Hezbollah fighters carry the coffin of a comrade killed by Israeli shelling in Lebanon in October. The Lebanese militants are part of a so-called Axis of Resistance supported by Iran. AP
Hezbollah fighters carry the coffin of a comrade killed by Israeli shelling in Lebanon in October. The Lebanese militants are part of a so-called Axis of Resistance supported by Iran. AP
Hezbollah fighters carry the coffin of a comrade killed by Israeli shelling in Lebanon in October. The Lebanese militants are part of a so-called Axis of Resistance supported by Iran. AP
Hezbollah fighters carry the coffin of a comrade killed by Israeli shelling in Lebanon in October. The Lebanese militants are part of a so-called Axis of Resistance supported by Iran. AP


Is Iran closer to its endgame of weakening the West?


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January 08, 2024

Looking at the latest phases of the Middle East in crisis, an astonishing sequence of events has erupted along Iran’s axis of proxies and allies.

Tehran has until now operated a variation of the Goldilocks approach to its networks. The operation of convenient alliances has allowed for just enough tension to contain any given showdown from spilling over into all-out or unlimited confrontation.

By sticking to recognisable lines, Iran’s networks have maintained a kind of equilibrium. European officials have been able to work with the constituent parts, and by extension, so has America. In the current crisis, as grave as it is, there has not yet been a departure from the known rules.

Over decades in a situation of near-international isolation, Iran has engineered countervailing leverage against western pressure. The current events, not least in the Red Sea, are a working demonstration of this reality.

Iran-aligned Houthi fighters enter the bridge of the Galaxy Leader, a cargo vessel seized in the Red Sea on November 19. Reuters
Iran-aligned Houthi fighters enter the bridge of the Galaxy Leader, a cargo vessel seized in the Red Sea on November 19. Reuters

As the focus shifts to stopping the spreading conflict in the Middle East, Iran is presented with another opportunity to solidify its worldwide alliance of hardliners. Tehran, it seems, is not seeking direct confrontation but works to ensure that it gains and the US-backed side loses.

The term “Axis of Resistance” is poorly understood, yet it is one of the most important factors in the global security equation today. It is not simply about the survival of the Iranian leadership, though that is paramount, but the rise of a bloc that can defy the West.

Since the emergence of the regime following the exile of the Shah in 1979, the Iranian leadership has nurtured a global vision of anti-western hegemony that is more practical than commonly appreciated. Resistance may be a clunky word, but its meaning is clear.

The word Axis is, wrongly, not taken very seriously either. For example, on a regional level, Iran is often said to back but not control its affiliates. On a global level, not many treat the relationship between Venezuela and Iran as meaningful. But they should when Caracas uses the current situation to threaten to annex Essequibo state from neighbouring Guyana.

When figures such as the late journalist John Pilger propagate a worldview that is all about the conniving and insidious evil of US global power, there is little thought as to how it plays along with the Tehran mindset.

Yet there is a shared agenda that is constantly seeking to expand its own spheres and diminish those of the West. It is about bringing down western powers, and it is not only driven by Tehran’s pragmatic interests but by the deep and shared belief that the day of triumph will come.

The term 'Axis of Resistance' is poorly understood, yet it is one of the most important factors in the global security equation today

Iran has been successful in developing an agenda that perfectly synchronises with the emergence of a new Cold War. Its alliance with Moscow to supply Shahed drones to the Ukraine offensive is a manifestation of the Tehran playbook.

Looked at objectively, there is no guarantee that Iran can play a local or global role of the type it has established. Its diminishing resources are eaten up by its security agenda. In a report in April, the Emirates Policy Centre pointed out that Iran’s military was allocated 21 per cent of the country’s New Year budget.

While noting that the published budgetary figure was only a tiny piece of the puzzle, it also drew attention to the fact that the Islamic Revolutionary Guard Corps, one of five entities alongside the Ministry of Defence, was taking almost one third of the allocation. The IRGC is the operational hub of the Axis and, thus, a vital plank of Tehran’s global strategy.

Given the shrunken size of the Iranian economy due to sanctions and the moribund nature of its oil sector, it is perhaps more significant to note that the military economy may represent one third of Iran’s economic activity.

No one who has visited Tehran can be in any doubt of the visible importance of the Palestinian issue in the country. Apart from anything else, giant posters hang at every strategic location.

A report from the European Council on Foreign Relations noted last week that the first foreign leader to visit the Iranian regime after it took control of the country was Yasser Arafat. But as the Palestine Liberation Organisation sought constitutional politics and entered rounds of negotiation with Israel, the Iranians shifted focus to Hamas and Palestinian Islamic Jihad.

Even then there has been a “push me, pull you” nature to those relationships. Islamic Jihad was frozen out of Iranian funds for a time when, in 2014, it refused to back the rise of the Houthi faction in Yemen. Meanwhile, Hamas’s positions on Syria at the outset of its civil war, as well as its 2017 revisions to its charter on the Palestinian consensus, were both too much for Tehran to swallow.

Behind the ideological ambitions, the long interests of operating an Axis mean that Iran treats its network as a franchise. As with a large commercial chain, having visibility and making an impact locally is the most important principle.

That means that local management asserts its interests and makes its own choices. As long as the general direction is broadly intact, the entire Axis functions as planned.

As pressure points have spread around the Middle East, there is no doubt that Iran’s focus on weakening the West is paramount. In 2024, it looks like it will view its capacity for achieving this endgame as having been boosted, not only over the past three months but in recent years.

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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David Haye record

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

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DIVINE%20INTERVENTOIN
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SPAIN SQUAD

Goalkeepers Simon (Athletic Bilbao), De Gea (Manchester United), Sanchez (Brighton)

Defenders Gaya (Valencia), Alba (Barcelona), P Torres (Villarreal), Laporte (Manchester City), Garcia (Manchester City), D Llorente (Leeds), Azpilicueta (Chelsea)

Midfielders Busquets (Barcelona), Rodri (Manchester City), Pedri (Barcelona), Thiago (Liverpool), Koke (Atletico Madrid), Ruiz (Napoli), M Llorente (Atletico Madrid)

Forwards: Olmo (RB Leipzig), Oyarzabal (Real Sociedad), Morata (Juventus), Moreno (Villarreal), F Torres (Manchester City), Traore (Wolves), Sarabia (PSG)

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Platforms: PlayStation 5, Xbox Series X/S, PC

Rating: 4.5/5

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Name: Brendalle Belaza

From: Crossing Rubber, Philippines

Arrived in the UAE: 2007

Favourite place in Abu Dhabi: NYUAD campus

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Who's who in Yemen conflict

Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government

Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council

Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south

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Updated: January 09, 2024, 10:24 AM