KUWAIT CITY // Gulf leaders have agreed to establish a joint rapid response force because of the recent clashes between Saudi Arabia and Yemeni rebels, the secretary general of the Gulf Co-operation Council, Abdulrahman al Attiyah, said yesterday.
Mr al Attiyah made his comments at a press conference after the GCC's annual summit, in which Gulf leaders discussed a wide range of political and economic issues.
"There is the defence council and there is the Jazeera Shield Force, and we have made a decision to establish a first intervention force," Mr al Attiyah said. "It is not meant to work on the Saudi borders, but to protect and defend any country of the GCC."
Mr al Attiyah said the force would perform a different function from the Jazeera Shield Force, also known as the Peninsula Shield Force. "What has been happening recently proves that this will be one of the wings to support stability and security in the GCC countries."
The Peninsula Shield Force, which is made up of troops from Gulf countries and is based in Jeddah, was created in the 1980s to respond to military aggression against any member of the GCC.
The Gulf Co-operation Council is a loose confederation of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. Every year, the leaders of the six states meet to discuss issues of regional importance and ways to promote economic integration.
The GCC's secretary general and Kuwait's minister for foreign affairs, Sheikh Mohammed Sabah Al Salem Al Sabah, held a press conference for about 300 journalists who attended the summit on its final day.
While answering a wide range of questions from foreign policy to oil, Sheikh Mohammed told reporters that the GCC is "not threatened by Iraq's plans to expand its oil production" in the next few years. Iraq has recently been offering contracts to develop its oilfields - some of the world's biggest - after years of neglect because of sanctions and war.
If Iraq's plans are completed, it could quintuple its current capacity to pump crude oil to more than 12 million barrels per day by 2015, rivalling the capacity of the world's largest oil producer, Saudi Arabia, which currently has a capacity of 12.5 million bpd.
Mr al Attiyah had said before the summit that the matter of Dubai World's US$3.5 billion (Dh12.9bn) sukuk payment was not on the agenda, but the minister of foreign affairs used the press conference to offer support for Dubai.
Sheikh Mohammed said: "Once we heard the news about the financial crisis in Dubai, and when Dubai World announced the rescheduling of the debts, I called the Emirates' foreign minister - I offered to give support and everything he needs.
"You have brothers in Kuwait and we are always supporting you," Sheikh Mohammed said to his counterpart.
Another economic issue that topped the agenda was the Gulf's stuttering plan to create a unified currency.
Kuwait's finance minister, Mustafa al Shamali, said the GCC monetary union agreement, which has been ratified by four of the countries, came into effect during the summit. He said the Gulf's central banks will now agree to a timetable for the establishment of a central bank before launching the unified currency. The minister expressed hope that Oman and the UAE, which pulled out of the planned currency, would rejoin.
The summit's most concrete economic success came with the official launch of a major project to link the electricity networks of the six states. The $1.6bn grid will enable electricity producers to export power to other states and provide a reserve of power to all of them in case of emergency.
The emir of Kuwait, Sheikh Sabah Al Jaber Al Ahmed Al Sabah, laid out the GCC's main foreign policy concerns in the summit's opening speech on Monday night, and the recent clashes on the GCC's southern border between al Houthi rebels and Saudi Arabia topped the list.
"Any violation of the security and stability of the brotherly kingdom of Saudi Arabia represents an aggression on all the security of the GCC countries," the emir said. "We support our Saudi brothers in all the actions they take to defend their sovereignty."
Sheikh Sabah also called for "solving the Iranian nuclear crisis through dialogue and peaceful means". He expressed concern for terrorism in Iraq, hostility between rival factions in the Palestinian territories and called for the establishment of an independent Palestinian state with Jerusalem as its capital.
In the past, the GCC has been criticised for being a talking shop, with weak institutions and poor implementation of resolutions. But at the end of the summit, Sheikh Mohammed offered a rare glimpse of public introspection.
"The course of the GCC is slow compared to the expectations of the people," he said. "We ask for miracles.
"This overloads us with a lot of burdens and a lot of responsibilities. We are slow compared to the expectations of our people, but at the same time, compared to the other regional organisations in the East or in the West, we are running very fast," he said.
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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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Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Company profile
Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends