Iran's newly elected President Ebrahim Raisi speaks during his swearing in ceremony at the Iranian parliament in Tehran last week. AFP
Iran's newly elected President Ebrahim Raisi speaks during his swearing in ceremony at the Iranian parliament in Tehran last week. AFP
Iran's newly elected President Ebrahim Raisi speaks during his swearing in ceremony at the Iranian parliament in Tehran last week. AFP
Iran's newly elected President Ebrahim Raisi speaks during his swearing in ceremony at the Iranian parliament in Tehran last week. AFP


What will Biden and Raisi do if the Iran nuclear talks fail?


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August 09, 2021

With Iranian President Ebrahim Raisi sworn in on Thursday, the impact on efforts to revive the 2015 JCPOA nuclear agreement will quickly become clear. Time is running short to reach an understanding and avoid further, and possibly greatly escalated or even devastating, confrontation.

Under his lame-duck predecessor, Hassan Rouhani, talks made little progress. Mr Rouhani has reportedly said that he was "not allowed" to make an agreement by Supreme Leader Ayatollah Ali Khamenei and his close allies. That's either because Iran's leaders don't want to make a deal or didn't want Mr Rouhani get any credit for the sanctions relief that Iran desperately needs. It will soon become obvious which attitude was driving whatever obstruction he faced.

In theory, an agreement ought to be attainable. Both sides say they want one. They even agree that it should be on the basis of compliance-for-compliance with the JCPOA text signed years ago. So, what Washington and Tehran are really negotiating is what constitutes compliance on both sides, and how and when measures to restore that compliance on both sides would be taken.

Timing is a key issue, as ever with the JCPOA. Iran's responsibilities are fairly clear, though an agreement about how quickly they would roll back prohibited activities and what monitoring would be required is necessary. US sanctions are more complex, but the Biden administration appears willing to ensure Iran gets all the economic benefits it received from the 2015 agreement.

All that may not sound like a particularly heavy diplomatic lift, but politics ensure it very much is.

There is, and always was, strong opposition on both sides to any such accommodation. Many of Mr Raisi’s allies were harsh critics of the agreement. But he has repeatedly stressed he wants to restore it.

Making matters worse from the American point of view, the 2015 agreement was a chronological gamble, providing Iran with significant sanctions relief and securing nuclear limitations that expire between 10-15 years from “implementation day” on January 16, 2016. The countdown towards the expiration of Iran's nuclear restrictions under the deal has been moving forward ever since.

So, this same agreement is going to be a lot less attractive in 2022 than it was in 2015, because it is all based on deadlines that have been expiring the entire time. However, the costs of failure are also becoming increasingly evident.

A year after former US president Donald Trump withdrew from the JCPOA and began a "maximum pressure" sanctions campaign, Iran launched a low-intensity warfare response of "maximum resistance" against US and US-related targets in the region.

The grey-zone conflict between the US and Iran eased somewhat when the indirect talks began after Joe Biden assumed the US presidency. But Iran continues to flex its muscles, particularly in an intensifying series of reciprocal attacks with Israel.

Israel is alleged to have been responsible for a wide range of explosions, fires and other sabotage in key Iranian facilities in recent months, including its main nuclear facility at Natanz. Iran's responses have recently included a deadly drone attack against an Israeli-operated merchant tanker travelling from Tanzania to Fujairah which killed two crew members.

Iranian tensions with the US reached a boiling point in January 2020 when pro-Iranian militias in Iraq unleashed numerous attacks against US targets and the US killed one of Iran's most powerful commanders, and important leaders, Gen Qassem Suleimani, as well as the deputy head of Iraq’s Popular Mobilisation Unit, Abu Mahdi Al Muhandis.

That didn't lead to a US-Iranian war, but it certainly got too close for comfort. And, even while tensions are somewhat eased, that recent history and the ongoing shadow war between Iran and Israel amply illustrate the alarming scenarios that could well develop out of a diplomatic collapse in Vienna.

Given the impasse under Mr Rouhani, and questions about Mr Raisi’s sincerity and authority, serious consideration is being given in Washington to how to manage a post-JCPOA future, especially if Iran makes a dash for nuclear weapons capability.

