US senators are drafting a bipartisan sanctions bill intended to sanction Sudanese military leaders responsible for last year’s coup against the civilian-led transitional government and set conditions necessary for American foreign aid to resume.
Senate Foreign Relations Committee Chairman Bob Menendez announced on Tuesday that he is collaborating on the legislation with James Risch, the top Republican on the panel.
Although they have not yet introduced the bill, Mr Menendez noted that the legislation establishes “conditions that must be met prior to restoring assistance” while directing President Joe Biden's administration to “rethink its assistance strategy".
He added that it would also set up “a regime of targeted sanctions for those who undertook the coup and continue to undermine democracy and abuse human rights, thus far a critical missing element of the administration response".
Mr Menendez announced the draft legislation during a Senate hearing on Sudan, when he pushed Assistant Secretary of State for African Affairs Molly Phee on the administration’s decision not to levy sanctions on Sudanese military leaders so far.
He said that the administration has “failed” to make use of existing sanctions authorities to sanction more than 250 companies reportedly owned by Sudanese security forces “in various sectors from mining to agriculture".
Ms Phee welcomed the Sudan sanctions legislation, noting that the State Department agrees that it “should explore” sanctions on those sectors. But she suggested that the Biden administration may not have the legal authority necessary to do so, absent new legislation.
“Our traditional existing regimes were not specifically designed for this moment,” she said.
“We’re looking at how we might develop a new regime in which we can work with you, and I was gratified to hear about the legislation you’re considering.
“We’re also looking at non-traditional ways to get at these financial sources of power for the security forces.”
Ms Phee lambasted Sudan’s military leaders on Twitter last week, accusing them of backtracking on commitments they made to her during a visit to Khartoum in January alongside David Satterfield, the new US envoy for the Horn of Africa.
Following their January visit, Ms Phee and Mr Satterfield threatened Sudanese military leaders with unspecified additional penalties should they fail to enable a peaceful political transition.
Still, Ms Phee told the Senate that the Sudanese security forces “are difficult, but they are not monolithic".
“Some of them, I think, would truly like to effect a transition,” she said. “They don’t know how to do it. They’re falling back on their old playbook.”
Sudanese security forces have repeatedly cracked down on anti-coup protesters, killing about 80 civilians and wounding hundreds of others since October.
Washington suspended $700 million in US foreign aid for Sudan following last year’s coup.
While Mr Menendez has welcomed the freeze, his legislation would seek to codify the conditions the Sudanese government must meet for that aid to resume.
“The pause of bilateral and multilateral assistance to the government and of debt relief has left the country’s finances in a precarious state, unable to meet its current financial obligations,” said Ms Phee.
“We have been clear that the only path to restoration of international financial assistance is predicated on ending the violence and restoring the democratic transition.”
The US had granted the foreign assistance to Sudan after Khartoum signed on to the Abraham Accords, normalising relations with Israel.
But Ms Phee noted that the Biden administration is not currently pushing Sudan to deepen ties with Israel amid the political upheaval.
“The normalisation efforts that were under way were part of a negotiation with a civilian-led government,” said Ms Phee.
“Now that the government is no longer in place, we don’t feel it’s appropriate to push forward at this time, but that’s something we’re keeping a close eye on for an opportunity to resume.
“And it would be helpful if Israel would use its influence to encourage the transition to go forward so then we can move forward on other important objectives like the Abraham Accords.”
Sudanese military leaders were the driving force behind normalising ties with Israel under the transitional government led by former prime minister Abdalla Hamdok.
Mr Satterfield will arrive in Israel on Wednesday to discuss Sudan as part of a two-week trip to the region, which includes a stop in the UAE.
The UAE joined the US, Saudi Arabia and the UK in calling for a return to Sudan’s transitional government shortly after last year’s coup.
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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