Iran’s President, Masoud Pezeshkian, has been in office for less than four months, a time dominated by Israel’s war in the region, including its direct exchange of fire with Iran. But last week his government put the focus on an evergreen domestic issue: the changing of Iran’s capital city.
Every single Iranian administration in the past four decades has mused over taking the capital out of Tehran and Mr Pezeshkian is one of those most enthusiastic about it. It fits well with his theme of tackling regional inequality in Iran and overcoming the marginalisation of Iran’s border regions. Last week, Mr Pezeshkian showed some seriousness by announcing that his Vice President, Mohammad Reza Aref, had been handed the task.
Mr Pezeshkian had raised the matter a few weeks ago, when he listed Tehran’s lack of sufficient water resources, subsidence problems and air pollution as factors that necessitated the move. He also suggested that the capital must move south, close to Iran’s lengthy coastal shore, something he has also brought up in meetings with MPs from coastal provinces such as Hormozgan and Sistan and Baluchistan. As these are two Sunni-majority provinces, such support also fits well with Mr Pezeshkian’s attempt to tackle discrimination against ethno-religious minorities in the country.
The problems Mr Pezeshkian cites are well-known. Tehranis consume an astronomical amount of water – more than 6.5 million cubic metres a year, which is twice that of New York City, a city with about the same population. The consumption increases by almost 3 per cent every year without Tehran’s water resources getting any bigger.
The city has difficulty providing enough water and electricity to its ever-ballooning population. Currently, the city’s population increases to as much as 15 million during working hours, when commuters arrive from surrounding areas.
It fits well with his theme of tackling regional inequality in Iran
Proponents of the move also see it as a way of decentralising governance and the economy. Around 25 per cent of the Iranian economy is concentrated in Tehran.
If Iran were to make this move, it would be hardly unique. Dozens of countries have done the shift before, and others, such as South Korea, Egypt and Indonesia, are working on it. Iran itself has had dozens of capitals throughout its long history, with Tehran having served in this role only since the late 18th century when the then village of only 15,000 people was picked by the founder of the Qajar dynasty, Agha Mohammad Khan, as his capital.
Will Tehran’s time in the sun finally come to an end after more than two centuries? It doesn’t appear likely in the medium-term, at least, since there are many obstacles that cannot be tackled by Mr Pezeshkian’s enthusiasm alone.
One problem is picking the next capital. Mr Pezeshkian’s suggestion is the southern coast, perhaps the Makran region of Baluchistan, where the port of Chabahar links Iran to the Gulf of Oman. But Chabahar is a whooping 1,800km away from Tehran and organising such a move would be a logistical nightmare.
Others suggest Isfahan, perhaps the best-known historical capital of the country (during the Safavid era from 1598 to 1736). But the city is already Iran’s unofficial second capital and such a move wouldn’t bode well for decentralisation. Isfahan is in Iran’s central, desert-heavy areas, which means it’s not much better placed for water resources. Hamedan, another historic city that has been populated for several millennia, has a similar problem, as does Yazd. Cities closer to Tehran, such as Arak or Saveh, share one major problem with the capital: susceptibility to earthquakes.
In short, although every single president raises the possibility of changing the capital, there has never been a consensus on its replacement. In the 1980s, Prime Minister Mirhossein Mousavi’s administration suggested a shift to somewhere near Tafresh, a few hours south of Tehran, near Arak. In the 2010s, then-president Mahmoud Ahmadinejad did the most to make the shift, in line with his love for gimmicky, headline-grabbing moves. His suggestion was the planned city of Parand, a short metro ride away from Tehran.
In the final years of Mr Ahmadinejad’s term, the Majlis, Iran’s Parliament, even tabled a bill that urged the government to seriously consider the move. The bill finally passed in 2014, during the presidency of Mr Ahmadinejad’s successor, Hassan Rouhani. But neither Mr Rouhani nor his successor, Ebrahim Raisi, took it any further because of the price tag.
In 2016, the Rouhani government estimated that the shift would cost $78 billion. Ahmad Vahidi, Mr Raisi’s interior minister, raised the estimate up to $100 billion. This seems a fair estimate since it compares to the estimated cost of South Korea’s capital change. In 2018, the Majlis’s research centre published a detailed report on the issue, which noted many benefits before concluding that Iran was nowhere near being able to afford it.
Opponents of the shift say it’s a distraction from the real problems of the country. Gholamhossein Karbaschi, a popular former reformist mayor of Tehran, has pointed out that the city’s myriad issues won’t go away even if it’s not the capital any more, so the government should focus on the tough job of tackling these problems instead of going after the pipe dream of changing the capital. Mehdi Chamran, a conservative who is current chairman of Tehran’s city council, also opposes the idea.
Ali Eta, a reformist former spokesman of the council, has also reacted negatively to Mr Pezeshkian’s plan. This is noteworthy, considering Mr Eta is a doctoral candidate in urban studies at the University of Strasbourg and was a Pezeshkian surrogate during the presidential election earlier this year.
Mr Pezeshkian has raised the issue of capital shift “too hastily”, Mr Eta recently said. If Vice President Aref were to be tasked with a Tehran file, it should be solving the city’s existing problems rather than creating another city altogether with entirely new problems.
Like many of Mr Pezeshkian’s promises in a country facing many challenges, this one will likely have to wait.
