Days after the United Arab Emirates rocked the Middle East by revealing it would normalise relations with Israel, the first publicly announced meeting took place between officials from the erstwhile foes. It involved two of the countries’ most powerful men, both of whom typically operate in the shadows.
On one side was Yossi Cohen, head of Mossad, Israel’s feared overseas spy agency; on the other was Sheikh Tahnoon bin Zayed al-Nahyan, the UAE’s national security adviser. The meeting in August last year in the UAE suggested that intelligence co-operation would be at the core of the new alliance. And it thrust Sheikh Tahnoon — who has emerged as one of the UAE’s most influential figures — into the limelight.
His rise over the past decade epitomises the nexus between power, business and national strategic interest in Gulf states such as the UAE, Saudi Arabia and Qatar, where a younger, tech-savvy and security-minded generation of royals have come to the fore. It also offers a glimpse into the inner workings of Abu Dhabi’s absolute monarchy, where the ruling family and a clique of trusted lieutenants dominate security and key sectors of the economy, blurring the lines between state and private enterprise.
“He oversees everything. He’s the trusted under-the-radar guy,” says Kirsten Fontenrose, former senior director for Gulf Affairs at the National Security Council in the Trump administration. “Part of that is mystique. He’s quiet and he’s always everywhere. He’ll be in the US, and the next thing you know he’s in Tehran, but he won’t have told you.”
A full brother of Sheikh Mohammed bin Zayed, Abu Dhabi’s crown prince and the UAE’s de facto leader, Sheikh Tahnoon manages a sprawling portfolio that straddles national security and the often opaque corporate sector in the oil-rich emirate.
On foreign policy, the 51-year-old martial arts expert is trusted by Sheikh Mohammed, or MBZ, as he is known, to handle the nation’s most sensitive and challenging issues: the UAE’s Iran and Yemen files, as well as security and intelligence co-operation with the US, Russia and the UK, former western officials say. Sheikh Tahnoon has also been at the forefront of the Gulf state’s battle against coronavirus.
His interests extend across an array of big businesses: chairman of ADQ, a state holding company set up two years ago which has rapidly become one of the emirate’s most active investors; he also chairs First Abu Dhabi Bank, the UAE’s largest lender, in which the government and ruling family have significant stakes; Royal Group, a conglomerate; and International Holding Company, another conglomerate spanning fisheries to healthcare whose assets quadrupled to about $4bn in 2020, the year Sheikh Tahnoon took over as chair.
In January he was named chair of Group 42, an Abu Dhabi-based entity set up in 2018 that describes itself as an artificial intelligence and cloud computing company. It was born out of Sheikh Tahnoon’s security role, and he has been considered its patron since its inception. Such developments are not dissimilar to ventures in Israel, where veterans of the Israel Defense Forces incubate tech companies while working closely with the IDF and defence industry.
And in a sign of how security, national strategy and royal or state-related interests often overlap, G42 was the first UAE company to open an office in Israel after normalisation. It has also partnered with Chinese company BGI to open a coronavirus laboratory in Abu Dhabi and conduct trials for a vaccine.
With the pandemic sharpening Abu Dhabi’s focus on health, technology and food security, companies affiliated with Sheikh Tahnoon have conducted a series of deals in areas of national strategic interest. ADQ acquired an indirect 45 per cent stake in Louis Dreyfus Company in November. The deal included a long-term agreement for the global merchant and processor of agricultural goods to supply the Abu Dhabi holding company with agri-commodities. It is part of a trend that has seen him become the most active member of the ruling family whose business interests overlap with the state’s.
But one consequence of the increased royal presence in business is a narrowing of the space for the private sector in an economy dominated by the state.
“If you have a guy who is playing poker and he starts with two aces, better not to play against him,” says a foreign executive with years of experience in Abu Dhabi. “You can’t compete against the royal family when all the big business is generated by the state.”
The blurring of lines between the state and royal interests has long been a characteristic of Gulf states. But it has become more pronounced, particularly in the UAE and Saudi Arabia, at a time when leaders of the two countries have become more autocratic, security conscious and determined to develop new sectors, often related to technological advances.
Steffen Hertog, a Gulf expert at the London School of Economics, says the leaderships are now more centralised, with more control and less of a “power balance between brothers, uncles and nephews”.
“It’s strategic, and more intended to have political control than rent-seeking, and very much under the control of MBZ in the UAE,” he says. “It’s a bit like the new generation of royals in Saudi Arabia who are all sidekicks of Prince Mohammed [bin Salman]. It’s [centralisation] being deployed more as a tool of the leader rather than the amorphous block that you had before.”
