NEW YORK // The sale of Predator surveillance drones to the UAE has been tentatively approved by senior US lawmakers, in what would be the first sale of the aircraft outside of Nato.
After nearly two years of deliberations, the US state department began talks with the senate and house foreign affairs committees in December, both of which approved the sale by defence contractor General Atomics to the UAE last week, US officials told Bloomberg News yesterday.
Congress is expected to be officially notified this week, with legislators then having 30 days to block the sale.
A source familiar with the discussions on Capitol Hill said that members of both the foreign affairs committees do not foresee any problems.
After the 30-day deadline expires, the state department will be free to clear the sale – which is worth around US$200 million (Dh734.6m), according to a Congressional Research Service report.
The sale of the unarmed export version of the military drone was announced at the Idex defence trade show in Abu Dhabi in February 2013. Sources familiar with the deal say it includes up to 10 Predator XP drones equipped with surveillance and targeting equipment but no weapons capabilities.
“The sale reflects the increasing closeness between the US and the UAE,” said Bilal Saab, a senior fellow for Middle East security at the Atlantic Council think tank in Washington, “the latter being perceived by the former as its most competent and trusted partner in the Arab world.”
If Congress allows the sale to proceed, General Atomics and the UAE would then complete the deal. The UAE ambassador to Washington, Yousef Al Otaiba, told Bloomberg Government earlier this month: “We then have to go back in and find funds, because this contract was signed two years ago” but that “It should be approved within the next several months.”
With the agreement signalling the first ever sale of the sophisticated technology to a nation outside of Nato, the US defence, state and commerce departments had to coordinate on formulating new policy to enable the deal.
A major stumbling block was Washington’s legal obligation to maintain Israel’s “qualitative military edge” over all other countries in the region. Similar concerns had to be addressed before the sale of advanced F-16 fighter jets to the UAE.
Many US allies in the Gulf and elsewhere have expressed interest in buying the Predator technology, which is now seen as a strategic asset. China, Turkey, Pakistan and other countries are developing similar technology, and concerns have been raised that they may have less qualms than the United States in exporting armed drones.
The UAE is one of the closest US allies in the Middle East. Between 2007 and 2010, the UAE signed defence contracts with US firms worth more than $10 billion, and contracts for military systems and training worth at least another $10bn have been agreed to since then. Many of these purchases have been made with a focus on defending against Iranian missile capabilities.
tkhan@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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Our legal columnist
Name: Yousef Al Bahar
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Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
GOLF’S RAHMBO
- 5 wins in 22 months as pro
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The drill
Recharge as needed, says Mat Dryden: “We try to make it a rule that every two to three months, even if it’s for four days, we get away, get some time together, recharge, refresh.” The couple take an hour a day to check into their businesses and that’s it.
Stick to the schedule, says Mike Addo: “We have an entire wall known as ‘The Lab,’ covered with colour-coded Post-it notes dedicated to our joint weekly planner, content board, marketing strategy, trends, ideas and upcoming meetings.”
Be a team, suggests Addo: “When training together, you have to trust in each other’s abilities. Otherwise working out together very quickly becomes one person training the other.”
Pull your weight, says Thuymi Do: “To do what we do, there definitely can be no lazy member of the team.”
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