Jordan's economy is expected to expand by 3.6 per cent in 2021, according to the International Monetary Fund. Courtesy Four Seasons Hotel Amman
Jordan's economy is expected to expand by 3.6 per cent in 2021, according to the International Monetary Fund. Courtesy Four Seasons Hotel Amman
Jordan's economy is expected to expand by 3.6 per cent in 2021, according to the International Monetary Fund. Courtesy Four Seasons Hotel Amman
Jordan's economy is expected to expand by 3.6 per cent in 2021, according to the International Monetary Fund. Courtesy Four Seasons Hotel Amman

MENA

US confirms new security pact with Jordan

Jordanian foreign minister defends agreement against criticism that it gives Washington too many privileges

Khaled Yacoub Oweis
Khaled Yacoub Oweis
Jordan

March 22, 2021

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The US on Sunday confirmed it had signed a new security pact with Jordan after controversy erupted over operational leeway it allows American troops.

A US embassy spokesperson said a defence co-operation agreement between Jordan and the US came into effect on March 17.

“The agreement reflects our longstanding security partnership,” the spokesperson said.

Hours earlier, several members of Jordan’s Parliament denounced the deal as giving away too many prerogatives to the US.

They demanded a special session of the legislature to discuss the deal, which commits Jordan to provide logistical and other support for the estimated 3,000 US troops in the country.

Parliamentarian Saleh Al Armouti, a member of the opposition Islamic Action Front, said the agreement was “a black day in the history of Jordan”.

Jordan is one the biggest recipients of American aid, but US troops and bases they use in the country are a sensitive subject.

Nationalist sentiment in Jordan runs high and many Jordanian dislike US support for Israel.

Relations between Jordanian authorities and the administration of president Donald Trump cooled after the announcement of his Middle East plan two years ago, although that had little effect on military ties.

Officials in Amman hope for better relations with President Joe Biden, whose administration has yet to spell out its Middle East positions in clear terms.

Jordanian Foreign Minister Ayman Al Safadi told Parliament that the security deal laid “a framework for defence co-operation between the United States and our brave Arab army”.

“We all do not accept any infringement on our sovereignty,” Mr Al Safadi said.

Pro-government media published the text of the agreement on Sunday.

It commits Jordan to allow the US to post troops and hardware in specific bases, and use them for training and transit.

US forces can also operate their own telecommunications networks, and American personnel are exempt from Jordanian taxes.

US troops are in Jordan under a status of forces agreement that governs their scope of operations.

US data shows that since 2014, Washington has given more than $2 billion in assistance to Jordan’s military and almost 6,000 of its soldiers have been trained in the US.

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.”

Jordan