What do Arab states think of Israel striking Iran?



Israel continues to bombard Gaza and Lebanon. It is launching strikes in Syria. But between Tel Aviv and Tehran, there’s an eerie silence. The latest round of attacks between the two came from Israel late last month, hitting military sites linked to Iran’s ballistic missile programme. Four soldiers and a civilian were killed, Iran said. Analysts believe Tehran's ballistic missile capabilities, drone production and air defences were seriously damaged.

This came in response to Iran launching its attack on Israel on October 1. With its response, the fear that Israel would hit back at Iran’s nuclear or oil centres has been put to rest, at least for now.

Israel’s strikes nevertheless prompted criticism from Arab states, including the GCC. The UAE strongly condemned them and expressed deep concern over the repercussions for security and stability in the region. Saudi Arabia called them a “violation of sovereignty” and international law, urging all parties to exercise maximum restraint.

Iran’s Foreign Minister, Abbas Araghchi, has recently been on tour across the Middle East. He said that he received guarantees from regional neighbours that neither their soil nor air spaces would be used to allow any attacks on Iran.

But Tehran has vowed to respond again. A continuous cycle of strikes poses a serious risk to the region and the world at large, potentially dragging the US and Arab states into a conflict that none of them wants.

On this episode of Beyond the Headlines, host Nada AlTaher speaks to The National’s military affairs reporter Robert Tollast about the effect of Israel’s strikes on Iran. She also talks with Dr Hasan Alhasan from the International Institute for Strategic Studies to investigate Iran’s relationship with its Arab neighbours amid regional escalations.

Below is the full transcript of this episode:

Nada AlTaher: There is now an eerie silence between Iran and Israel, parallel to Israel's intense bombardment of Lebanon and Gaza and strikes on Syria.

In late October, Israel struck Iran, hitting military targets linked to its ballistic missiles programme. Four soldiers and a civilian were killed, Iran said, as it downplayed the damage caused. But some estimates say Israel struck with a wave of 100 attack aircraft, which analysts believe seriously damaged Iran's ballistic and drone production and its air defences. The fear that Israel would hit Iran's nuclear or oil facilities, however, was put to rest for the time being.

All this happened weeks after Iran's attacks on Israel in early October. Israeli authorities told the media and the public not to share the locations or details of any sites that were struck, keeping observers and analysts guessing as to how big the attack really was.

But satellite imagery later revealed some damage to Israel's most important airbase, Nevatim. Still, the damage appears to have been limited - two buildings hit out of more than 30 impact points.

Israel's attack prompted criticism from Arab states and the GCC. The UAE strongly condemned the strike and expressed deep concern over its repercussions on security and stability in the region. Saudi Arabia called it a “violation of sovereignty” and international law, urging all parties to exercise restraint, with the kingdom also calling on the international community to take action to push for de-escalation.

This, after Iran's Foreign Minister Abbas Araghchi had been on a tour of the Middle East, making stops in Saudi Arabia, Qatar, Iraq, Oman, Jordan and Egypt. He later said he received guarantees from regional neighbours that neither their soil nor their airspaces would be usedin any attacks on Iran.

He also said Iran did not want the war to escalate and wants to establish a ceasefire.

But since Israel's strike, Tehran has vowed to respond again, despite the US, the UK and others calling for an end to this tit-for-tat exchange of fire that may seem like it is contained, but actually has far-reaching ripple effects.

A continuous cycle of strikes poses a serious risk to the region and the world at large, potentially dragging the US and Arab states into a conflict that none of them want. This is Beyond the Headlines and I'm your host, Nada AlTaher. This week we assess the regional impact of Israel's first direct strike on Iran and anticipate what comes next. We also look at Iran's relationship with its Arab neighbours in the midst of this regional escalation.

There was a lot of guesswork ahead of Israel's attacks. When would it strike? What would it hit? How big would the attack be? And the big question, will the US be able to restrain it? To understand the military impact of the strike on Iran and the implications it could have for the US - Israel's strongest ally - I speak to The National's military affairs reporter, Robert Tollast.

