Brazilian leaders said on Monday that the use of the military to combat rising violence in Rio de Janeiro could serve as a model for other violent areas of Brazil.
The armed forces officially took over Rio’s police on Friday under a decree signed by President Michel Temer. The measure still requires congressional approval, and the lower house was to debate it late on Monday.
The extraordinary move came after Rio’s governor asked for federal help following an exceptionally violent carnival season. During the holiday, there were several muggings, armed robberies and confrontations.
Mr Temer met ministers and politicians to discuss the intervention.
“It’s important to understand that Rio de Janeiro is a laboratory,” institutional security minister Sergio Etchegoyen said after the meeting. “It’s the outward manifestation of a structural crisis.”
According to the Brazilian Forum of Public Security, Rio de Janeiro isn’t the most dangerous state in Brazil: in terms of violent intentional killings per 100,000 people, it ranked 11th in 2016. But Rio is in many ways Brazil’s face to the world and carries major weight within the country as home to much of its media and entertainment industries.
Secretary-general Wellington Moreira Franco, a key Temer adviser, said what happens in Rio will hopefully spread throughout Brazil.
“I believe that this is one more step along the road of being able to restore security, order and, above all, confidence to residents of Rio de Janeiro state,” Mr Franco said. “This spirit is being mobilised so that … this conversation, this methodology can spread throughout Brazil.”
The security situation in Rio has been deteriorating for at least two years as the state experiences a deep fiscal crisis, often resulting in late or no payment to its police officers. The slide began just before the city hosted the 2016 Olympics, ahead of which it had stepped up policing. Those efforts, which focused on the hillside slums that are often controlled by drug traffickers, had some success.
But since the Games, battles among gangs and between gangs and the police have intensified. Major avenues are occasionally blocked for hours in shoot-outs and the number of people killed by stray bullets has risen dramatically.
tting the military in charge, however, also raises concerns about the heavy-handed tactics police have used. Amnesty International has already said that the decision to use soldiers would reinforce past mistakes by police. Rio is already the state with the most deaths during police operations.
Those concerns were fanned on Monday when defence minister Raul Jungmann said that the authorities would seek a broader kind of search warrant that, instead of specifying an address, might list an entire street or even neighbourhood where a suspect is believed to be living.
Mr Temer and his ministers have gone to great lengths to emphasise that the president is ultimately in charge of the operation, providing civilian oversight of the military. That reflects deep unease in a society where many still remember the 1964-1985 military regime.
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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