The Saudi crown prince has become the overarching figure across security and the economy — he was appointed defence minister and head of a powerful new Council of Economic and Development Affairs, days after his father, King Salman, ascended the throne in January 2015.
As chair of the Public Investment Fund, Prince Mohammed, 35, has transformed the country’s $400bn sovereign wealth fund into an omnipresent force, and his main tool to make overseas investments. Like his Emirati counterpart Sheikh Mohammed, the crown prince has also driven assertive foreign policies.
A younger generation of royals is also at the helm in Qatar, where Sheikh Tamim bin Hamad al-Thani became emir aged just 33. Under his watch, Sheikh Mohammed bin Abdulrahman al-Thani, a 40-year-old distant relative of the emir, has become a rising star as he has been promoted through the ranks to become the wealthy state’s foreign minister and most powerful investor as the hands-on chair of the Qatar Investment Authority.
Bio: Sheikh Tahnoon
Born December 4 1969, one of six full brothers who are the sons of Sheikh Zayed bin Sultan al-Nahyan, and his third wife Sheikha Fatima. He is a martial arts expert, avid cyclist, runner and a keen chess player
Set up First Gulf Bank aged 23
Appointed deputy national security adviser. Promoted to national security adviser in 2016
Appointed to the board of newly established Supreme Council for Financial and Economic Affairs
But, says Ms Fontenrose, Sheikh Tahnoon stands out both for the breadth of his role and his ability to remain under the radar. “I don’t think he has an equivalent in other Gulf countries,” she says.
A former US diplomat describes Sheikh Tahnoon as “very much a man in the shadows”, adding: “He’s got a talent for where foreign policy and national security intersect.”
A son of Sheikh Zayed bin Sultan al-Nahyan, the UAE’s founding father, Sheikh Tahnoon is one of a group of six powerful full-brothers, headed by Sheikh Mohammed, who are known as the “Bani Fatima six” in reference to their mother. Others include Sheikh Mansour, the billionaire owner of Manchester City football club. Another is Sheikh Abdullah, the foreign minister.
With nine years of experience in the armed forces starting from 1991, Sheikh Tahnoon was appointed deputy to Sheikh Hazza, then national security adviser and another member of the “Bani Fatima six”, in 2013. He replaced his brother three years later.
His rise coincided with an era during which Sheikh Mohammed, known colloquially as MBZ, pursued an interventionist foreign policy, deploying Abu Dhabi’s capabilities to push back against Iran and Islamist movements across the region while narrowing the space for debate at home.
Today, MBZ is arguably the Arab world’s most influential leader, with Sheikh Tahnoon his point man. “MBZ has a small circle of people he talks these kinds of issues through with, and Tahnoon would be number one,” says another former western diplomat.
A year before Sheikh Tahnoon became national security adviser in 2016, the UAE deployed troops to Yemen as a senior partner of the Saudi-led coalition against Iranian-backed Houthi rebels. In 2017, the UAE joined Saudi Arabia in a regional embargo against Qatar. In Libya, it has supplied weapons and other support to Khalifa Haftar, the renegade general who in 2019 launched an offensive on Tripoli.
Foreign officials describe Sheikh Tahnoon as pragmatic, probing and analytical. The former US diplomat says he was the first senior Emirati to raise the prospect of the UAE pulling out of the war in Yemen, realising it could not be won, in 2016. That was three years before the Gulf state began withdrawing troops after Abu Dhabi and Riyadh had attracted widespread criticism for their role in the conflict.
The former diplomat adds that the sheikh gave the impression he was wary of the UAE’s support for Gen Haftar, recognising that he was “not a viable political leader” and an “erratic” military leader.
Those UAE interventions damaged the Gulf state’s image — UN experts have repeatedly accused the UAE of violating an arms embargo on Libya.
The US Defense Intelligence Agency “assessed” that the UAE “may provide some financing” for the Libya operations of Russia’s Wagner Group, which has deployed about 2,000 mercenaries to back Gen Haftar, according to a Pentagon inspector-general’s report released in November. The same month, Human Rights Watch released an investigation alleging that an Emirati company, Black Shield Security Services, recruited Sudanese as security guards and then dispatched them to fight in Libya. The rights group said it was “just one example of the UAE’s pernicious involvement in foreign conflicts”. The UAE’s foreign ministry did not respond to requests for comment.
