BRUSSELS // Pledging to do whatever it takes to stabilise the euro economy, EU leaders vowed to stave off a Greek default as long as George Papandreou, the prime minister, pushes through a package of budget cuts next week.
"We have agreed that there will be a new programme for Greece," Angela Merkel, the German chancellor, told reporters before the final session of an EU summit in Brussels yesterday. "This is an important decision that says once again we will do everything to stabilise the euro overall."
Greece's next hurdle is to shepherd €78 billion (Dh409.77bn) of austerity measures through parliament, after Thursday's endorsement of the programme by experts from the European Commission, the European Central Bank and the IMF.
Europe's latest attempt to stem the debt crisis came after bonds of debt-strapped euro nations slumped and officials in the US and China warned that the euro area's failure to restore confidence threatened the world economy.
Mr Papandreou called the commitment to a new three-year aid programme "not only a green light but also a positive sign for the future of Greece".
The summit ended yesterday with leaders facing a potential last-minute hitch over the final approval of Italy's Mario Draghi as the next president of the ECB, but Mr Draghi was confirmed. Nicolas Sarkozy, the French president, had been pressing another Italian on the ECB's board, Lorenzo Bini Smaghi, to step down two years before his term ends to make way for a French replacement.
Mr Sarkozy was backed into a corner by a draft statement, prepared overnight, that included the appointment. Mr Draghi is slated to take over the ECB from Jean-Claude Trichet on November 1.
Thursday's discussions were dominated by Greece, which is drawing on €110bn of loans pledged last year. The leaders paired their show of solidarity with pressure on the Greek opposition party to fall in line with the savings programme.
The opposition leader Antonis Samaras refused to commit in meetings with fellow European conservatives in Brussels. While backing budget cuts, he lashed out at the "current policy mix" for too much reliance on tax increases.
The euro headed for a third straight weekly drop against the dollar amid concern over the outcome of the Greek crisis. Greek bonds fell, driving the 10-year yield to almost 17 per cent.
Mr Papandreou offered an assurance that he would deliver the budget cuts demanded in exchange for the €12bn instalment of emergency loans due next month and a new rescue package, a Greek government official said.
Speaking of "difficult and worrisome days", Herman Van Rompuy, the EU president, said Greek belt-tightening was "absolutely necessary to restore confidence and over time foster economic growth".
Already at a European record of 142.8 per cent of GDP, Greek debt will rise to 166.1 per cent of GDP next year, the EU predicts. The effort to cut a budget deficit that is about 10 per cent of GDP has helped deepen a third year of recession.
In Athens, Evangelos Venizelos, the finance minister, who has been in office since a June 17 cabinet revamp, yesterday announced measures including a 5 per cent tax on legislators' incomes, a levy on self-employed professionals and a reduction in the tax-free income allowance. Greek legislators will vote on the package on Thursday, in time for a July 3 meeting of European finance ministers to agree to pay the next instalment of aid.
Greece needs to cover about €4bn of bills maturing between July 15 and July 22 and faces about €3bn of coupon payments in the month, according to Bloomberg calculations. A bigger test comes on August 20 when it must redeem €6.6bn of bonds.
Mr Papandreou said a European commitment to aid Greece would make it easier for him to sell the Greek people on austerity measures that have provoked strikes and riots.
"If there is a strong commitment from the European Union, there will be a strong commitment from Greece," Mr Papandreou said.
The EU sweetened the offer by pledging to increase its contribution to Greek infrastructure projects and provide more "technical assistance" to enable the Greek government and companies to tap European subsidies.
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In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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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.”
UAE players with central contracts
Rohan Mustafa, Ashfaq Ahmed, Chirag Suri, Rameez Shahzad, Shaiman Anwar, Adnan Mufti, Mohammed Usman, Ghulam Shabbir, Ahmed Raza, Qadeer Ahmed, Amir Hayat, Mohammed Naveed and Imran Haider.
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
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