Qatari prime minister Abdullah bin Nasser bin Khalifa Al Thani delivers a speech during a panel discussion as part of the US-Islamic World Forum on June 1, 2015 in Doha. STR/AFP Photo
Qatari prime minister Abdullah bin Nasser bin Khalifa Al Thani delivers a speech during a panel discussion as part of the US-Islamic World Forum on June 1, 2015 in Doha. STR/AFP Photo
Qatari prime minister Abdullah bin Nasser bin Khalifa Al Thani delivers a speech during a panel discussion as part of the US-Islamic World Forum on June 1, 2015 in Doha. STR/AFP Photo
Qatari prime minister Abdullah bin Nasser bin Khalifa Al Thani delivers a speech during a panel discussion as part of the US-Islamic World Forum on June 1, 2015 in Doha. STR/AFP Photo

Middle East’s troubling position is one thing experts can all agree on


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DOHA // The crowd gathered at the Sheraton hotel in Qatar’s capital was hardly dashing. The international milieu of academics, government officials, and analysts were under no illusions that they could solve the Middle East’s many troubles. Nor did any of these individuals really hope that they would convince anyone that disagreed with them to change their point of view on one set of policies or another.

At least there was one overarching point of agreement: the Middle East is in serious trouble, and Washington’s ability to affect the region in a positive way is limited.

This was the scene at the 12th US-Islamic World Forum, which was held in Doha from June 1-3. Not pretty, but hardly dull, an apt reflection of the Middle East at the moment.

Hosted by the Brookings Institute, which has offices in both Washington and Doha, and Qatar’s foreign ministry, the meeting of Middle East influencers discussed the region’s most pressing issues. This included countering the attraction of the militant group ISIL and better understanding the United States and Saudi Arabia’s differences over the nuclear deal with Tehran, the deadline for which is only about three weeks off.

The Iran deal was perhaps the most heatedly debated issue. While Tehran’s point of view was considerably underrepresented at the conference, there were plenty of critics of the deal from both the US and GCC countries.

The Obama administration had sent Dr Colin Kahl, a national security adviser to vice president Joe Biden, to reiterate its case for why a deal makes sense for the US and, also, the Middle East.

At least one conference participant said Mr Kahl came off as condescending, and his arguments did seem stale, particularly since the issue of Tehran acquiring nuclear weapons isn’t actually the main concern for Gulf states.

Instead, it is the trust deficit built up between the Obama administration and its closest allies, especially Saudi Arabia, that is closer to the heart of the disagreement. For some, the negotiations with Iran, which were kept secret from most GCC states (though Washington and Tehran were brought together by Oman’s Sultan Qaboos), have come to symbolise the years long decline in trust.

Arab Gulf states are also concerned that Iran will use the funds gained from sanctions relief to further expand its influence across the region. Mr Kahl said that while this concern is taken seriously, it is unclear how the money would be used. Iranians expect tangible benefits from the engagement with the international community, he said, and the additional finances could help prop up the suffering local economy. He also pointed out that Tehran would support its proxies in the region regardless of sanctions being lifted.

Participants at the conference from GCC states described a situation where Saudi Arabia’s relationship with Washington began to degrade when the Obama administration, in the eyes of Riyadh, withdrew support for Egypt’s Hosni Mubarak. There was further friction over how to handle the protests in Bahrain. Saudi Arabia and the UAE ended up sending in security forces to stop the demonstrations. Then, it emerged that the US was holding secret talks with Iran, their main rival.

More recently, the US is perceived as pursuing contradictory policies in Iraq and Yemen: fighting on the same side as Iranian-backed Shiite militias against ISIL in Iraq, while at the same time aiding a Saudi Arabia-led coalition that is bombing Houthi rebels in Yemen who have received aid from Iran.

Today, the public does not know if Gulf leaders are convinced there is not a “grand bargain” between the US and Iran, as the Obama administration has assured.

Even if they are convinced, the decades-long relationship has taken a significant blow and it is doubtful whether it will be fully repaired even if the nuclear deal with Iran is successful. “Yesterday, Iran was an enemy, today a partner. We don’t know how far this will go,” said a participant from a Gulf state.

Not discussed in any great detail at the forum was the effect of Gulf states pursuing more overtly militarised policies as they settle into the reality of a more distant Washington.

The results are already being seen in places such as Yemen and north-west Syria, where Riyadh has lent support to its allies.

At this year’s forum, the chaos in these places was examined by participants. All appeared ready to dissect more of the same next year.

jvela@thenational.ae

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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