Jason Greenblatt, US President Donald Trump's Middle East envoy, says economic issues have not yet been addressed. AFP
Jason Greenblatt, US President Donald Trump's Middle East envoy, says economic issues have not yet been addressed. AFP

US envoy: Israel may object to some parts of peace plan



The Trump administration is prepared for Israeli criticism of elements of its coming Middle East peace plan, the US envoy to the region said, even as Washington faces growing Palestinian accusations that it will be heavily tilted in favour of Israel.

US negotiators had entered the “pre-launch phase” of the plan, despite a boycott by Palestinian leaders, Jason Greenblatt, a chief architect of the long-awaited peace initiative, said in an interview with Reuters.

But he declined to specify a time frame, except to say it would not be announced at the UN General Assembly gathering in New York later this month, or offer any details of a proposal that has drawn deep skepticism even before its unveiling.

Pushing back against widespread perceptions among Palestinians, Arab officials and independent analysts that the peace plan is likely to be decidedly pro-Israel, Mr Greenblatt made clear that both sides can expect parts they will like and dislike.

“We’re going to have to defend the plan to Israelis and Palestinians. We are ready for criticism from all sides, but we believe this is the best path forward for everyone,” he said as the administration moved to finalise the initiative, which is led by President Donald Trump's son-in-law, Jared Kushner.

But there was no immediate explanation of what might disappoint Israelis, who have been largely pleased with Mr Trump’s Middle East policies but have at times been rattled by suggestions he might ask them for significant concessions.

Mr Greenblatt said, however, that the United States will recommend compromises but will not seek to impose a deal.

"The parties will need to decide if they think the plan works for them and will make their lives better," he said. "The parties are the only ones who can make these compromises, and there are no compromises on Israel’s security needs.”

Doubts have mounted over whether Mr Trump's administration can secure what he has called the "ultimate deal" after it cut off aid to the Palestinians and ordered the PLO’s office in Washington shut, further angering Palestinian leaders and reinforcing their refusal to engage in US-led diplomacy.

The Palestinians have refused to participate in the US effort since December when Mr Trump recognised Jerusalem as Israel’s capital and then moved the US embassy there.

In late August, Mr Trump hailed the embassy move as a success but said, without elaboration, "in the negotiation Israel will have to pay a higher price because they won a very big thing".

Mr Trump’s aides later played down his comments.

It is unclear how the US plan would deal with the sensitive issue of Jerusalem. Palestinians want East Jerusalem as their future capital.

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The Trump administration hopes Saudi Arabia and other Arab allies will support its peace plan once it is released but does not expect them to "try to push the Palestinian people into a deal that the Palestinians don’t want", Mr Greenblatt said.

Some US officials have privately said they were counting on Arab states to use their influence with the Palestinians to convince them to come to the negotiating table.

Saudi Arabia’s King Salman recently has reassured other Arab countries and the Palestinians it will not endorse any plan that fails to address key Palestinian concerns.

The Trump administration has signalled it is unlikely to be deterred from rolling out the plan even if the Palestinians continue their boycott.

While the “political component” of the plan is at the point where it covers all core issues of the decades-old conflict, “we do have to get the economic portion of the plan finished”, Mr Greenblatt said. “A successful economy is critical for the Palestinians."

That is widely expected to include international funding proposals for the impoverished Gaza Strip.

US officials have also been non-committal about whether the plan would endorse the creation of a Palestinian state, as the Palestinians have long demanded.

Senior Palestinian official Saeb Erekat said earlier this week that “we will not succumb to US threats and bullying”.

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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.”