The creation of companies such as G42 is viewed by knowledgeable observers as an extension of the emirate’s national strategic goals as it relies heavily on technology in sectors ranging from security to health. Its relationship with Israel is expected to focus on these and other areas such as agritech, with entities linked to the state and the ruling family likely to take the lead.
There have, however, also been allegations of a darker domestic aspect to the security-minded leadership. The UAE authorities — which have perceived threats from Sunni Islamists, Shia militants and Iran over the past decade — have been accused of using surveillance to monitor domestic critics and opponents. Ahmed Mansoor, an Emirati human rights activist, was sentenced to 10 years in prison in 2018 for insulting the “status and prestige of the UAE and its symbols”. Activists have alleged his phone was targeted by the security services using spyware produced by Israeli firm NSO Group.
G42 has invested in the messaging app. Osama al-Ahdali, who is part of Sheikh Tahnoon’s “executive network” of trusted lieutenants in business, according to a person close to the senior member of the ruling family, was until last month listed as a ToTok director. Hamad al-Shamsi, another member of his network and a former IHC board member, is the only director listed for G42. In addition, Mr Shamsi is general manager of the private office of Sheikha Fatima, Sheikh Tahnoon’s mother.
The person close to Sheikh Tahnoon says neither Mr Ahdali nor Mr Shamsi had or have executive roles at ToTok or G42.
G42 has been branching out. In October, Kabul announced the group was part of a consortium that signed contracts with the Afghan aviation authority related to “security services, operation management, ground handling and aviation systems and technology”.
Its ties to the state were strengthened when Mubadala, a sovereign investment vehicle chaired by Sheikh Mohammed, took an undisclosed stake in G42 in November.
“The line between royals and business [in Abu Dhabi] is getting blurred. I don’t think it exists now; it’s very hard to say what is the exclusive preserve of the private sector,” says the foreign executive. “I don’t think there are any credible private sector players in strategic sectors.”
When Sheikh Zayed was alive, Sheikh Tahnoon handled the family’s “private department”, the person close to Sheikh Tahoon said. He set up First Gulf Bank, which later merged with National Bank of Abu Dhabi to form First Abu Dhabi Bank, when he was just 23. But in the years after Sheikh Zayed’s 2004 death, several other sons such as Sheikh Mansour pursued their own paths in business.
“If you wanted to negotiate a commercial deal with the family, not at the palace, you would approach through Tahnoon,” says the foreign executive. “As soon as they [the sons] got their own pot of money when Sheikh Zayed died . . . some of the guys wanted to do their own stuff.”
Sheikh Tahnoon was always “very interested in business”, he adds. “He would talk about the subject you were talking about by referencing things he read in his briefings.”
Over the past two years the holding company IHC has been on a buying spree, including the acquisition of Trust International Group, a defence company, and other Royal Group assets. The pandemic has created new opportunities for companies affiliated to Sheikh Tahnoon, including Pure Health, a lab operator 30 per cent owned by IHC, and Tamouh Healthcare, which is owned by IHC and has been involved in the UAE’s testing programme.
The person close to Sheikh Tahnoon says he is a huge believer in “technology, especially in a post-Covid world”.
“He puts his money where his mouth is. He strives to scale his businesses through technology, AI and digitisation,” the person adds. “Economic security is a key component of any country’s national security objectives, especially in a country like the UAE, which aims to create a knowledge-based economy less reliant on oil.”
A veteran consultant in the region says the confluence of his economic and security roles make Sheikh Tahnoon the second most influential man in Abu Dhabi, after Sheikh Mohammed. But he adds that the royal could be reaching the peak of his power as the crown prince’s children, notably Sheikh Khaled bin Mohammed, take up prominent positions in security and economic policy.
“The big question is whether we have seen the high watermark of his influence,” the consultant says. “Or whether the emergence of a new generation of leaders means his responsibilities could diminish.”
Sheikh Tahnoon’s longevity may rest on the extent to which his projects boost the UAE economy, says another regional expert: “Who would be superman forever?”
Petrobras/Bolsonaro: bossa boots | Financial Times
“Brazil is not for beginners.” Composer Tom Jobim’s remark about his homeland stands as a warning to gung-ho foreign investors. Shares in Petrobras have fallen almost a fifth since President Jair Bolsonaro said he would replace the widely respected chief executive of the oil giant.
Firebrand Bolsonaro campaigned on a free-market platform. Now he is reverting to the interventionism of leftist predecessors. It is the latest reminder that a country with huge potential has big political and social problems.
Bolsonaro reacted to fuel protests by pushing for a retired army general to supplant chief executive Roberto Castello Branco, who had refused to lower prices. This is politically advantageous but economically short-sighted.
