Houthis at a gathering in Sanaa. Photo: Yaha Arhab / EPA
Houthis at a gathering in Sanaa. Photo: Yaha Arhab / EPA

Houthis cannot rule all of Yemen



It comes as no surprise that the Houthi rebels have taken over the government in Yemen. That outcome was entirely predict­able, some would say from the moment the armed group took control of the capital Sanaa in September. Others might see the watershed moment as president Abradu Mansur Hadi’s resignation on January 22. Either way, it was inevitable that something would happen after the Houthis set an impossible deadline for an all-party political arrangement. It expired last Wednesday and the Houthis have dissolved parliament. The big question now is how do the Gulf nations – in particular Yemen’s large northern neighbour, Saudi Arabia – respond?

This is the first foreign policy challenge for Saudi Arabia’s new king and a difficult one at that. The situation in Yemen is untenable. The rebels, with the backing of Iran and members of former president Abdullah Saleh’s deposed regime, have announced the creation of a “supreme revolutionary committee”. It is supposed to rule for two years. Despite announcing that their move “will take Yemen to safe shores”, the Houthis appear to have no game plan, strategy or vision for the future. Houthi leaders are being disingenuous at best when they say that the new committee will be inclusive. More to the point, they are being foolishly optimistic if they think that controlling Sanaa by force means they have political control over the whole country. Their takeover may strengthen the southern separatist movement’s desire to secede and in the short term, it may suit the United States to cooperate with a Houthi-led government in attacking Al Qaeda in Yemen targets. But the current political arrangement in Sanaa, which disenfranchises so many Yemenis, is not in the interests of the country or the region.

Let’s be clear, the Houthis are a minority who have seized control with guns. If Yemen is to continue to exist as a cohesive state, which is in everybody’s interests, it must be ruled by a government that represents all its citizens. Iran must stop its meddling, while Yemen’s Gulf neighbours, and the wider world, must stand together to help the country achieve true political inclusivity and stability.

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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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