NEW YORK // The success of anti-establishment candidates standing against "big government" in internal party elections held across the United States this week could help to take control of Congress from the Democrats this autumn after voters rejected incumbents from the two main parties.
With midterm elections to pick all 435 House of Representatives seats, 36 of 100 Senate seats and 37 of 50 state governorships only five months away, the rejectionist mood poses the biggest threat to the legislative agenda of President Barack Obama, although the Republicans face a split vote because of right-wing Tea Party activists.
Candidates endorsed by Mr Obama and Republican leaders fared badly in several primaries that had a higher turnout than normal on Tuesday. But the Democrats did receive a boost when Mark Critz won a special election in Pennsylvania to replace John Murtha, the late Democratic representative. It was the only election on Tuesday when Republicans and Democrats competed against each other but Mr Critz will only serve the final months of Murtha's term.
Chris Van Hollen, the head of the Democrat House campaign committee, said: "It was the only race in the county today where a Democrat faced off against a Republican and the results are clear."
But voters rejected Democratic Party-backed candidates elsewhere. Arlen Specter, a five-term senator who switched to the Democrats from the Republicans last year, lost in Pennsylvania while Blanche Lincoln, a Democratic senator, was forced into a runoff election in Arkansas.
But the focus of most television punditry on the cable news shows was the victory in Kentucky by Rand Paul, a political novice pushed into prominence by the Tea Party, which enjoyed its clearest demonstration of power since the loosely organised movement was formed last year in opposition to Mr Obama's bailout of the banks and car industry and the reform of health care.
Mr Paul, the son of Ron Paul, a libertarian Republican representative and former presidential candidate, said his win was a "tremendous mandate for the Tea Party". He was backed by Sarah Palin, the former vice presidential candidate who has become a rallying figure for disaffected right-wingers.
Mr Paul said: "It cannot be overstated that people want something new, they don't want the same-old, same-old politicians. They think the system is broken and needs new blood."
With unemployment persisting at around 10 per cent and many Americans still suffering from the recession, Mr Obama's Democrats face a tough challenge in persuading the electorate this November that they are best placed to secure the recovery.
Mr Obama defended his party's economic record during a visit to Youngstown, Ohio on Tuesday. "I know it's still tough, I know a lot of times the future still feels uncertain. But I will tell you one thing. It's people like you, people in towns like Youngstown all across America that I'm thinking about every single day when I go to the Oval Office."
Mr Specter's defeat came despite Mr Obama's backing when he switched to the Democrats last year, although the White House's embrace appeared to cool in recent weeks when polls showed Mr Specter trailing. He lost to Joe Sestak, a Democratic representative whose campaign raised questions about Mr Specter's credibility after his long history as a Republican, including television ads showing George W Bush when he was president saying he could count on Mr Specter.
Edward Rendell, the governor of Pennsylvania, said Mr Specter, 80, had fallen to the anti-establishment mood. "In fairness to Arlen, if the economy was OK and there was no anti-incumbent wave, this wouldn't have been a close election."
In Arkansas, labour unions and progressives backed Bill Halter, state lieutenant governor, over Ms Lincoln, a moderate senator first elected in 1998. The two Democratic candidates will face a runoff on June 8. Ms Lincoln failed to win an outright majority even after she pleased many on the left by introducing a tough bill to ban investment banks from trading derivatives.
Mr Paul's victory for the Tea Party garnered the most headlines, with Ms Palin saying it was a "wake-up call for the country". Other Republican candidates, meanwhile, were expected to shift to the right to win the Tea Party's backing ahead of November's elections.
"Rand's victory is part of an American awakening that is taking place across the country as people embrace the principles of freedom that are the backbone of our country," said Jim DeMint, a conservative Republican senator from South Carolina.
Tea party activists have also prevented Bob Bennet, a Republican senator from Utah, from winning renomination because he was seen as too moderate. In Florida, Charlie Crist, the governor, quit the Republican Party to run as an independent for senator after the Tea Party backed Marco Rubio, who is now running for the Republicans.
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
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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.”