The deep divisions between US and its European allies over how to handle the Iran issue have been brutally exposed by their differing responses to the assassination of Qassem Suleimani.
Ever since US President Donald Trump announced in 2018 that he was withdrawing Washington from the nuclear deal signed between Iran and six of the world’s leading powers in 2015, tensions have been building between the US and the Europeans over their respective approaches to Tehran.
While Washington has embarked on a policy of applying what it calls “maximum pressure” against Tehran, primarily in the form of imposing harsh economic sanctions, the European signatories to the deal – Britain, France and Germany – have continued to maintain their support for it, arguing that it is the best means of delaying Tehran’s attempts to develop a nuclear weapons arsenal.
Certainly, the crisis that has erupted over the Trump administration’s unilateral action in assassinating Suleimani near the Baghdad airport last week would have been immeasurably more alarming had Tehran succeeded in its goal of developing nuclear weapons.
The crisis that has erupted over the Trump administration's unilateral action in assassinating Suleimani near the Baghdad airport last week would have been immeasurably more alarming had Tehran succeeded in its goal of developing nuclear weapons
But the main criticism voiced by the Europeans was less concerned with the fate of the nuclear deal than it was with the wider security implications of the American actions.
France, where President Emmanuel Macron has been spearheading a valiant effort to persuade Tehran to re-enter negotiations, was first to condemn the attacks. Amelie de Montchalin, France’s Europe minister, declared that the attack had made the world “more dangerous" and that Paris would focus its efforts on de-escalating in the Middle East. It was a similar picture in Germany, where the government of Chancellor Angela Merkel warned that the American action had created a dangerous escalation in tensions.
About the only European power that gave a more nuanced response was Britain where, after initial calls for restraint, Prime Minister Boris Johnson pointed out that Suleimani had “the blood of British troops on his hands” having been responsible for the deaths of forces serving in southern Iraq, and that he would “not lament” the death of Iran’s terrorist mastermind. Yet speaking to fellow Members of Parliament shortly afterwards, Mr Johnson also made it clear that Britain remained committed to saving the nuclear deal as the best means of limiting Iran’s ambitions. He also made a phone call to Hassan Rouhani, the Iranian president, today to reaffirm his commitment to the deal.
The lukewarm response from Britain and other European allies after Washington’s action against Suleimani, whom the Americans insist was in the process of plotting a further series of attacks against US diplomatic and military personnel in the region, has clearly angered Mr Trump.
He criticised Britain and the rest of Europe for continuing to back what he called the “defective” nuclear deal with Iran. “The time has come for the United Kingdom, Germany, France, China and Russia to recognise this reality. They must now break away from the remnants of the Iran deal,” he said.
This is unlikely in the case of Russia and China, which – together with the US – make up the other signatories to the deal. Both Moscow and Beijing regard their continuing support for Iran as presenting a useful means of countering Washington’s traditionally dominant position in the region, with Russian and Chinese warships recently taking the unprecedented action of joining Iran in conducting naval patrols in the Gulf.
Members of Syria's military gather in Aleppo to mourn the death of Iranian commander Qassem Suleimani. AFP
For America, though, the positions of the Europeans are more problematic because, at a time when Washington’s primary focus is dealing with the threat posed by emerging powers such as China and Russia, it is keen to maintain the semblance of unity in the western alliance, rather than having to contend with significant policy differences.
The challenge now, therefore, is for the US and Europe to find a way of settling their differences before irreparable harm befalls an alliance that has made a major contribution to maintaining global security for the better part of 70 years.
One factor that may help matters is Iran’s announcement in the immediate aftermath of Suleimani’s assassination that it would no longer abide by any of the limits of imposed on its nuclear activities by the deal. By abandoning the accord’s key provisions that block Tehran from having enough material to build an atomic weapon, the Iranians are sending their clearest signal yet of their intent to resume work on their weapons programme.
If Iran continues to violate the deal in this manner, then the agreement is, in effect, null and void, and the Europeans are off the hook in terms of having to maintain their token support for an agreement which, without US participation, has little validity anyway.
Another area where Europe can provide the US with tangible support is in the field of military and security cooperation. The Iranian threat, so far as its confrontation with the West is concerned, is not just directed at the US. European powers, too, can just as easily be targeted by Iran’s increasingly sophisticated ballistic missile systems, as well as its terrorist infrastructure. In recent months, Tehran has been accused of carrying out terrorist operations in Copenhagen, Paris and Berlin, an indication the terrorist operations once overseen by Suleimani were by no means confined to the Middle East.
This week’s announcement by Nato Secretary-General Jens Stoltenberg that the 29-member alliance will play a greater role in the Middle East is certainly a step in the right direction. For Iran will be the only country that will benefit if divisions continue within the western alliance.
Con Coughlin is the Telegraph’s defence and foreign affairs editor
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.”
