Al Sadr's role will shape Iraq's political future



For millions of Shiite Iraqis, Muqtada al Sadr is a hero and the heir to a legitimate resistance. For many of their compatriots, he was master of a sectarian militia and a tool of Iranian influence. In 2006, the Americans called him the single greatest threat to Iraq's unity.

Which Mr al Sadr landed in Najaf on Wednesday after three years in Iran? Opinions will vary, and it is unlikely that Mr al Sadr himself will be forced to show his hand any time soon.

From questionable successor to his father's theological mantle, to commander of the Mahdi Army, Mr al Sadr remains a power-broker in Iraq's politics. Despite exile in Qom, his political bloc won about 40 seats in the last elections. His support of Nouri al Maliki appeared to cement the incumbent's hold on another term as prime minister.

In the long months of horse-trading after the election - indeed, since the Mahdi Army was ostensibly disbanded in 2008 - Mr al Sadr's leadership has taken on a decidedly more political tone. Transformation, however, might be too strong a word. It is far too early to describe the Mahdi Army as a spent military force, and the dour cleric rarely inspires confidence with his sporadic public statements.

The skeleton in his closet is not his anti-American stance, but actions of his supporters that contributed to the outbreak of sectarian violence in 2004. Now, the 2010 vote has provided Mr al Sadr a role in the new Iraq, and at least seven seats in the fragmented cabinet. At present, those do not include the key defence or interior portfolios. "The minister [for each of the two ministries] will only be independent, non-partisan, nonsectarian and with no ties to militias and serving solely Iraq," Mr al Maliki recently told the Wall Street Journal. Few would argue that Mr al Sadr meets those criteria.

But his allies have claimed the ministries of housing and construction, water resources, and labour and social affairs, among others. Undoubtedly the bloc will be a conservative Shiite voice in government, and Mr al Sadr will continue to be a divisive figure.

That is preferable to any other alternatives. This government's litmus test will not be whether it resolves sectarian differences, but whether it contains them. And if Mr al Sadr can keep his followers from returning to bloodshed, it is very possible that his political star will continue to rise.

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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.”

Generational responses to the pandemic

Devesh Mamtani from Century Financial believes the cash-hoarding tendency of each generation is influenced by what stage of the employment cycle they are in. He offers the following insights:

Baby boomers (those born before 1964): Owing to market uncertainty and the need to survive amid competition, many in this generation are looking for options to hoard more cash and increase their overall savings/investments towards risk-free assets.

Generation X (born between 1965 and 1980): Gen X is currently in its prime working years. With their personal and family finances taking a hit, Generation X is looking at multiple options, including taking out short-term loan facilities with competitive interest rates instead of dipping into their savings account.

Millennials (born between 1981 and 1996): This market situation is giving them a valuable lesson about investing early. Many millennials who had previously not saved or invested are looking to start doing so now.

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