BERLIN // The European Union announced yesterday it would meet on May 23 to mend a widening rift on how to rescue the euro after Sunday's elections in France and Greece fuelled market fears that the debt crisis is about to erupt again.
The meeting of leaders of the bloc's 27 states could set the stage for a first clash between Angela Merkel, the German chancellor, and France's new socialist president, Francois Hollande, who has demanded a softening of Germany's plan to impose strict austerity.
The informal dinner is to lay the groundwork for another meeting on June 28 and 29, when leaders are to focus on job creation.
Investors continued to sell European shares and the euro yesterday, shaken by the prospect of a Franco-German rift and by political turmoil in Greece, where a leftist party opposed to the international bailout is trying to form a government.
The main stock-market index in Athens fell 4.5 per cent, for a nearly 11 per cent slide in two days. France's main indext, the CAC-40, fell almost 2 per cent.
Germany piled more pressure on Greece and France, with aides to Ms Merkel saying Greece cannot expect to receive any more aid if it refused to reform, and warning Mr Hollande that abandoning austerity was doomed to fail.
"The French economy and the country's finances remain in a precarious position," said Peter Altmaier, the parliamentary whip for Mrs Merkel's conservative Christian Democratic Union (CDU) party.
"Any country that attempts through higher deficits ... to run a supply-driven policy will run afoul of the markets very quickly and see its interest rates rise," he added. "There simply isn't any wiggle room."
Wolfgang Schaeuble, the German finance minister, said Mr Hollande's call to renegotiate the EU's fiscal pact to cut deficits "makes no sense", and that agreements could not be reopened whenever individual member states held elections.
"That is why I think we will convince the new French president," Mr Schaeuble said. "We have clear agreements in Europe."
Mrs Merkel, who openly backed the departing French president Nicolas Sarkozy in the election campaign, said on Monday that the fiscal pact was not negotiable and invited Mr Hollande to Berlin for talks. He is expected to meet her during his first foreign visit as president shortly after his inauguration on May 15.
In Greece, the Radical Left Coalition party, which was lifted into second place on Sunday by voters incensed at the deep cuts imposed in return for international aid, set about trying to form a working government yesterday.
But Alexis Tsipras, the Radical Left leader, was widely expected to fail to find sufficient backing from the range of small parties elected into parliament.
This raised the prospect of a new election in June and more weeks of political limbo.
Mr Tsipras said yesterday that Greece's commitment to austerity was no longer valid. "There is no way we will sneak back in again what the Greek people threw out" in the election, he said.
On Monday, Antonis Samaras, the leader of Greece's largest party, the conservative New Democracy, tried first to form a coalition but admitted defeat within hours after rejections from several party leaders.
Greek voters punished the two main parties that backed the €130-billion (Dh621.46bn) bailout package with the IMF and the EU, and any new Greek government is likely to try to renegotiate the deal - or simply refuse to implement the agreed cutbacks.
In Germany, talk resurfaced of a Greek exit from the euro zone. Gerda Hasselfeldt, the parliamentary floor leader for the Bavarian wing of the CDU, said Greece could only stay in the currency if it delivered the budget cuts attached to the bailout package.
"Aid can only be granted if the conditions are fulfilled. If a country isn't able or willing to meet the conditions, one has to think about if it can remain in the euro zone."
Germany's increasingly strident tone reflects its mounting isolation in Europe. Mr Hollande's election has given leaders of struggling southern European countries a powerful new ally in their drive to halt German-led austerity that has tipped them into recession.
In a telephone call with Mr Hollande on Sunday night, the Italian prime minister Mario Monti promised to cooperate on refocusing European policy towards growth.
Even the IMF, which co-arranged the bailout packages, has shifted its tone. Its managing director, Christine Lagarde, warned in a speech in Zurich on Monday that overly aggressive polices could backfire.
In a sign that the IMF could give leeway to countries that failed to meet their fiscal targets due to an economic slowdown, she said: "If growth is worse than expected, they should stick to announced fiscal measures, rather than announced fiscal targets. In other words, they should not fight any fall in tax revenues or rise in spending caused solely because the economy weakens."
foreign.desk@thenational.com
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.”
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
We Weren’t Supposed to Survive But We Did
We weren’t supposed to survive but we did.
We weren’t supposed to remember but we did.
We weren’t supposed to write but we did.
We weren’t supposed to fight but we did.
We weren’t supposed to organise but we did.
We weren’t supposed to rap but we did.
We weren’t supposed to find allies but we did.
We weren’t supposed to grow communities but we did.
We weren’t supposed to return but WE ARE.
Amira Sakalla
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3C%2Fstrong%3E%3A%20ASI%20(formerly%20DigestAI)%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202017%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Quddus%20Pativada%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%2C%20UAE%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Artificial%20intelligence%2C%20education%20technology%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20%243%20million-plus%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20GSV%20Ventures%2C%20Character%2C%20Mark%20Cuban%3C%2Fp%3E%0A
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
The Byblos iftar in numbers
29 or 30 days – the number of iftar services held during the holy month
50 staff members required to prepare an iftar
200 to 350 the number of people served iftar nightly
160 litres of the traditional Ramadan drink, jalab, is served in total
500 litres of soup is served during the holy month
200 kilograms of meat is used for various dishes
350 kilograms of onion is used in dishes
5 minutes – the average time that staff have to eat
Destroyer
Director: Karyn Kusama
Cast: Nicole Kidman, Toby Kebbell, Sebastian Stan
Rating: 3/5
UAE release: January 31
Nepotism is the name of the game
Salman Khan’s father, Salim Khan, is one of Bollywood’s most legendary screenwriters. Through his partnership with co-writer Javed Akhtar, Salim is credited with having paved the path for the Indian film industry’s blockbuster format in the 1970s. Something his son now rules the roost of. More importantly, the Salim-Javed duo also created the persona of the “angry young man” for Bollywood megastar Amitabh Bachchan in the 1970s, reflecting the angst of the average Indian. In choosing to be the ordinary man’s “hero” as opposed to a thespian in new Bollywood, Salman Khan remains tightly linked to his father’s oeuvre. Thanks dad.
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia