Josep Borell, the High Representative of the European Union for Foreign Affairs and Security Policy (L) with Iran's Foreign Minister Hossein Amir Abdollahian, at a press conference in the foreign ministry headquarters in Tehran on June 25. AFP
Josep Borell, the High Representative of the European Union for Foreign Affairs and Security Policy (L) with Iran's Foreign Minister Hossein Amir Abdollahian, at a press conference in the foreign ministry headquarters in Tehran on June 25. AFP
Josep Borell, the High Representative of the European Union for Foreign Affairs and Security Policy (L) with Iran's Foreign Minister Hossein Amir Abdollahian, at a press conference in the foreign mini
Raghida Dergham is the founder and executive chairwoman of the Beirut Institute, and a columnist for The National
July 31, 2022
As a result of the nuclear threat, stakeholders in the nuclear talks are again exploring putting differences with Iran in the "fridge", and cutting a provisional deal to revive the 2015 deal, or the Joint Comprehensive Plan of Action (JCPOA) between the P5+1 countries – the UN Security Council's five permanent members; the US, China, France, Russia, the UK; plus Germany – and Iran.
Israel is strongly present in this equation. Recently, Israel hinted at conducting a strike on Iranian nuclear facilities if a deal is signed, whose terms are not in the interests of Israeli national security.
The European states are anxious about an Iranian-Israeli confrontation and the failure of the Vienna talks, and the possible implications of their failure, with regard to nuclear, energy and military repercussions.
Josep Borell and Deputy Secretary General of the European External Action Service Enrique Mora (2nd-R) chat during a meeting with Iran's Foreign Minister, in Tehran on June 25. AFP
The Biden administration is coming under pressure, Israeli and domestic, which restrictsits ability to agree to Iran’s persistent conditions, such as delisting its Islamic Revolutionary Guard Corps (IRGC) as a terror group, or providing Iran with guarantees that the US will not unilaterally withdraw again from the nuclear deal in the future, as Donald Trump had done in the past. These steps are beyond the ability and mandate of the Biden administration, as some would be within the powers of Congress alone.
For its part, the Islamic Republic of Iran is caught between its ruling ideology and the centrality of the IRGC in its economy, foreign policy, regional behaviour and its need to sell its oil – especially at a time when Europe is in dire need for alternative oil supplies – before the embargo on Russian oil and gas goes into effect at the end of the year.
Provisional solutions are being discussed again, to capitalise on what has been agreed so far, and to freeze contentious issues to deal with later. Even with this approach there are obstacles and pitfalls. Yet, it is clear that a final grand bargain – which crucially requires a US-Iranian deal – has become nearly impossible, prompting this search for provisional agreements.
In the meantime, the Iranian leadership is allowing itself room for constructive manoeuvring, coupled with threats of retaliation. Iran is showing flexibility in the region, affirming the importance of continuing talks with Saudi Arabia, after the conclusion of a fifth unpublicised round, and expressing willingness for a public session. Iran also appears willing to not obstruct the demarcation of Lebanese-Israeli maritime borders as a goodwill gesture, but also to highlight the Iranian influence over such issues that are crucial to the US and Israel.
Strategically, Iran’s flexibility is represented by the possibility of agreeing to defer the issue of the IRGC, focusing instead on getting the sanctions lifted in order to sell oil and relieve popular pressure on the regime. In other words, suspending the regime’s political ideology provisionally serves its interests and its survival through economic recovery. Oil revenues are crucial for reinforcing its ideology in the long run so there is no harm in prioritising them for now. This is part of Iran's constructive manoeuvring policy.
Iran's flexibility is not open-ended. It is linked to the outcome of the Vienna talks
However, Iran’s flexibility will not be open-ended. It is organically linked to the outcome of the Vienna talks, whose bottom line is lifting the sanctions on Iran. It is also linked to the Israeli reaction to the putative Vienna deal. For this reason, Tehran is sending out both escalatory and conciliatory messages at the same time and making preparations.
Israel is giving cause for anxiety not just to Iran but also to Europe and Russia. Relations between Russia and Israel now face a crisis, after Moscow decided to outsource Syria to Iran and exchanged warnings with Israel. Moscow has since sought to limit the damage, after Israel said there could be serious political consequences for Russian policies targeting Israel in Syria, Ukraine and Russia itself, as Moscow moved against the activities of the Jewish Agency, a prominent group that facilitates Jewish immigration to Israel.
US President Joe Biden with Israel's President Isaac Herzog (L) and caretaker Prime Minister Yair Lapid (R) st the opening ceremony of the Maccabiah Games, in Jerusalem, on July 14. AFP
This week, an Israeli delegation went to the Russian capital for the first time since the crisis between the two countries started, following a Russian ban on the agency. Israel said the closure of the agency’s offices in Russia is a serious matter that will have implications for the bilateral relationship. This was coupled by a leaked list of possible Israeli responses, while Israel’s Defence Minister Benny Gantz revealed Russian anti-aircraft batteries had fired at Israeli planes during a sortie over Syria in May.
More importantly, Israel sent warnings to Russia, the European powers and the US through unofficial channels, saying it was ready to conduct strikes on Iranian nuclear sites if these states sign up to an agreement in Vienna. This is a new development, because there is an Israeli threat linked to signing the nuclear deal.
Europe is feeling a nuclear and energy terror as a result of Israel’s escalation and threat of direct action against Iran, with or without America’s consent. Israel has made it clear to the European states that freeing Iran from sanctions under a deal in Vienna could enable Iran to acquire nuclear weapons, a red line for Israel. Israel has also expressed distrust in promises of the Biden administration and European promises to not allow Iran to acquire nuclear weapons.
The nuclear terror felt in Europe has two aspects: One would be for the failure of the nuclear talks to lead to the intensification of the Iranian nuclear programme. And another would be the Israeli response, which could turn the shadow war between Iran and Israel into a direct, conventional one on Europe's doorsteps. Then there are the existential energy worries. In the wake of the decision to embargo Russian oil and gas, Europe needs an alternative that could very well be provided by Iran, should a nuclear deal be agreed.
For all these reasons, the EU High Representative for Foreign Affairs Josep Borrell, has engaged Iran looking for a way to resuscitate the Vienna talks through provisional arrangements that defer contentious issues and cement what has already been agreed, in the service of Iranian, European and US interests. Mr Borell is seeking a compromise on behalf of the EU, and to some extent, the US administration.
Iran has not closed the door to a compromise because it needs the money and also because it takes seriously the Israeli determination to carry out military action against it. Iran realises the cost of war would be high despite its own escalation and military preparations against Israel.
Tehran knows that Russia is unable and unready to go to war on its side against Israel. It knows that in the event the situation devolves into an Iranian-Israeli military standoff, the Biden administration will not able to continue negotiations. It knows that in the event of war with Israel, the US will have to side with Israel, a strategic alliance that is also a US domestic issue.
Ultimately, navigating between constructive manoeuvring and a rude confrontation is a thorny affair, especially in the midst of growing Israeli turbulence, despite the confused US and European expeditions in the waters of the Middle East.
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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.”
Born in Dibba, Sharjah in 1972.
He is the eldest among 11 brothers and sisters.
He was educated in Sharjah schools and is a graduate of UAE University in Al Ain.
He has written poetry for 30 years and has had work published in local newspapers.
He likes all kinds of adventure movies that relate to his work.
His dream is a safe and preserved environment for all humankind.
His favourite book is The Quran, and 'Maze of Innovation and Creativity', written by his brother.
