GCC underlines support in islands row


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Iran should enter talks or seek international arbitration to settle a dispute with the UAE over three small islands, the Gulf Co-operation Council's foreign ministers said yesterday. In a communique issued during their two-day meeting in Jeddah, the ministers reiterated their support for the UAE's claim to Greater Tunb, Lesser Tunb and Abu Musa in the Gulf, and called for peaceful action to help the Emirates restore its sovereignty.

The ministers "urged Iran to positively respond to UAE's endeavours and peaceful initiatives to settle the issue of the islands through direct bilateral negotiations or by referring the case to the International Court of Justice", WAM, the state news agency, reported. Dr Anwar Gargash, Minister of State for Foreign Affairs, represented the UAE at the meeting, which was due to end last night. Tensions between the UAE and Iran over the islands have heightened since the Iranians built two administrative offices on Abu Musa in August last year. Iran occupied the islands in 1971 and started to bolster its military presence there in the 1990s.

The UAE claims sovereignty on the grounds that the islands belonged to Ras al Khaimah and Sharjah. Tehran makes competing claims on historical grounds. Dr Mahmoun Fandy, a Gulf security expert at the UK-based International Institute for Strategic Studies, said: "This is the time if the UAE wants to get its islands story as an agenda item among policy makers worldwide - while there's tension between Iran and the West.

"But this is the same statement that's reissued at every meeting. It doesn't have any teeth. If the UAE wants a resolution, it's going to have to be more tough." The ministers praised the actions of Saudi Arabia, Bahrain and Kuwait in thwarting planned attacks by militants. Last month, Saudi Arabia said it had arrested 44 members of a cell with links to Kuwait. In May, Bahrain said it had apprehended a cell plotting attacks in other Gulf states.

The ministers said they were "satisfied" with action taken so far to prevent the spread of swine flu in the region. GCC health ministries have banned "vulnerable groups", such as the elderly and children, from taking part in Haj and Umrah this year and most are running awareness campaigns on the disease. The ministers reviewed steps by member states to follow the Supreme Council's guidelines on the development of nuclear power for peaceful purposes, and delegates called for the international community to face up to its responsibility to the Palestinian people, WAM said.

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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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