Egyptian president Abdel Fattah El Sisi, flanked by top military generals, talks to the media after an emergency meeting of the Supreme Council of the Armed Forces in Cairo, on January 31, 2015. The Egyptian Presidency/Handout via Reuters
Egyptian president Abdel Fattah El Sisi, flanked by top military generals, talks to the media after an emergency meeting of the Supreme Council of the Armed Forces in Cairo, on January 31, 2015. The EShow more

Latest Sinai attack whips up nationalist fervour in Egypt



CAIRO // In what has become a familiar scene, a visibly angry and emotional Egyptian president Abdel Fattah El Sisi spoke to the nation while some two dozen top generals stood at attention behind him.

Vowing to avenge the death of at least 30 service members killed by ISIL’s Egypt branch, the general-turned-politician warned that the fight against terrorism would take years and require many sacrifices by Egyptians.

Mr El Sisi spoke on Saturday, two days after the complex and highly coordinated attack targeted army positions in northern Sinai, prompting the Egyptian leader to cut short a visit to Addis Ababa and fly home to preside over an emergency meeting of the Supreme Council of the Armed Forces.

Following his meeting with the military’s top brass, Mr El Sisi issued a presidential order unifying all military forces in the Sinai Peninsula under one command. This move suggests that a stepped-up campaign against the militants will begin soon, raising the prospect of major clashes and further casualties.

Thursday’s attack in the coastal city of Al Arish was the second high-profile operation by the militants since October, when an elaborate ambush also in northern Sinai killed 30 army soldiers. It was also the latest chapter in an extremist insurgency in Sinai that has dramatically escalated since the July 2013 removal of president Mohammed Morsi by then military chief Mr El Sissi. It has since spread to the mainland, targeting army soldiers and members of the security forces around much of the country.

Mr El Sisi, in office since June, suggested on Saturday that Mr Morsi’s now outlawed Muslim Brotherhood was behind Thursday’s attack, saying he was told by unnamed leaders of the group in June 2013 that removing the former president would lead to an insurgency in which extremists from across the world would participate.

“I knew that this would happen and I believe that you (Egyptians) do know that we will face a massive wave of terror because we destroyed an organisation at the peak of its strength,” he said in televised comments that alluded to the Brotherhood.

He also hinted that the insurgency involved elements from abroad, a thinly veiled reference to the militant Hamas group that rules the Gaza Strip, on Egypt’s eastern border. “We will not abandon Sinai,” he said.

Coincidentally, an Egyptian court issued a verdict on Saturday that declared Hamas’ military wing – the Ezzedeen Al Qasam Brigades – a terrorist organisation, for what it said was the group’s involvement in anti-state activities in the country.

Despite being dealt this blow, however, Hamas cannot afford to sever ties with Egypt because of Cairo’s special relationship with Israel, as well as its control of the Rafah border crossing.

The latest Sinai attack, while underlining the formidable challenges faced by Mr El Sisi, has also laid bare what some critics see as glaring failings by the military and security forces, particularly the scarcity of actionable intelligence and a lack of better defensive tactics in a hostile region.

Significantly, Thursday’s attack came as a major military operation against the insurgents has been underway since October and followed harsh security measures in the area, including the evacuation of hundreds of families and the demolition of homes close to the Gaza border, as well as a night-time curfew.

Now, state media is speaking of an even bigger operation to be launched in the area as pro-government commentators urge Mr El Sisi to mercilessly strike at the militants.

“No voice must be louder than the voice of the battle,” a slogan dating back to the years after Egypt’s 1967 defeat by Israel, has been revived in the media.

The latest attack has also unleashed a new wave of nationalism and energised opposition by government supporters to pro-democracy activists seeking greater respect for human rights and more freedoms.

Among the most obvious losers of this growing patriotic fervour is the case of Shaimaa El Sabbagh, a 32-year-old mother of a small child who was shot dead during a peaceful protest on January 24. The incident touched a nerve in Egypt, and once again brought to the forefront the perceived excessive use of force by police against protesters.

Activists, and the leftist party to which El Sabbagh belonged, accuse the police of killing her. Authorities have ordered a high-level investigation into her death but the case may well be overshadowed by this new wave of patriotism that’s gripping the country.

“The case of Shaimaa El Sabbagh is a glaring example of the violation of moral values, as if the bullet she was shot with paved the way for the shells of El Arish,” prominent columnist Abdullah El Sennawi wrote on Saturday about how the pro-government media is handling the news.

“To be silent on the murderer (of El Sabbagh) or whoever is behind him is an affront to the pure blood that was profusely shed in the latest terrorist operation.”

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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.”