A fisheman throws his net in the Euphrates river, in Iraq's Shatrah district of the southern Dhi Qar province. AFP
A fisheman throws his net in the Euphrates river, in Iraq's Shatrah district of the southern Dhi Qar province. AFP
A fisheman throws his net in the Euphrates river, in Iraq's Shatrah district of the southern Dhi Qar province. AFP
A fisheman throws his net in the Euphrates river, in Iraq's Shatrah district of the southern Dhi Qar province. AFP

Iraq's shrinking water supplies could put country 'on the edge'


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As lower oil prices and a coronavirus-driven downturn batter Iraq's economy, availability of safe water is eroding and could fuel greater tensions, security experts warned on Wednesday.

Hospitalisations due to worsening contamination from sewage, agricultural runoff and chemical dumping are high, especially in southern Iraq, and families now reliant on bottled water may struggle to afford it as incomes dive, they said.

"There are layers and layers and layers of problems," said Azzam Alwash, founder of Nature Iraq, an environmental organisation that has helped restore drained marshes in southern Iraq, during an online event.

The conflict-riven country has seen its water infrastructure degrade over decades both from neglect and war damage, said Tobias von Lossow, a water security expert at the Clingendael Institute, a Dutch international relations think-tank.

Construction of new dams over the decades in upstream Turkey, Syria and Iran has choked off some of the flow of the Tigris and Euphrates rivers the country depends on, he said.

Now climate change is making temperatures hotter and rainfall more erratic, adding to fears of water shortages, he added, even as the Covid-19 pandemic slows efforts to deal with the threats and saps the country's financial resources.

Low oil prices, in particular, are "a financial existential threat for Iraq", Mr von Lossow said, with the country facing predictions its economy could decline 9-10 per cent this year.

Khaled Sulaiman, a Kurdish journalist who published a book earlier this year on water issues in Iraq, said he believed growing water shortages could further destabilise the country, which is "facing a serious crisis with water".

Shortages are already driving many Iraqi villagers into larger cities "because there's not any way to survive" as water supplies dry up, he added.

Some communities are battling Covid-19 and water-borne diseases at the same time, he said, even as water is wasted in inefficient irrigation projects or grabbed by the well-connected.

"All this could put Iraq on the edge," he warned, especially with its population predicted to double by 2080.

Maha Yassin, an Iraqi-born outreach officer for the Planetary Security Initiative, a group of think-tanks working on security issues, said frustration was growing among the country's youth over a lack of basic services.

Young people "just want to have tap water in their house, some air-conditioning ... during summertime," said Ms Yassin, who was born in Basra where the average summer high is 45 degrees Celsius.

Families in the region are in some cases already spending US$56 a month on bottled or filtered water, but as people lose jobs in the downturn, securing sufficient water is likely to become even more difficult, she warned.

Mr Alwash said addressing Iraq's growing water shortages remains a huge challenge as political upheaval, disputes with neighbouring states and a resurgence of extremist group ISIS soak up attention and resources.

"We are a war theatre and Iraqis are the victims," he said. "Until there is stability in our region, none of our problems are really going to be resolved."

After years of talking about those problems, "it seems to me everything is getting worse and worse", he said.

He called for efforts to help Iraqis understand the gravity of looming water shortages, to create a groundswell of support for action. "What's needed is political will," he said.

"It's about people understanding the problem is right around the corner, and if we don't address it now, it's too late."

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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.”

How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.