US Secretary of State Mike Pompeo. Leah Millis / Reuters
US Secretary of State Mike Pompeo. Leah Millis / Reuters

The split dynamic between the White House and State Department means Trump's tough talk on Iran could be hot air



The biggest issue with US foreign policy right now is that friends and allies find themselves lacking assurance of its coherence and continuity while adversaries are fully betting on this weakness as they develop their strategies.

The internal division in the US between the camp of Republican president Donald Trump and the camp of Democratic former president Barack Obama is bitter to the point that Americans in general now distrust each other in a very unhealthy way.

And the foreign policy implications of the divergent doctrines of the two presidents have split the Middle East itself into two polarised sides. The Obama-philes are led by Iran, which benefited greatly from the former president’s fixation on concluding a nuclear deal at any cost and effectively gave it the tools to execute its projects for regional expansion.

The second camp is led by Saudi Arabia, the UAE and Egypt, which together believe “Obama-ism” produced the most antagonistic US policy towards them to date, deliberately marginalising and sidelining them – and even destabilising them, at least from Egypt’s point of view, as Mr Obama and Hillary Clinton were accused of boosting the Muslim Brotherhood in Cairo.

Today Mr Trump has a clear stated policy to curb and contain Iran and its allies, such as Lebanese Hezbollah. His official strategy has overturned Mr Obama’s on the Arab Gulf countries and Egypt, reinstating them as strategic allies.

However, chronic American inconsistency has in the end reassured those same foes and left US allies anxious, including the Gulf states. Now some are calling for self-reliance, with limited reliance on the US, to avoid the fallout from the America’s incoherent policies.

For its part, Iran is pursuing patience as a policy, watching out for the smallest details, including in the important appointments in the US State Department, which is known for its Democratic sympathies.

So when news leaks of a meeting between Secretary of State Mike Pompeo and ambassador David Hale, a career diplomat sympathetic to Mr Obama and Mrs Clinton's policies, questions immediately emerge about what the Trump administration has in mind and the seriousness of its threats to Iran and Hezbollah. If the rumours are true about Mr Pompeo's intention to appoint Mr Hale as undersecretary for political affairs, this could mean that the Trump administration wants to give Iran a proposal similar to the one given to North Korea.

According to informed sources, Mr Pompeo has offered Mr Hale the same post that was occupied by Thomas Shannon. Unconfirmed reports say Mr Hale has accepted in principle but the final decision rests with Mr Pompeo. While sources say Mr Hale is not the only name being considered, he seems to be the most serious contender.

What we know about Mr Pompeo is that his interests and passion are not focused on the Middle East but rather, that he is keen on what is known in Washington circles as the grand prize, namely North Korea and China. According to talk in Washington, he has presidential ambitions and has been advised that his success as secretary of state is instrumental to them. Since the pool of talents among Republicans in the State Department remains inadequate, while the most experienced diplomats happen to be Democrats loyal to the policies championed by Mr Obama and Mrs Clinton, he has to adapt.

However, this would mean Mr Pompeo could diverge from the decisions of the Trump White House. Indeed, those loyal to Mr Obama are therefore loyal to the nuclear deal with Iran and Mr Obama’s approach to the Arab Gulf states, which Mr Trump flatly rejects.

Mr Hale is a veteran diplomat with a lot of experience in the Middle East, serving as ambassador to Pakistan after postings in Lebanon, Jordan, Tunisia, Bahrain, Saudi Arabia and the UN. He also served as undersecretary working on Israel, Egypt and as envoy for Palestinian-Israeli negotiations, succeeding George Mitchell.

In Lebanon, Mr Hale is known as a shrewd architect who helped convince Prime Minister Saad Al Hariri to agree to a deal to restore him to power with Hezbollah ally Suleiman Franjieh as president. This deal was accepted by Hezbollah but with a modification, replacing Mr Franjieh with current president Michel Aoun, a closer ally.

At the time, there was a belief that Mrs Clinton would become president and that the US’s Middle Eastern policy would continue down the path laid down by Mr Obama, especially with regard to the nuclear deal - but then Mr Trump became president.

The US State Department under Mr Obama sought to distinguish between Hezbollah’s political and military arms, in line with the approach used with the IRA during negotiations with Britain on Northern Ireland.

There would be nothing wrong with the fact that Mr Hale or US ambassador to Lebanon, Elizabeth Richard, are faithful to Mr Obama’s policies if he was still president or if Mr Trump had chosen to continue his predecessor’s policies. The problem is with the contradictory messages coming from the Trump administration. On the one hand, Mr Pompeo has made 12 demands of Iran while Mr Trump threatened unprecedented sanctions on the regime in Tehran and Hezbollah. On the other hand, the Trump administration is keeping Mr Obama’s ambassadors while Mr Pompeo seems to have picked a veteran Obama camp diplomat for the third highest post in the State Department – and second most important job in terms of foreign policy.

The question here is this: is Mr Trump pursuing a good cop, bad cop routine because he wants to ultimately woo rather than strongarm Iran? Or is there a schizophrenic dynamic between the White House and the State Department?

The least the Republicans in the US and Gulf leaders, especially in Saudi Arabia, can do about this is to ask for an explanation. Iran and its partners no doubt welcome this confusing ambiguity but the US national interest and the interests of its allies require this ambiguity not to be deliberate, unless Washington really wants to confuse both foes and friends because its incoherence and inconsistency are now a feature, not a bug.

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The six points:

1. Ministers should be in the field, instead of always at conferences

2. Foreign diplomacy must be left to the Ministry of Foreign Affairs and International Co-operation

3. Emiratisation is a top priority that will have a renewed push behind it

4. The UAE's economy must continue to thrive and grow

5. Complaints from the public must be addressed, not avoided

6. Have hope for the future, what is yet to come is bigger and better than before

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Director: Magizh Thirumeni

Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra

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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.”

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