Merkel offers support for Lebanon's refugee burden

German Chancellor Angela Merkel on Friday reaffirmed her support for Lebanon and “the tremendous burden it has shouldered” in taking in more than a million Syrian refugees, as she wrapped up a two-day trip to the Middle East.

“We want to contribute to finding a solution for Syria,” Mrs Merkel said during a press conference with Lebanese Prime Minister Saad Hariri. “Lebanon is in a very difficult regional environment right now.”

Mrs Merkel’s trip focused heavily on refugee issues, including funding and political support for UN agencies. On Friday, she visited a Lebanese school that holds a second shift of classes each day to accommodate Syrian students.

German Chancellor Angela Merkel speaks to a Syrian refugee student during a visit to a public school in Beirut where Lebanese and Syrian students study together, on June 22, 2018. Hussein Malla / AP Photo

Lebanese politicians, including President Michel Aoun, have intensified their calls in recent weeks for Syrians to return home.

Mr Aoun and others have also suggested that the international community intends to permanently resettle Syrian refugees in Lebanon and have them naturalised as Lebanese citizens.

Mr Hariri addressed that concern by pointing out that even after 70 years, hundreds of thousands of Palestinian refugees living in Lebanon have never received citizenship.

“Our constitution is very clear about naturalisation,” Mr Hariri said. “Were the Palestinian refugees naturalised?”

There are about one million Syrian refugees registered with the UN in Lebanon – although the government says the actual number in the country is upwards of 1.5 million. Their presence has placed a great strain on Lebanon's fragile infrastructure and economy, despite international assistance to help the country cope.

“I have explained to Chancellor Merkel that the only solution is for Syrians to return to Syria,” Mr Hariri said.

While a small fraction of the refugees have recently expressed the intent to return to Syria, the vast majority still consider the country too unsafe to do so.

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Refugee children to go back to school with a little help from the UAE

World Refugee Day: choosing between underfunded camps or people smugglers is no choice at all

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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.”

Merkel offers support for Lebanon's refugee burden

German chancellor's visit to Beirut followed a stop in Jordan where she pledged economic assistance

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