Britain ends 10-year boycott of Gujarat over deadly religious riots



AHMEDABAD // Britain held talks yesterday with the chief minister of Gujarat, Narendra Modi, ending a 10-year boycott over religious riots in the state that left more than 2,000 dead.

Mr Modi, a Hindu nationalist who is tipped as a possible future prime minister, came to power in Gujarat shortly before the 2002 riots and is accused of doing little to prevent country's worst religious violence since independence.

Since the riots, British officials had been banned from dealing directly with Mr Modi but the government this month changed its policy and announced that its ambassador to India, James Bevan, would travel to Gujarat.

Gujarat is one of India's flagship states for attracting foreign direct investment, and state officials said that the talks yesterday touched on trade and industry issues.

Mr Bevan held "talks with Chief Minister Modi and other senior politicians, and he is also meeting with British firms who have infrastructure projects in the state", a British embassy spokesman said.

The riots in 2002 were triggered by the deaths of nearly 60 Hindu pilgrims in a train fire that was initially blamed on a mob of Muslims.

Mr Modi is accused of failing to halt the revenge attacks that left more than 2,000 people - mainly Muslims - dead, according to rights groups. The government figures put the death toll at about 1,000.

Among the dead were three British nationals who were burnt to death in Sabarkantha district of the western Indian state.

When Britain announced it would end the boycott, the junior foreign minister Hugo Swire said the government wanted "to support human rights and good governance in the state".

"We want to secure justice for the families of the British nationals who were killed in 2002," he added.

Mr Swire also stressed the well-established ties with Gujarat because of large numbers of Indian families who migrated to Britain from the state.

Mr Modi, a top leader of the main opposition Bharatiya Janata Party, denies any misconduct over the riots. But he has struggled to shake off the allegations, and the United States has refused to grant him a visa since 2005.

Britain's resumption of links with Mr Modi came two months after a Gujarat court sentenced a former member of his government to 28 years in jail for her role in instigating the 2002 unrest.

The sentencing of Maya Kodnani, who served as minister from 2007-2009, was seen as a setback for Mr Modi's prime ministerial ambitions as India looks to general elections due in 2014.

Despite the scars of the sectarian violence, Gujarat in recent years has lured foreign firms with its reliable power supply, good infrastructure and the availability of educated but cheap labour.

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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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Thursday, November 7 – UAE v Oman
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Name: Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants