GCC sets up panels for Hizbollah sanctions


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ABU DHABI // GCC officials yesterday formed panels to oversee sanctions against Hizbollah's interests in the region, as a penalty for the group's involvement in Syria.

The meeting of interior ministry officials in Riyadh focused on targeting the "residency, financial transactions and trade" of individuals associated with or backing the Lebanese Shiite movement Hizbollah.

Hizbollah said in May that its fighters had joined Syria's conflict to fight for the president, Bashar Al Assad. They have since proven decisive in battles for key cities such as Al Qusayr, near the Lebanese border.

Hizbollah's involvement in the Syrian crisis has raised the regional stakes of the conflict in many Arabian Gulf capitals, where there is growing concern over Iranian influence in the region. The militia is backed by Tehran, Mr Al Assad's staunchest regional ally.

The GCC announced on June 10 that it planned to introduce sanctions against Hizbollah but did decide upon specifics.

The Bahraini deputy interior minister, Khaled Al Absi, said at yesterday's summit that two teams would be formed, one to "coordinate with central banks" and the second to review "legal, administrative and financial matters" linked to the sanctions.

The sanctions would be implemented "in coordination... with ministers of commerce and the central banks of the GCC", Abdullatif Al Zayani, the GCC's secretary general, said recently.

Mr Al Absi said the decision to implement sanctions against Hizbollah was taken "after the discovery in GCC states of several terrorist cells linked to the group", though he did not provide details.

"Iran's presence in Lebanon and Syria now constitutes a clear threat to Saudi Arabia's national security," wrote Jamal Kashoggi, a commentator, last month in an article for the Saudi broadcaster, Al Arabiya, warning of an "expanding Shiite crescent".

The developments represent a broad shift in relations with Hizbollah, which previously drew wide regional sympathy in its repeated confrontations with Israel.

But the decision to join the conflict in support of Mr Al Assad had solidified perceptions across the Gulf that Hizbollah's motives were sectarian.

"Hizbollah had a lot of fans throughout the Arab world, in spite of sectarian differences and the question of Iran, in much of the Arab world including the Gulf, until the Arab uprisings brought the sectarian schisms to the fore," said Hussein Ibish, columnist for the news site NOW Lebanon.

This week, The Daily Star, a Lebanese newspaper, quoted the Saudi ambassador, Ali Awad Asiri, as saying that Hizbollah should "reconsider its policy towards the Sunni sect and other sects".

The precise impact of the GCC sanctions against Hizbollah is not yet clear.

Bahrain has led Gulf states in implementing punitive measures, including listing the group as a terrorist organisation and prohibiting its citizens from contacting Hizbollah.

Qatar and Saudi Arabia have both reportedly expelled small numbers of Lebanese expatriates for their alleged connections to the group. About 360,000 Lebanese expatriates work in the Gulf, the Lebanese daily An-Nahar newspaper reported, remitting Dh14.69 billion each year.

* With additional reporting by Agence France-Presse

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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.

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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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