Fighting continues in Yemen. Saleh Al Obeidi / AFP
Fighting continues in Yemen. Saleh Al Obeidi / AFP

Iran’s words and actions must match



Among the most extraordinary aspects to the leadership in Tehran is how tone-deaf they are diplomatically. As Iran’s president was preparing to visit Oman and Kuwait – Hassan Rouhani has now returned home after his flying visit to the Gulf – his deputy chief of staff said the Gulf should “take advantage of the good opportunity” in case it “passes like a cloud”.

Such language would be understandable from a major country such as China. But from Iran? By yardstick every major milestone – international relations, strong alliances, development – Iran lags behind the countries of the Gulf. Indeed, one would hope that Mr Rouhani’s visit showed him what life could be like on the other side of the Arabian Gulf if his country stopped playing a detrimental role and started playing a constructive one.

This is why, again and again, the Gulf states have sought dialogue and diplomacy with Tehran. It was the Gulf, after all, that initiated this meeting – Kuwait’s foreign minister delivered a message of dialogue in January on behalf of the region – not Tehran. It is because we recognise how badly ordinary Iranians and Arabs have been affected by the current policies of Tehran.

Millions of people, from Iranians to Iraqis to Yemenis to Syrians have been harmed by the wars that Iran has provoked. All of this is unnecessary. But in order for the Iranian government to truly seek better ties with the Gulf states, it must first halt its provocative policies. It cannot come to the region and talk peace, while its military advisers support Bashar Al Assad and its sectarian policies find their way to Baghdad and weapons are funneled to the Houthis in Yemen. The two are linked.

Neither can this be business as usual. In a separate development, the Houthi rebels, who occupy Sanaa, were seeking to cap imports and affect the monetary policy of Yemen. Leaving aside how this will aggravate a food crisis and affect ordinary Yemenis, it also shows how the rebels are seeking to normalise what remains a state of war. This seems to be Tehran’s hope: that the extreme groups it supports in Arab countries will be able to find roles affect national policy, and Tehran’s role will be forgotten. But it cannot be. There is only one path to better relations with the Gulf states and that is the path of genuine diplomacy. Provocation and politics cannot be mixed.

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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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