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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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Explainer: Tanween Design Programme
Non-profit arts studio Tashkeel launched this annual initiative with the intention of supporting budding designers in the UAE. This year, three talents were chosen from hundreds of applicants to be a part of the sixth creative development programme. These are architect Abdulla Al Mulla, interior designer Lana El Samman and graphic designer Yara Habib.
The trio have been guided by experts from the industry over the course of nine months, as they developed their own products that merge their unique styles with traditional elements of Emirati design. This includes laboratory sessions, experimental and collaborative practice, investigation of new business models and evaluation.
It is led by British contemporary design project specialist Helen Voce and mentor Kevin Badni, and offers participants access to experts from across the world, including the likes of UK designer Gareth Neal and multidisciplinary designer and entrepreneur, Sheikh Salem Al Qassimi.
The final pieces are being revealed in a worldwide limited-edition release on the first day of Downtown Designs at Dubai Design Week 2019. Tashkeel will be at stand E31 at the exhibition.
Lisa Ball-Lechgar, deputy director of Tashkeel, said: “The diversity and calibre of the applicants this year … is reflective of the dynamic change that the UAE art and design industry is witnessing, with young creators resolute in making their bold design ideas a reality.”
More from Neighbourhood Watch:
BUNDESLIGA FIXTURES
Friday Stuttgart v Cologne (Kick-off 10.30pm UAE)
Saturday RB Leipzig v Hertha Berlin (5.30pm)
Mainz v Borussia Monchengladbach (5.30pm)
Bayern Munich v Eintracht Frankfurt (5.30pm)
Union Berlin v SC Freiburg (5.30pm)
Borussia Dortmund v Schalke (5.30pm)
Sunday Wolfsburg v Arminia (6.30pm)
Werder Bremen v Hoffenheim (9pm)
Bayer Leverkusen v Augsburg (11.30pm)
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
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Price: From Dh1,700,000
Available: Now
What vitamins do we know are beneficial for living in the UAE
Vitamin D: Highly relevant in the UAE due to limited sun exposure; supports bone health, immunity and mood.
Vitamin B12: Important for nerve health and energy production, especially for vegetarians, vegans and individuals with absorption issues.
Iron: Useful only when deficiency or anaemia is confirmed; helps reduce fatigue and support immunity.
Omega-3 (EPA/DHA): Supports heart health and reduces inflammation, especially for those who consume little fish.
Full list of Emmy 2020 nominations
LEAD ACTOR IN A COMEDY SERIES
Anthony Anderson, Black-ish
Don Cheadle, Black Monday
Ted Danson, The Good Place
Michael Douglas, The Kominsky Method
Eugene Levy, Schitt’s Creek
Ramy Youssef, Ramy
LEAD ACTRESS IN A COMEDY SERIES
Christina Applegate, Dead to Me
Rachel Brosnahan, The Marvelous Mrs. Maisel
Linda Cardellini, Dead to Me
Catherine O’Hara, Schitt’s Creek
Issa Rae, Insecure
Tracee Ellis Ross, Black-ish
OUTSTANDING VARIETY/TALK SERIES
The Daily Show with Trevor Noah
Full Frontal with Samantha Bee
Jimmy Kimmel Live
Last Week Tonight with John Oliver
The Late Show with Stephen Colbert
LEAD ACTOR IN A DRAMA SERIES
Jason Bateman, Ozark
Sterling K. Brown, This Is Us
Steve Carell, The Morning Show
Brian Cox, Succession
Billy Porter, Pose
Jeremy Strong, Succession
LEAD ACTRESS IN A DRAMA SERIES
Jennifer Aniston, The Morning Show
Olivia Colman, The Crown
Jodie Comer, Killing Eve
Laura Linney, Ozark
Sandra Oh, Killing Eve
Zendaya, Euphoria
OUTSTANDING REALITY/COMPETITION PROGRAM
The Masked Singer
Nailed It!
RuPaul’s Drag Race
Top Chef
The Voice
LEAD ACTOR IN A LIMITED SERIES/TV MOVIE
Jeremy Irons, Watchmen
Hugh Jackman, Bad Education
Paul Mescal, Normal People
Jeremy Pope, Hollywood
Mark Ruffalo, I Know This Much Is True
LEAD ACTRESS IN A LIMITED SERIES/TV MOVIE
Cate Blanchett, Mrs. America
Shira Haas, Unorthodox
Regina King, Watchmen
Octavia Spencer, Self Made
Kerry Washington, Little Fires Everywhere
OUTSTANDING LIMITED SERIES
Little Fires Everywhere
Mrs. America
Unbelievable
Unorthodox
Watchmen
OUTSTANDING COMEDY SERIES
Curb Your Enthusiasm
Dead to Me
The Good Place
Insecure
The Kominsky Method
The Marvelous Mrs. Maisel
Schitt’s Creek
What We Do In The Shadows
OUTSTANDING DRAMA SERIES
Better Call Saul
The Crown
The Handmaid’s Tale
Killing Eve
The Mandalorian
Ozark
Stranger Things
Succession
The biog
Name: Timothy Husband
Nationality: New Zealand
Education: Degree in zoology at The University of Sydney
Favourite book: Lemurs of Madagascar by Russell A Mittermeier
Favourite music: Billy Joel
Weekends and holidays: Talking about animals or visiting his farm in Australia
The biog
Favourite food: Fish and seafood
Favourite hobby: Socialising with friends
Favourite quote: You only get out what you put in!
Favourite country to visit: Italy
Favourite film: Lock Stock and Two Smoking Barrels.
Family: We all have one!