Iran's Foreign Minister Abbas Araghchi had earlier said that 'the ball is now in the E3's court'. EPA
Iran's Foreign Minister Abbas Araghchi had earlier said that 'the ball is now in the E3's court'. EPA
Iran's Foreign Minister Abbas Araghchi had earlier said that 'the ball is now in the E3's court'. EPA
Iran's Foreign Minister Abbas Araghchi had earlier said that 'the ball is now in the E3's court'. EPA

Europe's talks with Iran cancelled after Washington-Tehran meeting setback


Sunniva Rose
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A planned meeting between Iran and France, the UK and Germany scheduled to take place in Rome on Friday has been cancelled, sources have told The National.

This follows the cancellation of the latest round of talks between Iran and the US to discuss Tehran's nuclear programme, due to an impasse. These had reportedly been set to take place in the Italian capital on Saturday.

A source said Friday's talks involving France, the UK and Germany – collectively known as the E3 – and Iran were scrapped after the reported Washington-Tehran meeting a day later was cancelled.

The E3-Iran talks often took place in Vienna's Palais Coburg. Leonhard Foeger / File Photo
The E3-Iran talks often took place in Vienna's Palais Coburg. Leonhard Foeger / File Photo

“Saturday's meeting between Iran and the United States has been cancelled, and for this reason Friday's meeting between Iran and the E3 group in Rome has also been cancelled,” a European source said. “We have no information yet on a future meeting.”

These cancellations come at a time of heightened tension between Iran and Europe, which has adopted a more aggressive stance towards Tehran over its military support for Russia in its war against Ukraine.

Other sources also said the E3 talks were off “due to US pull out”. They did not provide details.

However, media reports claimed the US had never confirmed its attendance at Saturday's Rome meeting − which would have been the fourth round of talks with Iran in recent weeks.

Oman, which mediated earlier sessions of the US-Iran talks, said these would be rescheduled for “logistical reasons”.

Iran has blamed Washington for the deadlock. A new date will be set “depending on the US approach,” a senior Iranian official told Reuters on Thursday. “US sanctions on Iran during the nuclear talks are not helping the sides to resolve the nuclear dispute through diplomacy,” the unnamed official added.

Earlier on Thursday, Iran accused the US of “contradictory behaviour and provocative statements”, after Washington warned Tehran of the consequences of continuing to back Yemen's Houthi rebels, and imposed new, oil-related sanctions on Iran.

Despite this, Iranian Foreign Ministry spokesman Esmaeil Baghaei said Tehran would continue to engage “seriously and resolutely” in result-oriented negotiations with the US, state media reported.

Assessing Europeans

Reports indicate that it was Iran that had initially suggested the Friday meeting with the Europeans. This signalled that it may want to assess where the Europeans stand on the possible reimposition of UN sanctions before October, when a resolution ratifying the 2015 Joint Comprehensive Plan of Action expires.

Under the JCPOA deal with world powers, Tehran agreed to limit its nuclear programme in exchange for sanctions relief. The West suspects Iran is pursuing nuclear weapons, while Tehran says the programme is for civilian purposes.

In 2018, during his first term in office, US President Donald Trump removed his country from JCPOA, citing security concerns, and intensified US sanctions on Tehran. Iran has since produced higher-grade nuclear material.

Paris has warned it would not hesitate to take a hardline approach over sanctions. “Regarding the Iranian nuclear deal – which, as you know, expires in a few weeks,” France would “not hesitate for a second to reapply all the sanctions that were lifted 10 years ago,” a French Foreign Ministry official said on Wednesday.

Iranian Foreign Minister Abbas Araghchi said last week he was ready to travel to Europe for talks, although he suggested that the ball was in Europe's court, after ties had soured between the two sides.

“I am ready to take the first step with visits to Paris, Berlin and London. I was ready to do it before Iran commenced its indirect dialogue with the US, but the E3 opted out,” Mr Araqchi wrote. “The ball is now in the E3's court.”

Since September, Tehran and the E3 have met several times to discuss their ties and the nuclear issue.

The most recent meeting in March was held at the technical level, looking at the parameters of a future deal to secure a rollback of Iran's nuclear programme.

Europe has become more hawkish about the possibility of reapplying sanctions because of Iran's involvement in Ukraine, which it views as an existential conflict. Yet Iran has given “soft signals” that it is ready to accommodate Europe's concerns, said Ellie Geranmayeh, an Iran expert at the European Council on Foreign Relations think tank.

In February, Iran abstained in a UN General Assembly vote condemning Russia's aggression in Ukraine.

In a signal of the US's shift in foreign policy under Mr Trump, the US voted against the resolution − alongside Russia, North Korea and Israel, among others.

“It's soft signals, but [Iran] is still nevertheless signalling here that it is taking certain European interests into account,” Ms Geranmayeh said in a recent ECFR podcast.

The EU foreign affairs chief has in recent decades endorsed a mediating role between Iran and the rest of the world on its nuclear programme.

But the bloc's current High Representative for Foreign Affairs, Kaja Kallas, appears to have taken a step back from this, said Nathalie Tocci, director of the Institute of International Affairs think tank in Rome, speaking on the same podcast.

“It's a shame that she didn't try to use [this] as much as she could have done,” Ms Tocci said. “The fact that the last round of negotiations were taking place in Rome suggests there is not total closure towards having Europeans involved in some shape or form.”

Speaking in Luxembourg last month, Ms Kallas said consultations were ongoing with the E3 about the looming deadline for the possible reimposition of sanctions on Iran once JCPOA expires.

Mr Trump has threatened to attack Iran unless it reaches a new deal swiftly that would prevent it from developing a nuclear weapon. But he has also expressed hopes that a diplomatic deal can be reached.

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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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