Washington says Astana process produced Syria 'stalemate'

The Astana process by Russia, Iran and Turkey to end the Syrian conflict has only led to a "stalemate" in efforts to establish a constitutional committee crucial to a political settlement, the US said on Thursday.

Establishment and convening of the committee by year's end "is vital to a lasting de-escalation and a political solution to the conflict," State Department spokeswoman Heather Nauert said in a statement.

Her comments came after the outgoing UN envoy to Syria, Staffan de Mistura, regretted that there was "no tangible progress" on the composition of the constitutional committee at two days of talks which ended Thursday in the Kazakh capital Astana.

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Moscow and Tehran, allies of the Damascus regime, began the Astana process in January 2017 along with rebel-backer Turkey.

The Astana process followed a Russian military intervention which tipped the military balance in favor of Syrian President Bashar Al Assad's authoritarian regime.

"Russia and Iran continue to use the process to mask the Assad regime's refusal to engage in the political process" under UN auspices, Ms Nauert said.

She added that "success is not possible without the international community holding Damascus fully accountable for the lack of progress in resolving the conflict."

The Astana process has gradually eclipsed the earlier UN-sponsored negotiations framework known as the Geneva process, which had put more emphasis on political transition but failed to curb violence that has killed more than 360,000 people and displaced millions.

Syria's war began in March 2011 as an uprising against Assad but morphed into a complex conflict with myriad armed groups, many of whom are foreign-backed.

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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.”