Iraq's Deputy Prime Minister Ali Allawi has said he expects US president to pursue the same policies as Donald Trump in Iraq. EPA
Iraq's Deputy Prime Minister Ali Allawi has said he expects US president to pursue the same policies as Donald Trump in Iraq. EPA
Iraq's Deputy Prime Minister Ali Allawi has said he expects US president to pursue the same policies as Donald Trump in Iraq. EPA
Iraq's Deputy Prime Minister Ali Allawi has said he expects US president to pursue the same policies as Donald Trump in Iraq. EPA

Joe Biden will not abandon Trump's policies in Iraq, says deputy prime minister


Mina Aldroubi
  • English
  • Arabic

US president-elect Joe Biden’s administration will not abandon Donald Trump’s policies in Iraq, but will attempt to de-escalate tensions in the region, Iraq’s Deputy Prime Minister Ali Allawi said on Monday.

Mr Biden’s win raised alarm bells for some Iraqi politicians who fear that it may translate into greater influence for Iran and its proxy groups in the country.

But the Iraqi official suggested that Mr Biden’s administration will not abandon Mr Trump’s approach towards Iran.

"There might be some kind of hybrid policy driven by new realities on the ground,” Mr Allawi said during a Chatham House web seminar on Iraq.

Pressure on Baghdad will ease, he said.

There have also been fears that Mr Biden would push through the idea of dividing Iraq among partisan lines, but Mr Allawi brushed aside those concerns and said that the “plan for partition is gone. Iraq is now less sectarian and is ruled by raw power politics”.

"It [the US] will certainly advocate for Arab countries to open diplomatic relations," he said.

Washington has nearly 3,000 troops in Iraq to help the country's forces fight the remnants of ISIS. The number is expected to downscale to 2,500 by January.

US Secretary of State Mike Pompeo has threatened to close the US embassy in Baghdad over a number of rocket attacks by Iranian-backed militias, but there has been no official announcement about its status.

Mr Allawi said US presence in Iraq is “more for appearance” and is symbolic, but if the attacks continue then it may have to be re-evaluated.

The remaining US military personnel do not engage in combat operations, but serve to train and advise Iraqi forces to combat the remaining ISIS sleeper cells. The same policy is expected to continue under the Biden administration, the Pentagon has said.

“The US presidency has been in the past a force of stability [for Iraq] but has drawn down in the last few years. It's still important for security,” Mr Allawi said.

Describing the issues facing Iraq today as "an existential economic crisis", Mr Allawi, who is also the finance minister, said there were no quick solutions.

Last month the Iraqi cabinet approved a white paper for economic reform to be carried out over the next three to five years, including a centralised IT system.

The need for change is dire in Iraq, as the government tries to rebuild following years of war and rampant corruption.

It is also struggling to revive its stagnating oil industry due to the outbreak of the coronavirus pandemic.

Iraq is ranked 162 out of 180 countries in Transparency International Corruption Perceptions index.

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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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