The foreign ministers of the four countries boycotting Qatar, from left, Sheikh Abdullah bin Zayed, Sameh Shoukry of Egypt, Bahrain's Sheikh Khalid bin Ahmed Al Khalifa and Adel Al Jubeir of Saudi Arabia, at a meeting in Manama on July 30, 2017 to discuss further measures against Doha. Bahrain News Agency via AP
The foreign ministers of the four countries boycotting Qatar, from left, Sheikh Abdullah bin Zayed, Sameh Shoukry of Egypt, Bahrain's Sheikh Khalid bin Ahmed Al Khalifa and Adel Al Jubeir of Saudi AraShow more

Qatar crisis enters third month as Doha struggles to end boycott



Two months into the Gulf crisis, Qatar and the bloc of countries that accuse it of supporting terrorism and undermining their collective interests are locked in a cold war that is no longer escalating but playing out through diplomatic and legal channels and in daily media and public-relations assaults.

Doha has sought to focus on protesting against the June 5 move by Saudi Arabia, the UAE, Bahrain and Egypt to cut travel and economic ties, while refusing to meet their conditions for restoring normal relations.

At Qatar's request, the UN’s aviation authority, the International Civil Aviation Authority, met last Monday for discussions under the dispute resolution mechanism of the air travel treaty to which Doha, Bahrain and the UAE are all signatories. Qatar claimed the countries were in violation of the accord because they blocked Qatari flights from their airspace.

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Read our essential backgrounder on the Gulf dispute here: Qatar crisis: What you need to know

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While the ICAO did not declare the boycott a violation of the treaty, the move produced a small concession for Qatar, as all four countries — including Saudi Arabia, which is not party to the treaty — agreed to provide emergency corridors through their airspace. "Nine corridors have been identified including one in international air space over the Mediterranean sea that will be monitored by the Egyptian authorities," the Saudi state news agency reported.

Also on Monday, Qatar also challenged the boycott at the World Trade Organisation, starting a legal process that is likely to drag on for years.

As both sides court public opinion and the support of world powers, the crisis is now playing out in the United Nations Security Council. Egypt holds the chair this month.

Qatar’s UN ambassador wrote to the council late last month to defend his country against the accusations of funding terrorism and in turn accuse the boycotting quartet of seeking regional political gains through its actions against Qatar. It also accused Egypt of misusing its position on the council.

Egypt denied the allegation in a letter on Thursday, and accused Qatar of supporting terrorist groups financially and ideologically in Syria, Iraq and Libya.

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At a council meeting on Thursday, Egypt’s deputy ambassador also said Qatar’s “pro-terrorist” policies violated Security Council resolutions and that it was “shameful” the council had not punished Doha.

"It's crucial for the Security Council to make these countries that don't respect these resolutions accountable," Ihab Awad Moustafa told the council. "For example, the adoption by the Qatar regime of a pro-terrorist policy."

Qatar, he added, “believes that the economic interests and the different political orientations will protect them from any accountability vis-a-vis the Security Council because it has violated the resolutions of the council."

So far, Qatar’s economic and security partnerships with world powers have forced a stalemate, with no clear path for a quick resolution to the crisis. Attempts at mediation by Kuwait, the United States, Britain and France have made no headway.

The quartet are sticking to their original 13 demands as well as the six broad principles they say must provide a framework to any solution. Quartet officials said after a meeting on the crisis in Manama last week that the only negotiations they are open to are over the implementation of their demands, not the content of them.

Qatar has refused these terms, calling them a violation of its sovereignty, and dismisses the allegations as an attempt to force it into line with the Saudi-led strategy for trying to stabilise the region, which includes the sidelining of political Islamist groups. Qatar is the sole Arab state patronising the Muslim Brotherhood and its offshoots beyond its borders after the group failed to consolidate gains made in the initial aftermath of the Arab Spring.

Despite the damage to its economy, Qatar has managed to weather the boycott by relying on Turkey and Iran for the supply of basic commodities, the bulk of which used to arrive by land from Saudi Arabia and by ship from the UAE. Its role as the world’s largest supplier of natural gas has not been affected, and the quartet has said it will not force American and other international businesses to choose sides.

Qatar has also managed to reduce international pressure by signing a financial counterterrorism agreement with the US that will include American officials being based in Doha as monitors. The pact was signed during a visit to Qatar last month by US secretary of state Rex Tillerson, who has since said that Doha was implementing it. Washington and European powers believe the agreement addresses the core issue of funding for terrorism, but the quartet say it does not address all their concerns.

UAE officials have said in recent weeks that the crisis will probably result in an extended divorce from Qatar, with new regional relationships being forged as the cold war becomes permanent.

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Real estate tokenisation project

Dubai launched the pilot phase of its real estate tokenisation project last month.

The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.

Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.

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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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Europa League final

Who: Marseille v Atletico Madrid
Where: Parc OL, Lyon, France
When: Wednesday, 10.45pm kick off (UAE)
TV: BeIN Sports