Bob, Iran insists that the US was indirectly involved in the Israeli strike, but the US has indicated it was not. This comes despite weeks of the US advising Israel on the retaliation, exactly what to strike and where to strike. What do we know about the role of the US in this attack?

RT: The background support is obviously decades old. In terms of this specific operation, though, a lot of the capabilities that it looks like Israel uses, such as the Rocks missile, are indigenous capabilities essentially. Some electronic warfare equipment is used that Israel also developed.

The main thing would be intelligence support from the US. Israel only has two satellites that can provide high-resolution imagery, or very high resolution. The US probably has at least 24 - it might even have more we don't know about.

It also has something called Project Maven, which is AI analysis of satellite imagery. That would be very, very useful because it automatically detects any potential movement in Iranian air defence systems.

The really surprising thing is aerial refuelling tankers were not resupplied, because some of the existing tankers Israel has are 40-year-old Boeing 707s. There would be safety and maintenance issues with those, but it's clear Israel just decided to take the chance.

I think the raid on Hodeidah, in Yemen, is a good example. That was a 4,000km round trip, so it's a similar distance to the Iran strike and that really shows that Israel had thought about such a long-range operation. So I don't think the US were very directly involved in this particular attack.

NA: What can you tell us about the targets that were hit? Was this more of a performative stunt by Israel to show it was retaliating? Or was its actual intention to cause damage and escalation?

RT: I don't think it was performative, really. One of the aspects of this entire conflict is that a lot of observers think it's Israel against the Houthis, against Iran, against Hezbollah, Hamas, etc.

Israel, from pretty early on, has seen itself as going up against a unified front. I think that's been really clear since April, when Israel killed two Iranian generals in Damascus in a strike on the Iranian embassy compound. Israel was very, very keen to show it would go after any target, anywhere. That's why I think we've seen such massive escalation throughout the year.

But to Israel, I don't think it's escalation. I think this is essentially its plan from the beginning.

In terms of the Iranian ballistic missile attack, or the last one against Israel, again I don't think that was performative, because Iran went for Nevatim, one of the most important Israeli airbases, where they have F-35s.

That was clearly an attempt to damage Israeli capability. I think that's one of the worrying things, that this isn't performative any more. It's basically a regional war.

NA: The US has said this strike was an exercise in Israeli self-defence, but it also said this should be it for the tit-for-tat strikes between Israel and Iran. We also know the US has no interest in escalating a war that it could be directly and militarily dragged into. But if Iran strikes back, which it says it will, what will the US do? And will it protect Israel at all costs, even while running the risk of becoming directly involved?

RT: In terms of Iran intentionally or accidentally killing Americans, and then US President Joe Biden feeling pressure to do something and strike Iran, I think that's a very low risk at the moment.

But the important thing you mentioned there is “at all costs”. Because if Israel continues to refuse to listen to America in terms of the massive destruction in Gaza, the strangulation of aid, particularly in northern Gaza now, the extent of the damage in Lebanon and so on, I think it starts to look quite embarrassing for Washington to keep on laying out red lines.

And the missile defence, which is really what Israel needs from the US right now, which costs billions of dollars, at some point that's politically quite awkward. Because there has to be a line for the US somewhere. Literally, these big Iranian attacks cost about $1billion dollars a time to shoot down.

NA: Is there a concern by Israel’s western allies and the US’s Arab allies that Israel does not have a clear strategy in expanding wars that seem to have no tangible objective? What do you make of what's going on in terms of Israel's military objectives and how could you win a war with objectives that keep changing?

RT: I think there's two ways to look at the Israeli strategy. The first is that it essentially believes that it does have a strategy. It believes it can ultimately nearly destroy Hamas. It believes it can nearly destroy Hezbollah. And it probably believes it can essentially win against Iran.

All of those things are more or less correct. In the short term, all of those things are possible for Israel. In the long term, is it a viable or sustainable strategy for Israel? I think a lot of Israeli actions since the founding of the country have involved aggressive retaliation.

