Saudi Arabia's Crown Prince Salman bin Abdul Aziz Al Saud (right) with French President Francois Hollande following a meeting in Riyadh on December 30. Kenzo Tribouillard/ Pool via Reuters
Saudi Arabia's Crown Prince Salman bin Abdul Aziz Al Saud (right) with French President Francois Hollande following a meeting in Riyadh on December 30. Kenzo Tribouillard/ Pool via Reuters

Saudi’s $3bn pledge to Lebanon seen as counterbalance to Hizbollah, Iran



Saudi Arabia’s pledge of $3 billion (Dh11 billion) to Lebanon’s army on Sunday is being widely touted as a counterbalance to the influence of the Shiite political and militant group Hizbollah and its Iranian backers.

The move comes amid heightened tensions between Iran and Saudi Arabia, who support opposing sides in Syria’s civil war.

For Lebanon, the aid will provide a much needed boost for its military at a time when the war is spilling over Syria’s borders and threatening neighbouring countries.

For Saudi Arabia, it is a power play meant to counter the weight of its regional rival Iran.

“It is important to note that [the Saudi pledge] is a long-term strategy that reflects the geopolitics of the moment,” said Elias Hanna, a retired general in Lebanon’s armed forces.

Gen Hanna was referring to Saudi Arabia’s reaction to an apparent shift in Western, and particularly United States, policy towards the Middle East.

Riyadh has been critical of Washington’s last-minute decision to refrain from military action against Syria following a chemical weapons attack in the Damascus suburb of Ghouta last August, along with its drive towards an interim deal with Iran over its controversial nuclear programme.

Still, the announcement of the funds is likely to be well received by Western powers, which themselves provide funding to Lebanon’s armed forces. Since 2006, the US has provided Lebanon’s armed forces $1bn, an amount far exceeded by the Saudi pledge.

The move also appears to indicate closer ties between the French president, Francois Hollande, and Saudi Arabia’s King Abdullah, who met in Riyadh on Sunday for talks that included the escalating tensions in Syria and Lebanon. Lebanon’s president, Michel Suleiman, announced the Saudi aid later the same day, and elaborated a few hours later that the funds would be used to buy “newer and more modern weapons” from France.

Emile Hokayem, a Middle East analyst at the International Institute for Strategic Studies, said that rather than a dramatic shift in relations, the deal was part of a longstanding policy of cooperation between Riyadh and Paris.

“Saudi Arabia’s flirtation with France is not circumstantial – it’s longstanding,” Mr Hokayem said, noting that Saudi displeasure with the US was a contributing – but not a decisive – factor.

France has helped Saudi Arabia on numerous occasions in the past, helping to retake the Grand Mosque of Mecca in 1979 from a radical Sunni group and providing intelligence to Saudi forces fighting Houthi rebels in Yemen in 2009, Mr Hokayem said.

Mr Hokayem also said “it is important to note that the Saudi grant is being used to fund a Lebanese institution, rather than a particular militia group”, a reference to Iran’s financial backing of Hizbollah.

It remains to be seen how the aid will be transferred. The sum is almost double the army’s 2012 budget allocation of $1.7bn, according to the Stockholm International Peace Research Institute. Details have also yet to emerge regarding when the money will arrive – a process that could be delayed by Lebanon’s heavy bureaucracy and its current absence of a government – and how it will be allocated.

A major concern is that with the Saudi pledge viewed as a direct challenge to Hizbollah, it risks raising sectarian and political tensions further in a country that has seen waves of violence and political assassinations linked to the war in Syria.

This was evidenced most recently on December 27, when a former Lebanese finance minister and prominent critic of the Syrian regime, Mohammed Chatah, and at least five others were killed by a car bomb in central Beirut.

Many within Lebanon’s pro-Saudi March 14 alliance, including its leader Saad Hariri, said that they held Hizbollah responsible for the attack.

However, while some on Hizbollah-affiliated media outlets have raised objections to the aid, including the Al Akhbar newspaper’s editor-in-chief, Ibrahim Al Amin, the majority of Lebanese favour a strong national army and will at least tacitly support the move, according to Dr Fadi Assaf, a consultant at the Beirut-based Middle East Strategic Perspectives consultancy.

“Even if some are voicing certain criticisms, it is not in anybody’s interest to reject” the pledged funds, he said.

foreign.desk@thenational.ae

The biog

Simon Nadim has completed 7,000 dives. 

The hardest dive in the UAE is the German U-boat 110m down off the Fujairah coast. 

As a child, he loved the documentaries of Jacques Cousteau

He also led a team that discovered the long-lost portion of the Ines oil tanker. 

If you are interested in diving, he runs the XR Hub Dive Centre in Fujairah

 

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.”

Ziina users can donate to relief efforts in Beirut

Ziina users will be able to use the app to help relief efforts in Beirut, which has been left reeling after an August blast caused an estimated $15 billion in damage and left thousands homeless. Ziina has partnered with the United Nations High Commissioner for Refugees to raise money for the Lebanese capital, co-founder Faisal Toukan says. “As of October 1, the UNHCR has the first certified badge on Ziina and is automatically part of user's top friends' list during this campaign. Users can now donate any amount to the Beirut relief with two clicks. The money raised will go towards rebuilding houses for the families that were impacted by the explosion.”

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