World waits for Netanyahu



TEL AVIV // It is slated to be the most important speech of Benjamin Netanyahu's current premiership. In the face of a threatening collision with the US on the achievement of Palestinian statehood, senior Israeli officials have pledged that the prime minister's major policy address today would attempt to ease mutual tensions over the future of Israeli-Palestinian peace talks.

But many commentators question whether Mr Netanyahu, who came to power for the second time in March, would be willing to sufficiently compromise to satisfy the administration of Barack Obama, the US president. Since Mr Netanyahu announced last Sunday his intention to deliver the address, the event has spurred speculation on whether he will reverse his opposition to Palestinian statehood and agree to curtail the expansion of Jewish settlements in the occupied West Bank.

Palestinians want the West Bank, along with the Gaza Strip and East Jerusalem, to form their future state and they claim Israel's growing settlements are the biggest obstacle. Mr Obama, in what is viewed as the toughest US line against Israeli settlements in decades, has repeatedly urged Mr Netanyahu's government to endorse the creation of a Palestinian state and freeze the construction of new homes in occupied territory.

So far, the Israeli premier has rejected both demands, prompting an unusual clash with the US. Mr Netanyahu says a pullout from the West Bank would prompt attacks on Israel from the territory. However, Mr Netanyahu, whose previous premiership in 1996-1999 was marred by poor relations with the US, is expected to try to make concessions in his speech. While he is unlikely to explicitly say he backs the establishment of a Palestinian state, Israeli media have speculated he will voice support for the 2003 US-backed "Road Map" plan, which previous Israeli governments have accepted and which aims for a two-state accord.

However, it also calls on Israel to halt settlement expansion. Still, Israeli officials are now insisting the previous governments only agreed to the plan and to the 2005 Gaza withdrawal after reaching an unwritten understanding with the US that settlement growth in the West Bank would continue. Those claims have been rejected by Obama administration officials, including Hillary Clinton, the secretary of state. Today, one possibility is that Mr Netanyahu will pledge that Israel will dismantle smaller and more isolated outposts while at the same time the state will continue to build to accommodate growing families in the larger settlement blocs it plans to keep under any peace pact.

Some commentators have described Mr Netanyahu's speech as a bid to find a middle ground between the competing pressures of the US and those of his predominantly right-wing governing coalition - any moderation in the premier's hawkish position promises to draw resistance even from his closest political allies. Benny Begin, a powerful Likud member, has cautioned Mr Netanyahu to resist US demands on supporting Palestinian statehood.

In 1997, Mr Begin quit the Likud leader's first government in protest after Mr Netanyahu handed over part of the West Bank city of Hebron to the Palestinians. His resignation helped spur Mr Netanyahu's ouster by his fractious right-wing coalition two years later. Mr Begin, a minister in the current cabinet who is understood to be a close confidante of the premier, said last week: "If the only solution is two states for two peoples, then there is no solution."

vbekker@thenational.ae

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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