Iran's judiciary announced Ali Reza Akbari's execution on Saturday. AP Photo
Iran's judiciary announced Ali Reza Akbari's execution on Saturday. AP Photo
Iran's judiciary announced Ali Reza Akbari's execution on Saturday. AP Photo
Iran's judiciary announced Ali Reza Akbari's execution on Saturday. AP Photo


Akbari's execution will trigger a dangerous period in UK-Iran relations


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January 16, 2023

Iran appears to have launched a game of nerves with the UK that could have unpredictable consequences.

Alicia Kearns, a leading backbencher in the UK’s Conservative party, has called on the government to recall the ambassador Simon Shercliff from Tehran if Iran's former deputy defence minister Ali Reza Akbari were executed. On Saturday, Iran’s judiciary announced that Mr Akbari, who became a British citizen after quitting Iranian politics and arriving in London in 2009, had been hanged.

The case involving Mr Akbari has many hallmarks of repeated confrontations between the UK and Iran over the past decade. A new strand of this cycle of crisis in the relationship is also now apparently moving to the fore. It is not hard to see that there could be a run of more attacks and incidents that will become a form of dirty war between the two countries.

Withdrawing the ambassador would certainly be a setback for the entire diplomacy of the Middle East.

The British mission in Tehran has never lost its historic importance. Mr Shercliff is a skilled and insightful diplomat who adds much to the UK presence in the region. Go back a decade or more to the last time there was no ambassador in Tehran and things were very messy indeed. That the two countries are on the brink of a new phase of dispute and tensions is very worrying, especially as the fallout from it could go far beyond the bilateral relationship.

Police officers stand on duty outside the Iranian embassy in London. AFP
Police officers stand on duty outside the Iranian embassy in London. AFP
There is little good in pretending that the dynamic is not already playing out

The idea is given credibility by the absence in London of Iran’s ambassador, who is said to have been recalled under hardliner pressure. While Mohsen Baharvand had Islamic Revolutionary Guard Corps (IRGC) credentials, that wasn’t enough to prevent his early recall. The charge d’affaires in the UK had taken an unsympathetic public line against demonstrators in Iran who came out after the death of Mahsa Amini in police custody.

Already there is a diplomatic mismatch in the relationship, and history shows that things go wrong with alarming speed.

The last time the UK embassy inside Iran was stormed, in 2011, the then ambassador Dominick Chilcott was out of the country. His deputy, still in country, managed a fraught situation well but there was a threat to life at the time. The Iranian embassy staff in the UK was privately apologetic and disconcerted by the attempted razing of the UK mission and its residential compound in Tehran’s northern suburb of Gholhak.

What is most instructive is that the allies of the supreme leader, Ayatollah Ali Khamenei, egged on the attack. Iranian Parliament's then speaker, Ali Larijani, said the wrath of the pro-government crowds stemmed from “decades of domination-seeking behaviour of Britain”. It was not until after the signing of the nuclear deal, the Joint Comprehensive Plan of Action, that a new British ambassador was able to return to Iran.

Alistair Burt, who at the time of the embassy assault said that it could not have happened without the backing of the Iranian leadership, told British television this week that showdowns such as the one revolving around Mr Akbari are always the product of a power struggle in Iran.

Newspaper reports this week suggested that the discovery of uranium-tainted package at Heathrow Airport around Christmas was being treated as a “dry run” by Iran for a more formal attack. The idea that this could happen is not so fanciful. Not long after diplomatic relations resumed in 2016, both sides managed to play down the discovery of a lock-up bomb factory just outside of London linked to Tehran.

The international situation effectively means that there is no way out for Iran from its deteriorating ties with the West. The accumulation of evidence towards proscribing the IRGC in the UK and EU, and possibly in Canada, is such that the announcement looks more and more like a formality.

Leo Docherty, the UK's undersecretary of state for Europe told parliament that a move to proscribe the group – which would make a criminal offence to belong to it, attend its meetings or carry its logo – was certainly on the cards.

"It would be wrong of me to speculate about the outcome of the government's current consideration of this issue, which is active," Mr Docherty said during a debate in the House of Commons last week. "But I can say that I think the calls right across the house, and the unity with which these calls are being made on all sides will be noted by the government and this is something that we regard as extremely serious."

Under the current Iranian leadership, there is a pattern of singling out the UK to bear the brunt of these degraded relationships. The tensions between the diplomats, foreign office ministers and leading politicians such as Ms Kearns always revolve around whether or not a strict stance will goad and fuel Iran.

Tehran’s appetite to take this to the next stage certainly seems to be strong just now, although proscribing the IRGC could certainly trigger retaliation. There is little good in pretending that the dynamic is not already playing out.

The problem is that there are not many options left other than to take the strongest self-defence steps in such a poisoned situation.

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Mohammed Naveed (captain), Mohamed Usman (vice captain), Ashfaq Ahmed, Chirag Suri, Shaiman Anwar, Mohammed Boota, Ghulam Shabber, Imran Haider, Tahir Mughal, Amir Hayat, Zahoor Khan, Qadeer Ahmed, Fahad Nawaz, Abdul Shakoor, Sultan Ahmed, CP Rizwan

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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Updated: January 16, 2023, 9:38 AM