Cairo expelled Ankara’s ambassador on Sunday after Turkish Prime Minister Recep Tayyip Erdogan (pictured) condemned the repression of Morsi’s supporters. AP
Cairo expelled Ankara’s ambassador on Sunday after Turkish Prime Minister Recep Tayyip Erdogan (pictured) condemned the repression of Morsi’s supporters. AP

Egypt and Turkey pare diplomatic ties over Ankara’s backing of Muslim Brotherhood



CAIRO // Locked in a crackdown on the Muslim Brotherhood since President Mohammed Morsi’s ouster, Egypt has launched a diplomatic offensive against the movement’s foreign backers armed with funds from its old foes.

In their first salvo soon after Mr Morsi was toppled, the military-installed rulers took aim at Qatar – the only Gulf monarchy that openly supported the Brotherhood – by closing the Egyptian channel of Al Jazeera television.

The authorities also detained some journalists working in Cairo for the Doha-based network. In addition, officials said Cairo was willing to return to Qatar funds given to Egypt during the Morsi presidency.

But the main confrontation for the new authorities is a diplomatic one that has developed with Turkey.

On Sunday, Cairo expelled Ankara’s ambassador after Turkish Prime Minister Recep Tayyip Erdogan condemned the repression of Morsi’s supporters.

The tussle began soon after Egyptian security forces broke up two camps of Morsi supporters on August 14 in Cairo, in what was the bloodiest episode in Egypt’s modern history.

A day later both Cairo and Ankara recalled their respective ambassadors, but while Ankara later sent its envoy back to Egypt, Cairo’s ambassador to Turkey stayed at home.

On Sunday, the two countries went a step further by reducing their diplomatic ties to the level of charges d’affaires.

Karim Bitar, a Paris-based analyst, said the row stems from “increasing Egyptian nationalism and bitter regional setbacks for Turkey, including in Syria, which has seen it lose influence” in the region.

For Shadi Hamid, research director at the Brookings Doha Center, “Egypt’s ruling military leaders are clearly not tolerating any backing to the Muslim Brotherhood, either inside the country or outside”.

“Gulf countries like Saudi Arabia, Kuwait and the UAE have provided billions in aid to Egypt which is giving it the degree of latitude” in its diplomatic tactics which has even seen Cairo returning part of Qatari funds, he said.

Saudi Arabia and Kuwait announced they would give US$9 billion (Dh33 billion) to Egypt just days after Morsi’s ouster on July 3.

They even promised to make up for any shortage of military assistance Cairo normally gets from the United States.

In October, Washington suspended its annual US$1.3bn (Dh4.7bn) military aid to Cairo amid repeated criticisms of Egypt’s deadly crackdown on Islamists. US officials, however, have refused to term Morsi’s ouster as a “coup”.

The UAE, which strongly backs Egypt’s new rulers, also announced it would provide Cairo with US$4.9 bn (Dh17.9bn).

Mr Hamid, the Brookings analyst, said Cairo’s public position on the United States or Europe was purely “rhetoric”, with both Washington and Brussels “unwilling to push for any confrontation with Egypt”.

“They don’t have that political will,” he said.

Mr Bitar said many countries had already accepted what has happened in Egypt.

“Most other countries, apart from traditional supporters of the Muslim Brotherhood like Turkey and Qatar, have taken note of the new Egyptian situation and acknowledged the coup in the name of realism and due to their basic hostility towards political Islam,” he said.

Washington too is slowly stepping back from its earlier stance, with US secretary of state John Kerry recently accusing the Brotherhood of “stealing the revolution” of 2011 that ousted long-time ruler Hosni Mubarak.

For Mr Bitar the real challenge to Egypt is not any diplomatic isolation but the gradual loss of funds from abroad as “some Gulf countries have warned that the economic aid given to Egypt was emergency assistance and not intended to be a steady financial backing”.

“Going forward, the challenges for Egypt will probably be more economic rather than making the legitimacy of the new authorities acceptable internationally.”

Cairo University professor Mustafa Kamel Al Sayyed said it was this that made him feel diplomatic tensions with Ankara were only “temporary”.

Mr Al Sayyed said Cairo was unlikely to aggravate ties with Qatar “where hundreds of thousands of Egyptians are working as expatriates because ultimately it could be those employees who pay the price”.

* Agence France-Presse

Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia

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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A State of Passion

Directors: Carol Mansour and Muna Khalidi

Stars: Dr Ghassan Abu-Sittah

Rating: 4/5

Washmen Profile

Date Started: May 2015

Founders: Rami Shaar and Jad Halaoui

Based: Dubai, UAE

Sector: Laundry

Employees: 170

Funding: about $8m

Funders: Addventure, B&Y Partners, Clara Ventures, Cedar Mundi Partners, Henkel Ventures