The guided-missile submarine USS Georgia is seen in the Strait of Hormuz. US Navy via AP
The guided-missile submarine USS Georgia is seen in the Strait of Hormuz. US Navy via AP
The guided-missile submarine USS Georgia is seen in the Strait of Hormuz. US Navy via AP
The guided-missile submarine USS Georgia is seen in the Strait of Hormuz. US Navy via AP

US accelerates aircraft carrier and deploys nuclear-powered submarine to Middle East


Holly Johnston
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US Defence Secretary Lloyd Austin has ordered a quicker transit of an aircraft carrier strike group and deployed a nuclear-powered guided missile submarine to the Middle East amid concerns of further regional conflict and an Iranian attack on Israel.

Mr Austin spoke with Israeli Minister of Defence Yoav Gallant on Sunday, discussing the war in Gaza, according to Pentagon Press Secretary, Pat Ryder.

The pair also discussed “efforts to deter aggression by Iran, Lebanese Hezbollah, and other Iran-aligned groups across the region”.

Mr Austin said the US is committed “to take every possible step to defend Israel” and said Washington has strengthened its military capabilities in the region amid escalating tensions.

The USS Abraham Lincoln carrier strike group, equipped with F35C fighter jets, has been ordered to sail quicker to the Middle East, under the control of the US Central Command.

The nuclear-powered USS Georgia guided missile submarine has also been deployed.

The movements come as Israel braces for a promised Iranian attack after the assassination of Hamas chief Ismail Haniyeh at a Tehran guesthouse two weeks ago.

Israel has not claimed responsibility for the killing of Mr Haniyeh.

Israeli intelligence says an attack could take place before ceasefire talks are set to resume on Thursday, Axios reported on Sunday, warning the Iranian and Hezbollah attack will be larger than an earlier attack in April.

Hamas and Iran have both accused the US of approving Mr Haniyeh's assassination, a claim denied by Washington.

Iran-backed groups are also expected to attack Israel in retaliation, raising the prospect of all-out war in Lebanon as Israel ups attacks on its northern neighbour.

The US sent a carrier strike group, a fighter squadron and additional warships to the region last week in one of the biggest movements of US forces since the war began. It said it had heard Iran's threats “loud and clear”.

“We can’t just assume that we are also potentially going to be victims of that kind of an attack, so we’ve got to make sure we’ve got the right resources and capabilities in the region,” National Security Council spokesman John Kirby told CNN.

Washington has repeatedly reiterated its support for Israel and said it would defend it from further attacks.

Europe warns Iran

On Sunday, Britain, France and Germany warned Iran against any attack on Israel, saying it would “jeopardise” an opportunity for peace and regional stability.

The three nations said there could be “no further delay” in ceasefire negotiations after the killing of Mr Haniyeh, and called for an end to the fighting.

They also spoke of “deep concern” over the latest regional escalations.

Tehran “will bear responsibility for actions that jeopardise this opportunity for peace and stability. No country or nation stands to gain from a further escalation in the Middle East,” the statement read.

Regional travel has been disrupted amid rumours of a wider war, with many airlines suspending flights to Israel and Lebanon and avoiding regional airspace.

On Monday, Air France, its subsidiary Transavia France, and Lufthansa all announced they would extend flight suspensions across the region, namely to Beirut and Tel Aviv.

Air France said flights to Beirut will remain suspended until August 14.

Lufthansa said it was extending the suspension of flights to Beirut, Amman, Tel Aviv, Tehran, and Erbil until August 21, while Swiss International also extended flight suspensions to Lebanon and Israel.

Iraqi and Iranian airspace will also be avoided, the Swiss carrier added.

Meanwhile, the war in Gaza continues to rage. The conflict began when Hamas and allied militant groups attacked southern Israel on October 7 last year, killing about 1,200 people. Retaliatory air strikes and a ground campaign have killed more than 39,700 in Gaza to date, according to the enclave’s Health Ministry.

Most of those killed are women and children, according to the Gaza Health Ministry, with more than 92,000 other civilians wounded and almost the entire population displaced several times.

While mediators invited Israel and Hamas to resume ceasefire talks later this week, the militant group has instead called for the introduction of a proposal suggested by US President Joe Biden.

Hamas “calls on the mediators to present a road map to put into action what was proposed to Hamas … based on the vision of Biden and the decisions of the UN Security Council, and to force the occupier [Israel] to implement it, rather than hold more talks or bring new proposals,” it said.

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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.”

Updated: August 12, 2024, 2:23 PM