The looming impact of Yemen's deepening instability, including transnational terrorism, refugee flows and ripening ground for proxy battles with Iran, is shaping up to be the GCC's biggest security challenge in decades, according to regional analysts.
Perhaps not since Saddam Hussein's Iraq invaded neighbouring Kuwait in 1990, they say, has the six-member regional grouping been faced with the spectre of such myriad threats.
"If left unattended, if we leave Yemen alone without help on the security, economic and development fronts, sooner or later its problems will undermine the stability of the UAE and GCC," said Mustafa Alani, head of Security and Terrorism Studies at the Dubai-based Gulf Research Center. "I think if no major help is offered to Yemen, collectively or by individual countries, we are going to be a victim of that conflict."
Evidence is mounting that al Qa'eda has already capitalised on Yemen's largely lawless, impoverished territory by regrouping and committing terrorist acts.
A Nigerian man accused of attempting to blow up a jetliner over the United States on Christmas Day is suspected of receiving training in Yemen by al Qa'eda operatives. The 23-year-old suspect, Umar Farouk Abdulmutallab, studied at a university in London and ? earlier this year ? Dubai.
In August, Prince Mohammed bin Nayef, Saudi Arabia's security chief, was wounded in an attack carried out by an al Qa'eda agent who had flown from Yemen to greet him. The assailant blew himself up using an incendiary device, reportedly concealed in his rectum, that was triggered by a telephone call from Yemen.
"This is not a joke," said Abdulkhaleq Abdullah, a professor of political science at UAE University.
"Let's hope Yemen doesn't go from fragile state to failed. It will be a source for all sorts of these unpleasant things."
The United States, alarmed by al Qa'eda's strengthening presence in Yemen, has over the past year been quietly helping to boost the country's security and intelligence agencies, the New York Times reported on Monday.
The assistance, according to the report, includes counterterrorism training and US$70 million (Dh257m) to train and equip its armed forces.
But as well as the terrorism threat, analysts say, Yemen's manifold issues could spell a number of more direct problems for its neighbours.
In addition to al Qa'eda, Yemen is struggling to contend with an emboldened secessionist movement in the south, all-out war with Houthi rebels in the north and an ailing economy.
According to a September report by the Carnegie Endowment for International Peace, an American research organisation, the confluence of these crises presents to Yemen's government uniquely troubling obstacles.
"Yemen has always survived crises in the past, but these complex and interwoven challenges are unprecedented in both degree and kind," said the report's author, Christopher Boucek. "If left unaddressed, Yemen's problems could potentially destabilise Saudi Arabia and the other Gulf states."
For example, earnings from oil exports, accounting for three quarters of government revenue, are projected by the World Bank to dry up by 2017. And water supplies in the country, half of whose 23 million inhabitants subsist on less than $2 a day, are rapidly diminishing.
"If the situation worsens in Yemen," said April Longley Alley, a Yemen expert who lives in Washington, DC, "a humanitarian crisis could produce destabilising refugee flows into neighbouring countries, particularly Saudi Arabia and Oman".
Dr Alley said the GCC, because of its proximity to Yemen and the amount of funds it could potentially mobilise, "should be at the centre of economic development efforts. Ultimately, Yemen is part of their neighbourhood and Yemen's problems could easily become their problems."
Some GCC members have pledged significant amounts of aid. Last month, the UAE announced a Dh2.4 billion (US$650m) package for such development projects as dams and a power stations.
At the 2006 London Donors Conference, an estimated $4.7bn was pledged by international donors to reduce poverty and enhance structural reforms in the country.
But so far, according to analysts, too little has been done to co-ordinate on the issue.
"You have the Europeans, the Americans, GCC nations, all of which are increasingly concerned about instability in Yemen, but there seems to be a lack of co-ordination among these actors," said Dr Alley.
Last month, at a meeting in Kuwait, GCC leaders announced ambitious plans to create a rapid response force following Saudi Arabia's ongoing clashes with the Houthi rebels along its border with Yemen.
The force, said Abdulrahman al Attiyah, the GCC's secretary general, "is not meant to work on the Saudi borders, but to protect and defend any country of the GCC".
Yemen is not a member of the GCC.
But outlines of the proposed force remain too vague to inspire much hope, said Abdullah al Shayji, professor of political science at Kuwait University.
"This military force still is very vague, just an idea," he said. "It's going to take a long time before we see it in action. It's still unclear about the number of forces, who will command, where the headquarters will be, the scope, funding, the limits of their action."
If anything, he said, there was a general feeling that it would meet a similar fate as Peninsula Shield Force, created in the 1980s to forge closer military ties between member states.
The military unit was basically powerless in defending against the Iraq invasion of 1990, and Dr Shayji said that failure to create anything more credible in its place "is what has bedevilled the GCC as an organisation and as an alliance in general".
"At the end of the day," he said, "you're living in a tough neighbourhood and you don't have the muscles to put up a fight."
That has raised paranoia, particularly regarding Saudi Arabia's battle with Houthi militants, who some believe are being aided by Iran.
The Houthis, followers of an offshoot of Shiite Islam, have for years sporadically fought Yemen's military and, since November, engaged Saudi forces in battles that have reportedly killed 73 of its troops.
Dr Alani, of the Gulf Research Center, said there was concern that if not decisively put down, Houthi success could embolden Iranian aspirations in Yemen.
"We have to look at it from the perspective that Iran has no right to interfere here," he said. "We have to tell the Iranians that their experience of creating Hizbollah in Lebanon should not be replicated on our doorstep, that we are not going to allow a mini-state to establish itself in the GCC."
But to do this, GCC military strategy would have to expand beyond its current, conventional emphasis on air and naval defences, he said. "We are not equipped to deal with this low-intensity, low-tech conflict. We are equipping ourselves for this hi-tech conflict, by buying planes and air defences, but ignoring things on the ground."
Riad Kahwaji, chief executive of the Institute for Near East and Gulf Military Analysis, a research organisation in Dubai, said any successful stabilisation effort would need to be broad-based and involve tackling security as well as promoting government reform and negotiations with local tribal elders.
@Email:hnaylor@thenational.ae
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
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A $10 hand-powered LED light and battery bank
Device is operated by hand cranking it at any time during the day or night
The charge is stored inside a battery
The ratio is that for every minute you crank, it provides 10 minutes light on the brightest mode
A full hand wound charge is of 16.5minutes
This gives 1.1 hours of light on high mode or 2.5 hours of light on low mode
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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