The West has always understood it might have to live with a nuclear-armed Iran, as it does with North Korea, but has also recognised that doing so would require a tougher, more disciplined and thoroughgoing regime of containment. That won't be easy, and could be very risky. And because it is such an unattractive proposition, some are suggesting radical alternatives.

Israel has launched repeated attacks against pro-Iranian militia groups in Syria and Iraq, and has made it clear that Hezbollah in Lebanon, too, faces serious redlines. Last week, Israeli Defence Minister Benny Gantz said his country might be willing to strike Iran directly if Tehran and its proxies continue to attack Israeli targets.

Women and children visit the ruins of the Khiam detention centre on Lebanon's border with Israel. A flare-up along the border this week has seen Israel carry out its first air strikes on Lebanese territory in seven years. Getty Images
Women and children visit the ruins of the Khiam detention centre on Lebanon's border with Israel. A flare-up along the border this week has seen Israel carry out its first air strikes on Lebanese territory in seven years. Getty Images
For all its limitations, the JCPOA is still the best short-term solution by far

A former senior US official, Dennis Ross, suggested that if the talks fail, Washington should supply Israel with the fearsome GBU-57 Massive Ordnance Penetrator (also known as "the mother of all bombs”), a massive 14,000-kilogram bunker-buster weapon.

They “could be used to destroy [Iran's underground nuclear facility at] Fordow” and other deeply hardened sites, he writes. He claims Iranians might doubt the US's willingness to carry out such an attack, but not Israel's. He also suggests such a weapons transfer could be a negotiating tactic, inducing Tehran to come to terms. But it takes very little imagination to realise that any such attack would probably unleash a maelstrom of regional violence, if not all-out war. And if Tehran is absolutely determined to develop nuclear weapons, eventually it will – such attacks and any other pressure notwithstanding.

For all its limitations, the JCPOA is still the best short-term solution by far.

One major stumbling block is that both sides plainly think they are operating from stronger positions than they actually are. And both are hoping to secure at least a little advantage over the other to fend off political criticism.

Now that Iran has a new president, progress will be required sooner rather than later. The US has said the Vienna talks cannot go on indefinitely. That is putting it mildly. The clock has been ticking since 2015, and the hands aren't moving any slower.

Dubai Bling season three

Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed 

Rating: 1/5

TV: World Cup Qualifier 2018 matches will be aired on on OSN Sports HD Cricket channel

David Haye record

Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4

COMPANY PROFILE
Name: Airev
Started: September 2023
Founder: Muhammad Khalid
Based: Abu Dhabi
Sector: Generative AI
Initial investment: Undisclosed
Investment stage: Series A
Investors: Core42
Current number of staff: 47
 
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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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MATCH RESULT

Al Jazira 3 Persepolis 2
Jazira:
Mabkhout (52'), Romarinho (77'), Al Hammadi (90' 6)
Persepolis: Alipour (42'), Mensha (84')

HIJRA

Starring: Lamar Faden, Khairiah Nathmy, Nawaf Al-Dhufairy

Director: Shahad Ameen

Rating: 3/5

EA Sports FC 24

Company profile

Name: Fruitful Day

Founders: Marie-Christine Luijckx, Lyla Dalal AlRawi, Lindsey Fournie

Based: Dubai, UAE

Founded: 2015

Number of employees: 30

Sector: F&B

Funding so far: Dh3 million

Future funding plans: None at present

Future markets: Saudi Arabia, potentially Kuwait and other GCC countries

Company%20profile
%3Cp%3EDate%20started%3A%20January%202022%3Cbr%3EFounders%3A%20Omar%20Abu%20Innab%2C%20Silvia%20Eldawi%2C%20Walid%20Shihabi%3Cbr%3EBased%3A%20Dubai%3Cbr%3ESector%3A%20PropTech%20%2F%20investment%3Cbr%3EEmployees%3A%2040%3Cbr%3EStage%3A%20Seed%3Cbr%3EInvestors%3A%20Multiple%3C%2Fp%3E%0A

First Person
Richard Flanagan
Chatto & Windus 

Updated: August 09, 2021, 2:00 PM