The US embassy in Bahrain is operating as normal despite orders from Washington to evacuate non-essential diplomatic staff based in the Middle East, an official at the mission told The National on Thursday, as tension rises over Iran's nuclear programme.
US President Donald Trump said on Wednesday that US personnel were being moved out of the region because “it could be a dangerous place”. The US would not allow Iran to have a nuclear weapon, he added.
It comes ahead of a sixth round of talks between Washington and Tehran in an attempt to reach a nuclear deal. Mr Trump has threatened to bomb the country if Iran refuses to reach an agreement.
Staff from US embassies in Kuwait and Bahrain were reportedly on standby to be moved. However, an embassy spokesman in Manama told The National on Thursday that operations in Bahrain were normal.
“The US embassy in Manama has not changed its staffing posture and remains fully operational,” he said.
Bahrain, home to the US navy's Fifth Fleet, hosts about 9,000 US troops. The US also has a military presence in Iraq, Kuwait, Qatar, Syria and the UAE.
In Israel, the US embassy in Jerusalem said it was restricting staff movements. "Due to the increased regional tensions, US government employees and their family members are restricted from travel outside the greater Tel Aviv [area] ... Jerusalem and Be'er Sheva area until further notice," a statement read.
Travel between those locations, to Tel Aviv's airport or on the motorway through the occupied West Bank to the Jordanian border, would be permitted, the embassy added.
Reports of the potential US evacuation pushed up oil prices by more than four per cent before they eased on Thursday.
“We’ve given notice to move out, and we’ll see what happens,” Mr Trump had said on Wednesday evening. Iran “can’t have a nuclear weapon, very simple”, he added. “We’re not going to allow that.”
The State Department updated its worldwide travel advisory to reflect the latest US position.
“On June 11, the Department of State ordered the departure of non-emergency US government personnel due to heightened regional tensions,” the advisory said.
It also advised American citizens against travelling to Iraq due to “serious threats”.
An Iraqi military spokesman, Sabah Al Numan, said on Thursday the evacuation of some US embassy personnel is a “regulatory precautionary measure related to them”.
Iraq's Prime Minister Mohammed Shia Al Sudani warned any escalation would not serve the talks between Iran and the US, stressing the need for a measured approach to resolve differences. “Iraq supports finding a fair and balanced approach that leads to positive outcomes,” Mr Al Sudani said in a statement issued by his office.
Hours after Mr Trump's announcement, Oman's Foreign Minister Badr Albusaidi said his country will host the sixth round of US-Iran nuclear talks on Sunday.
Tehran and Washington have held five rounds of talks since April to thrash out a new nuclear deal to replace a 2015 accord that Mr Trump abandoned during his first term in 2018.
In recent days, US officials have repeatedly demanded that Iran completely cease uranium enrichment, a request firmly rejected by Tehran.
Iranian Defence Minister Aziz Nasirzadeh warned Washington on Wednesday that Tehran would hit US regional bases if drawn into a war. Britain's maritime agency advised vessels to exercise caution while travelling through the Gulf, the Gulf of Oman and the Strait of Hormuz, which all border Iran.
On Thursday, Iran's military began carrying out drills, earlier than planned, to focus on "enemy movements".
"These exercises are planned and executed with changes to the annual calendar of the armed forces, and a focus on enemy movements," the Mehr news agency quoted Maj Gen Mohammed Bagheri as saying.
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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.”