Fourth-quarter ebitda beat expectations at R$60bn (US$11bn), announced late on Wednesday, a 47 per cent increase on the previous quarter. This partly reflected the reversal of a R$13bn charge for healthcare costs. Investors now have to factor the cost of possible fuel subsidies into forecasts. The last time Petrobras was leaned on, it set the company back about R$60bn (US$24bn at the time). That equates to 40 per cent of forecast ebitda for 2021.
At just over 8 times forward earnings, shares trade at a sharp discount to global peers. Forcing Petrobras to cut fuel prices will make sales of underperforming assets harder to pull off and debt reduction less certain. Bidders may fear the obligation to cap prices will apply to them too.
A booming local stock market, rock bottom interest rates and low levels of foreign debt are giving Bolsonaro scope to spend his way out of the Covid-19 crisis. But the economy remains precarious. Public debt stands at 90 per cent of gross domestic product. The real — at R$5.40 per US dollar — remains near record lows. Brazil’s credit is rated junk by big agencies.
Rising developed market yields will make financings costlier for developing nations such as Brazil. So will high-handed treatment of minority investors. It sends a dire signal when a government with an economic stake of just over a third uses its voting majority to deliver a boardroom coup.
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South Africa’s economy is ‘dangerously overstretched’, officials warn
South Africa is pushing ahead with plans to shore up its precarious public finances as officials warn the economy is “dangerously overstretched” despite the recent boom in commodity prices.
Finance minister Tito Mboweni hailed “significant improvement” as he delivered the annual budget on Wednesday and said that state debts that will hit 80 per cent of GDP this year will peak below 90 per cent by 2025, lower than initially feared.
But Mboweni warned that President Cyril Ramaphosa’s government was not “swimming in cash” despite a major recent tax windfall. The Treasury now expects to collect almost 100bn rand ($6.8bn) more tax than expected this year after a surge in earnings for miners. This compares with a projected overall tax shortfall of more than 200bn rand. Still, the finance minister made clear that spending cutbacks would be necessary.
“Continuing on the path of fiscal consolidation during the economic fallout was a difficult decision. However, on this, we are resolute,” Mboweni said. “We remain adamant that fiscal prudence is the best way forward. We cannot allow our economy to have feet of clay.”
The pandemic has hit South Africa hardest on the continent, with 1.5m cases recorded despite a tough lockdown. An intense second wave is receding and the first vaccinations of health workers started this month. More than 10bn rand will be allocated to vaccines over the next two years, Mboweni said.
Even before the pandemic’s economic hit, a decade of stagnant growth, corruption and bailouts for indebted state companies such as the Eskom electricity monopoly rotted away what was once a prudent fiscus compared with its emerging market peers.
Government spending has grown four per cent a year since 2008, versus 1.5 per cent annual growth in real GDP. The country’s credit rating was cut to junk status last year. Despite this year’s cash boost, the state expects to borrow well over 500bn rand per year over the next few years. The cost to service state debts is set to rise from 232bn rand this year to 338bn rand by 2023, or about 20 cents of every rand in tax.
The fiscal belt-tightening will have implications for South Africa’s spending on health and social services. On Wednesday Mboweni announced below-inflation increases in the social grants that form a safety net for millions of South Africans. “We are actually seeing, for the first time that I can recall, cuts in the social welfare budget,” said Geordin Hill-Lewis, Mboweni’s shadow in the opposition Democratic Alliance.
The finance minister is also facing a battle with union allies of the ruling African National Congress over a plan to cap growth in public sector wages. South Africa lost 1.4m jobs over the past year, according to statistics released this week. The jobless rate — including those discouraged from looking for work — was nearly 43 per cent in the closing months of 2020.
The South African treasury expects the economy to rebound 3.3 per cent this year, after a 7.2 per cent drop last year, and to expand 2.2 per cent and 1.6 per cent next year and in 2023 — growth rates that are widely seen as too low in the long run to sustain healthy public finances.
“The key challenges for South Africa do however persist, clever funding decisions aside,” Razia Khan, chief Middle East and Africa economist for Standard Chartered, said. “Weak structural growth and the Eskom debt overhang must still be addressed.”
Turkey’s Uighurs fear betrayal over Chinese vaccines and trade
For five days this month, Jevlan Shirmemmet and other Uighur activists protested outside the Chinese embassy in Ankara, where they demanded to know the whereabouts of missing family members in China’s Xinjiang province. But on the sixth day, Turkish police stepped in.
