Raghida Dergham is the founder and executive chairwoman of the Beirut Institute, and a columnist for The National
July 10, 2022
US President Joe Biden is opening a new chapter in relations with the Middle East, forced to do so by the developments in Ukraine and Iran.
The Biden administration is anxious about any potential collapse of nuclear talks with Iran, and how Tehran might react if they do not result in a new nuclear agreement. Moreover, the failure of the Vienna talks – now taking place in Doha – would be Mr Biden’s own: he has invested a lot of political capital in reviving the nuclear deal previously torn up by his predecessor, Donald Trump. It does not help matters that a failure to reach a deal with Iran would give ammunition to Mr Trump.
In a bid to find something to write home about, Mr Biden is visiting the region this week. In Riyadh, he is set to meet with the Saudi King and Crown Prince, and attend a GCC Summit for which Egypt, Jordan, and Iraq are also invited. But any reset in Mr Biden’s troubled relationship with Arab states, who are concerned by his administration’s unsure footing on issues such as Iran, is unlikely to be the result of some friendly initiative on Washington’s part. Rather, it will be more about pragmatism, and is therefore unlikely to result in new strategic coherence.
This would be a disappointment for Washington, which is concerned first and foremost with gaining allies in its effort to counter Russia, particularly in light of the latter’s ongoing war in Ukraine. In Moscow’s view, the war in Ukraine will culminate with a Russian victory no matter the cost, including the cost of international isolation.
One of the ways Russia could seek to regain the initiative is in the Middle East, particularly in Syria. Moscow has repeatedly communicated to the Israeli government its frustration with airstrikes attributed to Israel, and with the Israeli stance on Ukraine. Last week, the Russian government halted the Russian operations of the Jewish Agency, which is in charge of organising the emigration of Jews to Israel. The message to the Israeli government could be that Russia has little tolerance left for its military operations in Syria, including those targeting Iran and Hezbollah’s assets.
Iran’s Islamic Revolutionary Guard Corps (IRGC) is, in turn, increasingly well prepared for action out of Syria, believing the latter to be the most advantageous front for retaliatory strikes on Israel. The broad outline of Russia’s policies in the Middle East is its reliance on a strategic partnership with Iran and the development of Iranian capabilities in the region to become a strong pillar of a Russian-Chinese-Iranian troika. Apart from that, the Kremlin sees good relations with the Arab states as crucial, but it realises that the strategic relationship between them and the US remains the cornerstone of many of their policies, despite setbacks whether Joe Biden or Donald Trump is in the White House.
The Iranian nuclear talks remain an elephant in the room in Biden's discussions with the US's Arab allies. Reuters
The Biden administration is anxious about any potential collapse of nuclear talks with Iran, and how Tehran might react if they do not result in a new nuclear agreement
Even so, under Barack Obama US-Arab relations were often strained, and the Biden administration has brought back that atmosphere somewhat. It seemed, until the war in Ukraine started that Mr Biden had probably not thought of changing this. But Putin’s war on Ukraine forced the Biden administration – many of whose officials had served under Mr Obama – to seriously seek reviving strategic relations with Arab states, from economic to energy, political, security, and military ties as well as arms deals. But Mr Biden has made much of his discomfort with Saudi Arabia, and may show it when meeting with Crown Prince Mohammed bin Salman. He will be wary of the campaign in the American liberal media to watch his every step in Riyadh.
It is not just the Biden administration that needs the US relationship with Arab states restored, however; many American allies want to see that, too. European Nato members wants to see it partly because of Europe’s need to offset lost Russian oil with supplies not only from the Gulf but also Iran. The latter requires a strong commitment across the region to seeing an Iranian nuclear deal finalised. And Turkey, a Nato member and regional US ally, has already paved the way for improving its own complicated relations with states like Egypt, the UAE, Saudi Arabia and Israel, opening a new chapter and marking a major shift in Middle Eastern relations. And of course Israel has embarked on new relationships with Gulf states. It hopes the Biden administration will continue the work of the Trump administration on the Abraham Accords, with the grand prize being future ties with Saudi Arabia.
There is also much to be gained in America’s relationship with Iran. Tehran is anxious about Mr Biden’s regional tour, and the prospect of warmer US-Arab relations. It is losing its grip in some of its areas of influence – notably in Iraq, which will attend the GCC Summit. However, Iran also knows that the Gulf states have little desire to have a troubled relationship with it, and ultimately want stable relations based on non-interference. An ongoing Saudi-Iranian dialogue is evidence of this, and what the GCC states want is a shift in Iranian foreign policy doctrine. This today seems completely unlikely because the IRGC will not easily abandon its partners, proxies, and projects in Syria, Lebanon, Iraq, and Yemen. But with the right diplomatic and strategic engagement with the Middle East, Washington could play a role in making it happen.
A strategic reconfiguration could be afoot in the Middle East. But any outcome will largely depend on the direction in which the Biden administration’s compass will settle.
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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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Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”
Know how to fight: Shetty married his wife, Radhi, three years ago (he met her in a meditation class before he went off and became a monk). He says they’ve had to learn to respect each other’s “fighting styles” – he’s a talk it-out-immediately person, while she needs space to think. “When you’re having an argument, remember, it’s not you against each other. It’s both of you against the problem. When you win, they lose. If you’re on a team you have to win together.”
