A Turkish Armed Forces Honour Guard welcomes Sheikh Mohamed bin Zayed to Turkey's Presidential Complex, on November 24, 2021. UAE Ministry of Presidential Affairs
A Turkish Armed Forces Honour Guard welcomes Sheikh Mohamed bin Zayed to Turkey's Presidential Complex, on November 24, 2021. UAE Ministry of Presidential Affairs
A Turkish Armed Forces Honour Guard welcomes Sheikh Mohamed bin Zayed to Turkey's Presidential Complex, on November 24, 2021. UAE Ministry of Presidential Affairs
Insight and opinion from The National’s editorial leadership
November 26, 2021
In the years preceding the pandemic, flights between Dubai and Istanbul were so busy that it was one of Turkish Airlines’ most profitable routes. The two cities framed the Middle East, with Istanbul its geographic gateway to the West, and Dubai to the East. When Covid-19 halted these flows, stalling commerce, tourism and personal visits, the distance between these great regional hubs was made wider, and for travellers, the Middle East seemed less intimate.
In truth, however, the distance between Turkey and the UAE had been growing for some time. In the aftermath of the Arab uprisings a decade ago, the two countries took different approaches and views on the region. Whereas many Arab states had viewed the uprisings with extreme caution, as they watched extremist groups seek to seize the moment, for Turkey they appeared to represent an opportunity.
The differences created political divisions and ruffled feathers in several Arab capitals, from Tripoli to Baghdad. A decade on, it is time to heal rifts in the region and find ways to work together towards stability and more prosperity.
The visit of Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, to Turkey on Wednesday marked an important moment. It was Sheikh Mohamed’s first official visit to the country in nearly 10 years, and comes after recent high-level contacts between Emirati and Turkish officials.
A decade on, it is time to heal rifts
The pandemic has offered many lessons for the Middle East, but the most important is that the region is in need of more collaboration that can cut across politics. In the case of Turkey and the UAE, what transcends politics is of significant value. The UAE is Ankara’s largest regional trading partner, and Emirati trade and investment in Turkey has grown considerably in recent years. From 2019 to 2020, UAE exports to Turkey increased by more than 110 per cent and total trade increased by 21 per cent. Dubai is a financial hub for Turkish businesses, and the UAE home to thousands of Turks, including families who have been settled there for generations.
All of this was at the core of meetings between Turkish and Emirati officials on Wednesday. One outcome of the talks was the UAE’s establishment of a $10 billion fund to support investments in Turkey, including in the key areas of energy, health and food.
Importantly, the discussions also covered some of the larger issues at stake, such as regional co-operation on major global challenges. From combatting Covid-19 to collective action on climate change, regional solutions are needed. As Dr Sultan Al Jaber, the UAE Minister of Industry and Advanced Technology said, Turkey and the UAE “aim to forge partnerships to address global challenges together, like climate change, energy, food and water security”.
Dr Al Jaber also described the UAE and Turkey as “natural partners”, given the scale of potential co-operation between them. There will be more to resolve in order to bring that partnership into full force, but the hard work is being done now. Those efforts will set the stage for Turkey and the UAE to come out of the turbulence of the pandemic with a larger sense of shared priorities. That would be a long-term benefit not only for Emirati-Turkish relations, but for the region as a whole.
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
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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.”
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