Power play makes Zardari stronger



ISLAMABAD // The Pakistani president, Asif Ali Zardari, has tightened his grip on the reins of power in the run-up to next month's elections for the Senate - the indirectly elected upper house of parliament - after months of political wrangling and horse-trading with regional parties. Last month he successfully had the federal cabinet expanded to bring into the ruling coalition two MPs - one from the Muttahida Qaumi Movement (MQM) and one from Jamiat Ulema e-Islam (JUI) - restoring the government's parliamentary majority.

"Zardari may have lost popular credibility over the judges issue," said Rana Qaiser Mehmood, editor of the Daily Times newspaper, referring to Mr Zardari's reluctance to reinstate a group of judges sacked by Pervez Musharraf, the former president. "But he has certainly consolidated his position in power by skilfully playing the numbers game." Both parties hold significant numbers of votes in the directly elected National Assembly. The MQM also holds the second largest number of seats in the Sindh provincial assembly, while the JUI is the third-largest grouping in both the volatile North-West Frontier Province (NWFP) and Balochistan assemblies.

Mr Zardari's Pakistan People's Party (PPP) leads the ruling federal government coalition, as well as governments in Sindh and Balochistan. Previous cabinet reshuffles in the latter part of 2008 saw the inclusion of the Awami National Party (ANP), which leads the PPP-supported ruling coalition in the NWFP, as well as members of Balochistan's plethora of parties and independents from the Taliban-infested Federally Administered Tribal Areas (FATA), which border Afghanistan.

They had earlier individually supported the government without formally joining the treasury benches - which are occupied by members actively supporting the government - in the National Assembly. The PPP assumed power in April in coalition with the faction of the Pakistan Muslim League (PML) led by Nawaz Sharif, a former prime minister. But the two parties split after a month over Mr Zardari's reluctance to restore the group of judges from the Supreme Court.

The loss of Nawaz League votes left the PPP with 124 seats, well short of the 172 required for a ruling majority, and left the prime minister, Yousaf Raza Gilani, susceptible - in theory, at least - to a vote of no-confidence. The PPP has deliberately avoided public discussion of the situation and maintained its silence on the issue after last week's cabinet expansion, which, according to parliamentary journalists, has increased the ruling coalition's strength to 186 seats.

This intricate process of political give-and-take comes before elections on March 4 for half the 100 seats of the Senate, where the four provinces have equal weighting and one smaller bloc jointly represents Islamabad and FATA. Provincial assemblies elect members of the Senate, with polls for two groups of 50 seats held every third year. Terms are for six years. The Senate has the power to reject non-finance laws and constitutional amendments approved by the directly elected National Assembly. Impasses on such matters as constitutional amendments and the impeachment of the president require a majority vote from a combined sitting of both houses of Parliament.

In the 1980s and 1990s the Senate became bogged down in partisan tussles with the National Assembly. Cautious to avoid being trapped in a similar situation, Mr Zardari has tied coalition building at the federal level with similar exercises in the provinces, effectively ensuring a hung Senate after the March elections. The PPP is confident of emerging as the largest bloc in the upper house, but even with the support of its coalition allies it could fall short of a majority. The presence of 50 midterm senators - that is, they were elected during a previous government's term in office - will hand the balance of power in the Senate to the Quaid faction of the PML, which governed during the Musharraf presidency, and still forms the third-largest blocs in the national and Punjabi assemblies.

The option of an alternative coalition with the Quaid PML for both the PPP and Nawaz PML has fuelled tensions between the two parties, which have formed a coalition government in Punjab led by Mr Sharif's brother, Shahbaz. Hawks within the Nawaz PML have promoted the unification of the two factions; Mr Zardari has countered by appointing a governor, the president's constitutional representative in the provinces, who has repeatedly restrained Mr Sharif's governance.

However, the PPP and Nawaz PML have to date refrained from returning to the politics of confrontation of the 1980s and 1990s that facilitated Mr Musharraf's 1999 military takeover. Rhetoric continues to fly over the failure to restore the sacked chief justice, but both parties are eager to avoid violence during a national day of protest planned for March 12. "Sharif is under pressure from hawks within the party, but is fearful of the extra-constitutional repercussions of any violence," said Suhail Warraich, political editor of Geo TV and biographer of the former prime minister.

thussain@thenational.ae

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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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