They prevented the activists from gathering outside the diplomatic mission, positioned themselves outside their hotel and accompanied them wherever they went.
The stand-off reflects the difficult balancing act that Turkey, which is home to tens of thousands of exiled Uighurs, must perform with Beijing, not least because it wants closer ties and investment and is reliant on China for supplies of coronavirus vaccines.
President Recep Tayyip Erdogan, who casts himself as a champion of oppressed Muslims around the world, has in the past been a vocal critic of China’s actions in Xinjiang, the north-western region where the Chinese Communist party has interned more than 1m Uighurs, Kazakhs and other Muslims.
“On the one hand, Turkey wants to stand up for us, we know that, we feel it,” said Shirmemmet, 29, whose mother has been detained in Xinjiang since early 2018. “But they aren’t able to. We feel like their hands are tied.”
Analysts say that the plight of China’s Uighurs poses a problem for Erdogan, who is seeking alternative global partners at a time when relations with the west are deeply strained. “They are Muslims, they are Turks, and Turkish voters are sensitive about the issue,” said A Merthan Dundar, director of the Asia-Pacific Research Centre at Ankara University. “The government cannot establish very close relations with China. But it doesn’t want to cut all ties.”
In years past, Erdogan was one of the most outspoken global Muslim leaders concerning the plight of Uighurs, who are seen in Turkey as part of a broader global family of Turkic peoples whose rights Ankara has a responsibility to defend.
But opposition parties have accused Erdogan’s government of toning down its criticism to avoid upsetting Beijing. “Europe and America have spoken out against the oppression of our Uighur brothers in China . . . But there is still not a sound from Ankara,” Meral Aksener, leader of the opposition IYI party, said last month. Turkish officials insist that they continue to raise their concerns with Beijing behind closed doors.
Some figures in Erdogan’s government have advocated for stronger ties with Beijing in order to lure Chinese capital at a time when foreign direct investment from western countries has dwindled.
Investment so far has been limited, with the value of Chinese investment in Turkey standing at $1.2bn in 2019 in terms of equity capital, according to central bank data, compared with more than $100bn from Europe.
Ankara is eager for more. The country’s sovereign wealth fund has been courting Chinese investment, and plans to open an office in China in the first half of this year. Ankara also has a swap agreement with China’s central bank that helped to boost the appearance of Turkey’s depleted foreign currency reserves by an estimated $2bn.
The pandemic has added an extra complexity to the relationship. While Turkey has struggled to procure European-made vaccines, it has a deal in place for 100m doses of the CoronaVac jab made by Chinese drugmaker Sinovac Biotech. Delays to the shipments in December coincided with a decision by China’s parliament to ratify an extradition treaty between the two countries. Turkey has yet to ratify it.
Yildirim Kaya, a member of parliament from the opposition Republican People’s party, said that the ratification of the treaty by Beijing had created “a great deal of panic among Uighur Turks who have escaped from China to Turkey”. In a set of questions posed to the Turkish health minister, he demanded to know if Ankara had faced pressure to ratify the deal to speed up the delivery of the vaccines. Turkish foreign minister Mevlut Cavusoglu reacted angrily to such suggestions. “We don’t use Uighurs for political purposes,” he said. “We defend their human rights.”
Analysts are also sceptical that China would use the vaccine, of which Turkey has already administered 6.2m doses, as such crude leverage. Ceren Ergenc, an associate professor of China studies at Xi’an Jiaotong-Liverpool University in Suzhou, believes it is more likely that Ankara was doing Beijing a favour by signing a deal for a vaccine that had yet to be approved in China — and that still has question marks over its efficacy.
“It happened at a moment when China needed not necessarily the money but the prestige in the international system about the credibility of its vaccines,” she said. “There’s a kind of indebtedness or reciprocity — Turkey still needs financial support from China so it did this act of buying the Chinese vaccine that had at the time not yet undergone all phases of testing.”
In response to questions from the Financial Times, the Chinese embassy in Ankara said the recent protests had sought to “smear” China and that their actions had threatened the safety of the diplomatic mission. It strongly rejected the notion that it had used Turkey’s need for vaccine doses as political leverage as “absolutely unfounded conjecture and malicious misinterpretation”.
Still, the episode has left many members of the Uighur diaspora feeling deeply nervous about their place in Turkey. “China sees us as criminals,” said Mirzehmet Ilyasoglu, who joined this month’s Ankara protests to demand information about his missing brother, brother-in-law and four friends. “We hope that this [extradition] agreement won’t come before parliament, but if it is signed then our concern will grow.”
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