US President-elect Joe Biden has decided to defuse tensions with Iran and climb down from his predecessor Donald Trump’s “maximum pressure” campaign against the regime. He has done so, believing that appeasing Tehran would be impossible without – at the very beginning – separating its nuclear weapons programme from the other thorny issues, including its ballistic missiles project and its expansionist agenda across the Middle East.
Speaking to The New York Times, Mr Biden made clear the features of his Iran policy, which would essentially be based on a commitment to returning to the 2015 nuclear agreement – signed under the Obama administration and later rejected by the Trump administration – as a "starting point" for negotiations. Curiously, that is also the demand of Iranian Foreign Minister Mohamad Javad Zarif. The view of the Biden camp is that once the two sides automatically return to the nuclear agreement, they can talk about the other issues.
“There’s a lot of talk about precision missiles and a whole range of other things that are destabilising the region,” Mr Biden said, “[but] the best way to getting some stability in the region [is to deal] with the nuclear programme.” He added that if Tehran failed to co-operate on the other issues, his administration could consider resorting to a snapback of sanctions.
Then US president Barack Obama and his vice president Joe Biden crafted Middle East policy that proved to be flawed. Reuters
The Biden team has previously talked about expanding the circle of participants in the nuclear talks to include major Arab countries as well (the 2015 nuclear deal only involved the US, China, Russia, Britain, Germany and France). If this were indeed to happen, it would be a significant development – so long as the incoming administration doesn’t settle for some kind of token Arab participation.
Mr Biden's strategy may have some short-term benefits. Iran's leaders, for instance, appear to have postponed plans to retaliate against the assassination of one of their top nuclear scientists, Mohsen Fakhrizadeh, late last month in Tehran. They have instructed Iranian proxies across the region to adopt a policy of strategic patience. Nobody has claimed the killing of Fakhrizadeh, although the regime has alleged Israel's involvement, with, perhaps, the blessing of the Trump administration. In any case, Tehran will probably wait for the incoming administration to lift sanctions against it, in exchange for returning to the 2015 deal, thereby being able to fund their expansionist projects with the cash now available to them.
Mr Biden clearly knows Iran’s irresponsible actions, for he has himself characterised its influence in the region as “malign”. But whether his gradualist approach is an outcome of domestic politics or not, the problem with that is it greatly undermines Mr Trump’s maximalist strategy that has set the regime back like never before in its history.
Iran's Supreme Leader Ayatollah Ali Khamenei, centre, with the Islamic Revolutionary Guard Corps in Tehran. EPA
Apart from rolling back some of the gains made by the current administration and reducing the leverage America currently has over Iran, the Biden team must also remember that it will be dealing with a regime that is ideologically driven like few others around the world.
Karim Sadjadpour, a senior fellow at the Carnegie Endowment for International Peace, told me that there is little possibility of a “grand bargain” between the US and Iran. This is not due to a lack of American desire to push for it, but because hostility towards the US increases the Iranian regime’s credibility in the eyes of its supporters. “Continued conflict with the United States is far less of an existential threat to Iran than a rapprochement,” Mr Sadjadpour pointed out.
Tom Fletcher, who currently serves as the principal of Hertford College at Oxford University, also ruled out the possibility of a grand bargain – although he said that could actually work in America’s favour. “It’s better that we pick out one [issue] that we might potentially be able to get done and then hopefully create the climate for the rest,” he said, essentially echoing Mr Biden’s strategy.
However, Mr Fletcher did agree that delaying talks on the other sticking points would be counter-productive “partly because America’s regional allies will demand that they make much faster progress on those other issues”.
Ultimately, though, the final say may not rest with a Biden administration but with the Iranian regime, especially its hardline faction led by the Islamic Revolutionary Guard Corps. In truth, the instincts of Iran’s leaders will be to not deviate from the dominant ideology of the regime since its establishment more than four decades ago.
And if the Biden team hopes it can help reform the regime, it will be disappointed. The reason is simple: Iran is a country that has essentially been hijacked by a group of expansionist-minded ideologues who are supported by, as Mr Sadjadpour described them, “radicals willing to go out and fight and kill for the Islamic Republic of Iran”.
Raghida Dergham is the founder and executive chairwoman of the Beirut Institute and a columnist for The National
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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.”