So they have finally come round, the leaders of “the exceptional nation”, to the idea that even their allies won’t always meekly just do what they’re told. The Obama administration, according to arecent report, has decided that institutions over which it has great influence, such as the World Bank, should work with China’s proposed Asian Infrastructure Investment Bank (AIIB). Earlier this week, US Treasury under secretary for international affairs Nathan Sheets said “the US would welcome new multilateral institutions that strengthen the international financial architecture”.
This only came after Washington had a very public hissy fit over the fact that in the past few weeks Britain, Germany, France and Italy declared that they wanted to join the AIIB as founding members (the deadline for that status is the end of this month). The White House let it be known via the American press that “some of its closest allies” had ignored “direct pleas” not to do so and that the move was a “stinging rebuke”.
Why the fuss? Last October, 21 countries signed the memorandum of understanding on establishing the AIIB, including Kuwait, Oman and Qatar from the Gulf. Five other states, including Saudi Arabia, joined soon after, followed by Europe’s leading economies. The UAE hasn’t indicated that it wishes to become a member, but after China’s foreign minister Wang Yi met the Emirates’ Vice President and Prime Minister, Sheikh Mohammed bin Rashid, in Dubai in February, Chinese media reported that the UAE would like to be a “gateway” for China in the Gulf and to the Arab world. The reports also said that Sheikh Mohammed “noted that the Asian Infrastructure Investment Bank would benefit the development of regional countries, and accord with the interests of all sides”.
On Monday, Australia’s cabinet voted to join, Switzerland applied last week, and Canada and South Korea are considering whether or not to do so. Last Sunday even the managing director of the IMF, Christine Lagarde, said that the Fund would be “delighted” to cooperate with the AIIB. The announcement was interpreted as a blow to Washington’s efforts to block the new China-led bank. Elizabeth Economy, director of Asia Studies at the Council on Foreign Relations, said: “Opposition to the Asian Infrastructure Investment Bank has become a millstone around Washington’s neck. It is time to remove it one way or another.” It would appear that this gathering momentum is what caused the US to give way, though not entirely graciously.
The US Treasury’s Mr Sheets has also said that co-financing projects with existing institutions such as the World Bank or the Asian Development Bank “will help ensure that high quality, time-tested standards are maintained”. That is code for what Washington has been warning all along: we don’t trust a Chinese-led institution to meet those standards – and nor should you.
But that is not entirely convincing. More realistic is the conclusion of one Australian commentator that the US fears “that without proper governance procedures in place the bank could be used by China as a tool of foreign policy. Of course it will – precisely as the World Bank has been used as a tool of US policy”.
Ever since their inception at the Bretton Woods conference in 1944, the World Bank has traditionally been headed by an American and the IMF by a European. Both institutions are based in Washington. Their location and the geographical provenance of their leadership were reflective of the post-Second World War order. But they are out of date. Continuing to privilege Europe and America in this way is indefensible, as the emerging economies made clear when Dominique Strauss-Kahn had to step down as head of the IMF in 2011.
There were eminently qualified candidates from Turkey, Brazil, India, Singapore and Mexico. Even Kenneth Rogoff, a former IMF chief economist, conceded at the time that “the days are gone when it should automatically be a European”. In the event, of course, Mr Strauss-Kahn’s successor is European. Though Ms Lagarde is well-regarded, there is no doubt that the row over her appointment caused enormous resentment and is likely to have contributed to the keenness of so many Asian countries to sign up to the AIIB.
At a time when China has overtaken the US to become the world’s largest economy – as the IMF announced last December – its right to have a greater say in the global financial architecture cannot be denied. And a lot of construction – of the physical kind – is needed in Asia: $8 trillion-worth in the decade to 2020, according to a 2009 study by the Asian Development Bank. The AIIB will support this. Yes, that means that much of the direction will come from Beijing rather than Washington. But this rebalancing of power is entirely appropriate, a part of the inexorable shift towards a multipolar world that cannot be stopped by arm-twisting Americans upset at the gradual erosion of their dominance. “America has, either by design or ineptitude, turned the AIIB into a test of diplomatic strength. That has proved a disaster,” declared The Economist.
It is a warning to the US. But given the ease with which countries in the Middle East, Europe and Asia are signing up to the AIIB, it is also a message. The world has moved on. It’s time for America to catch up.
Sholto Byrnes is a senior fellow at the Institute of Strategic and International Studies, Malaysia
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.”
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
COMPANY%20PROFILE
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Nepotism is the name of the game
Salman Khan’s father, Salim Khan, is one of Bollywood’s most legendary screenwriters. Through his partnership with co-writer Javed Akhtar, Salim is credited with having paved the path for the Indian film industry’s blockbuster format in the 1970s. Something his son now rules the roost of. More importantly, the Salim-Javed duo also created the persona of the “angry young man” for Bollywood megastar Amitabh Bachchan in the 1970s, reflecting the angst of the average Indian. In choosing to be the ordinary man’s “hero” as opposed to a thespian in new Bollywood, Salman Khan remains tightly linked to his father’s oeuvre. Thanks dad.
SCHEDULE
Saturday, April 20: 11am to 7pm - Abu Dhabi World Jiu-Jitsu Festival and Para jiu-jitsu.
Sunday, April 21: 11am to 6pm - Abu Dhabi World Youth (female) Jiu-Jitsu Championship.
Monday, April 22: 11am to 6pm - Abu Dhabi World Youth (male) Jiu-Jitsu Championship.
Tuesday, April 23: 11am-6pm Abu Dhabi World Masters Jiu-Jitsu Championship.
Wednesday, April 24: 11am-6pm Abu Dhabi World Professional Jiu-Jitsu Championship.
Thursday, April 25: 11am-5pm Abu Dhabi World Professional Jiu-Jitsu Championship.
Friday, April 26: 3pm to 6pm Finals of the Abu Dhabi World Professional Jiu-Jitsu Championship.
Saturday, April 27: 4pm and 8pm awards ceremony.
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
If you go:
The flights: Etihad, Emirates, British Airways and Virgin all fly from the UAE to London from Dh2,700 return, including taxes
The tours: The Tour for Muggles usually runs several times a day, lasts about two-and-a-half hours and costs £14 (Dh67)
Harry Potter and the Cursed Child is on now at the Palace Theatre. Tickets need booking significantly in advance
Entrance to the Harry Potter exhibition at the House of MinaLima is free
The hotel: The grand, 1909-built Strand Palace Hotel is in a handy location near the Theatre District and several of the key Harry Potter filming and inspiration sites. The family rooms are spacious, with sofa beds that can accommodate children, and wooden shutters that keep out the light at night. Rooms cost from £170 (Dh808).
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
Results:
Men’s wheelchair 200m T34: 1. Walid Ktila (TUN) 27.14; 2. Mohammed Al Hammadi (UAE) 27.81; 3. Rheed McCracken (AUS) 27.81.
The%20specs
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MANDOOB
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COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Where%20the%20Crawdads%20Sing
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
