US president Barack Obama bids a farewell to Japanese prime minister Shinzo Abe after laying a wreath in front of a cenotaph to offer prayers for victims of the atomic bombing in 1945 at Hiroshima Peace Memorial Park with viewing the Atomic Bomb Dome in Hiroshima. Kimimasa Mayama /EPA
US president Barack Obama bids a farewell to Japanese prime minister Shinzo Abe after laying a wreath in front of a cenotaph to offer prayers for victims of the atomic bombing in 1945 at Hiroshima PeaShow more

Why the US can’t disengage from the Middle East



One of the key features of late Obama-era American foreign policy is the dominant mythology that all American – and, by extension, any western – military intervention in the Middle East is doomed to failure. President Obama has said as much, with increasing intensity, in a series of interviews, and it appears to have risen to an article of faith in the White House.

In his recent conversations with The Atlantic's Jeffrey Goldberg, Mr Obama extended this principle to Russia's intervention in Syria. He spoke of enormous costs and claimed that "the notion that somehow Russia is in a stronger position now in Syria ... is to fundamentally misunderstand the nature of power in foreign affairs or in the world general. They are overextended. They're bleeding," he insists.

Neither the reality nor the assessments of his own officials corroborate Mr Obama’s opinion. Russia seems to have achieved a major effect on the strategic situation on the ground, in favour of itself and its allies, Iran and Bashar Al Assad, at limited cost and without being particularly overextended, let alone bleeding.

Mr Obama, it would seem, simply assumed that this would be the case, without any real evidence. But because it is an article of faith in the present White House that American intervention in the Middle East is doomed to fail catastrophically, it was extrapolated that any Russian intervention in the Middle East, including Syria, would be a similar disaster.

This thinking was perfectly illustrated in David Samuels’s recent The New York Times profile of White House communications guru Benjamin Rhodes. In it, Mr Rhodes insists: “I profoundly do not believe that the United States could make things better in Syria by being there.”

This is more belief as faith rather than a well-educated and considered opinion of a real expert on the Middle East. That’s amply illustrated by his follow-up comment: “And we have an evidentiary record of what happens when we’re there – nearly a decade in Iraq.” That would only be valid if Syria today were practically the same as Iraq in 2003-2013, a laughable notion.

It’s a perfect example of leaping to conclusions based on the scantest knowledge and understanding, and allowing prejudices and political expediency, rather than well-informed and careful judgments, to dictate conclusions. Indeed, this whole article of faith about Middle East engagement being doomed to failure by definition is an unrealistic and ahistorical assumption based on a limited set of specific and contingent scenarios, primarily in Iraq and to some extent Libya.

For the sake of American foreign policy, and the interests of its regional partners, this myth has to be shattered before the next administration begins to formulate its own policies, lest it too fall victim to this indefensible dogma.

Enter Frederic C Hof, director of the Atlantic Council's Rafik Hariri Center for the Middle East, formerly Mr Obama's special adviser for transition in Syria and now one of his most incisive critics. In a piece published last week on the Atlantic Council website titled The Non-Option of Disengagement from the Middle East, Mr Hof quickly and devastatingly puts paid to the preposterous naysaying that has misguided the US administration's recent approach to the Middle East.

Mr Hof points out that all of the instances cited by supporters of the doomed-to-failure mythology had specific causes and identifiable authors. “None resulted from a flawed consensus of ‘the foreign policy establishment’,” he notes. It is an absolutely crucial point.

“None signified the preordained failure of American military operations,” he explains, since “the liberation of Kuwait in 1991 featured diplomatic and military excellence” and serves as a studiously ignored but crucial counter-example.

The key is accurate assessment, and adequate planning, especially for post-conflict stabilisation, rather than wishful thinking that is either too aggressive or too passive.Mr Hof also rightly identifies “the vital importance to the world economy – and therefore to the American economy – of energy resources passing through the Strait of Hormuz”, the threat of terrorism and numerous other factors reinforcing the strategic centrality of the region.

Moreover, even if the US were to pivot to Asia, as Mr Obama keeps advocating, that would not reduce, but counterintuitively actually increase, the strategic importance of the Middle East. As scholar Kristian Coates Ulrichsen pointed out at a panel I moderated recently at the Arab Gulf States Institute in Washington: “The Gulf states have, themselves, already pivoted to Asia.”

Given the absolute dependency of Asian economies on the energy resources of the Gulf region, any American pivot to Asia would only reinforce, rather than undermine, the region’s economic, and hence strategic, importance.

As Mr Hof notes, the United States has no “castle, moat and drawbridge”. It will remain deeply engaged in the Middle East, like it or not, as long as it wishes to remain a global power. Therefore, it will have to take action from time to time, and ensure success. Even if the next administration doesn’t assign Mr Hof a senior role in American foreign policy-making – and it certainly should – it at least needs to listen to his simple, clear and wise counsel.

Hussein Ibish is a senior resident scholar at the Arab Gulf States Institute in Washington

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It’ll be summer in the city as car show tries to move with the times

If 2008 was the year that rocked Detroit, 2019 will be when Motor City gives its annual car extravaganza a revamp that aims to move with the times.

A major change is that this week's North American International Auto Show will be the last to be held in January, after which the event will switch to June.

The new date, organisers said, will allow exhibitors to move vehicles and activities outside the Cobo Center's halls and into other city venues, unencumbered by cold January weather, exemplified this week by snow and ice.

In a market in which trends can easily be outpaced beyond one event, the need to do so was probably exacerbated by the decision of Germany's big three carmakers – BMW, Mercedes-Benz and Audi – to skip the auto show this year.

The show has long allowed car enthusiasts to sit behind the wheel of the latest models at the start of the calendar year but a more fluid car market in an online world has made sales less seasonal.

Similarly, everyday technology seems to be catching up on those whose job it is to get behind microphones and try and tempt the visiting public into making a purchase.

Although sparkly announcers clasp iPads and outline the technical gadgetry hidden beneath bonnets, people's obsession with their own smartphones often appeared to offer a more tempting distraction.

“It's maddening,” said one such worker at Nissan's stand.

The absence of some pizzazz, as well as top marques, was also noted by patrons.

“It looks like there are a few less cars this year,” one annual attendee said of this year's exhibitors.

“I can't help but think it's easier to stay at home than to brave the snow and come here.”

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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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