Republican senators question Biden administration over Iran sanctions waivers for Iraq

More than a dozen Republican senators have questioned a recent decision by President Joe Biden's administration to issue an Iran sanctions waiver for Iraq.

In the three-page letter, Republicans on the Senate Banking Committee accuse the Democratic administration of using a “strategy of appeasement” with Iran, despite the country’s malign activity in the Middle East, including supporting proxy groups that have engaged in attacks on US interests and troops to “deadly effect”.

“The United States should be restricting Iran’s access to currency abroad,” the senators wrote.

“Instead, your administration is expanding it, all while continuing to share limited information on a strategy to restore deterrence in the Middle East with Congress or the American people.”

Last month, the administration renewed a 120-day waiver that allows Iraq to circumvent sanctions to pay Iran for energy.

Iraq relies on Iran for about a third of its energy needs, and Baghdad owes Tehran several billion dollars.

It is unable to pay Iran directly because of US sanctions.

The waivers, which the US has been issuing since 2018, allow Baghdad to pay Tehran via non-Iraqi banks in third countries.

The State Department is adamant that the money that is transferred to non-Iraqi banks can only be used for certain purposes.

The US also brokered a deal in September that allowed for $6 billion in frozen Iranian funds in South Korea to be transferred to Qatar, in exchange for the release of five US citizens held in Iran.

But the senators appear to remain unconvinced of the wisdom of such moves.

“If we want to actually restore deterrence in the region, those funds should be placed further out of Iran’s reach, not closer,” they wrote.

The letter calls on Treasury Secretary Janet Yellen and Secretary of State Antony Blinken to clarify how the waiver is in “the national security interest of the United States”.

Tension between Washington and Tehran, which was already high, has continued to rise amid the Israel-Gaza war.

The Iran-backed Houthis in Yemen have engaged in attacks on commercial shipping in the Red Sea, while other groups in Syria and Iraq have launched numerous strikes on US troops stationed in the region.

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Group A

Kyrgyzstan v Qatar, 5.45pm

Iran v Uzbekistan, 8pm

N Korea v UAE, 10.15pm

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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.”

Republican senators question Biden administration over Iran sanctions waivers for Iraq

Waivers allow Baghdad to circumvent sanctions to pay Tehran for energy

Tuesday's fixtures

The specs