When you look at the history, I think that really answers the question about the strategy - essentially Israel hasn't become safer. So I think for the short term, it can perhaps see something that looks like a victory. In the long term, it's not a sustainable thing.

NA: Do you think both sides feel like they have no choice but to strike back?

RT: There's an argument to be made that both sides are trapped, or feel trapped, in this cycle of retaliation. Iran playing it down could be a way of finding an exit from this, saying, ‘We successfully defended ourselves, therefore, we're strong.’

There is still talk that Iran might retaliate somehow. And I think that ultimately, as news reports spread around the world that its air defences didn't perform very well, then yes, absolutely, I think Iran might feel stronger pressure to retaliate.

And then there is Israeli Prime Minister Benjamin Netanyahu - essentially we're talking about very macho leaders on both sides - will also feel the need to retaliate. And Iran could still do some significant damage to Israel. They've still got a large arsenal of ballistic missiles.

NA: There are legitimate fears that further escalation between Israel and Iran carries a serious risk of spilling over. Gulf states have repeatedly called for diplomacy over military strategy, in an effort to avoid both short and long-term consequences.

Dr Hasan Alhasan is a senior fellow for Middle East policy at the International Institute for Strategic Studies. He joins me to share his insights about the Gulf's position on Iran amid its rising tensions with Israel.

Hasan, Iran's Foreign Minister Abbas Araghchi toured the Middle East before Israel's strike, after Iran said Gulf countries should not let their airspace be used in an Israeli attack. Was an actual agreement reached? And did we see any manifestation of that agreement during the Israeli retaliation?

HA: I'm not sure we could call it an agreement, but I think there was an understanding, at the very least, that the Gulf states would stay neutral. That was the clear message that GCC Secretary General Jasem Albudaiwi conveyed, following the meeting between the Iranian President [Masoud Pezeshkian] and the Iranian Foreign Minister and the foreign ministers of the GCC states in Doha.

For Iran, it's important to ensure the neutrality of the Gulf states, because what that means is that operationally it restricts the US’s margin of manoeuvre, as the US has about 30,000 to 35,000 troops in the region.

And so for Iran to be able to make it more difficult for the US to operate out of those bases, out of these territories, is an understandable Iranian objective, even from a military perspective. From a diplomatic and political perspective, it also makes sense because it allows Iran to say that it is not isolated in its own region and that it has good relations with its neighbours. And so that goes counter to the US narrative.

NA: If a country says the Israeli response should not use its airspace, what is it effectively restricting? Because you mentioned the US bases. How does all of that factor in?

HA: The understanding here is that the Gulf states would not allow Israeli fighter planes to fly over their territories on the way to striking targets in Iran. The Gulf states have generally had a principled position of not allowing any parties to the conflict to use their airspaces.

The reason why the US comes into this equation is because there is a risk the Iranian-Israeli confrontation could escalate and could end up involving the US. If that happens, then the US would want to use its military assets in the Gulf, and its military assets elsewhere in Jordan and the Mediterranean and Diego Garcia, to launch attacks against Iran.

So the discussion around restricting the use of airspaces to the US is really thinking ahead about what happens if this escalates and the US gets involved.

NA: We spoke about Iran wanting to demonstrate it has close ties with the Arab states. We know that obviously everyone is concerned about an uncontained war coming to their backyards in the region. We heard strongly worded language from the Gulf countries, including the UAE and Saudi Arabia, condemning the Israeli strike on Iran. What can we make of this stance by Arab states?

HA: These condemnations from all six GCC states are really significant. The reason why, I think, is that all of the six states are on board. So keep in mind, for example, that even Bahrain, which doesn't have a formal diplomatic relationship with Iran and that has traditionally been the most hawkish Gulf state on Iran, also condemned these attacks.

This reflects a common concern in the region of Israeli recklessness and how Israeli risk-taking could end up importing the war into the region, into their own neighbourhoods. I think that's the last thing that the Gulf States want to see. I think the broad regional consensus is on a position of neutrality.

It reflects a view in the Gulf that Iran is actually very difficult to deter, that even Israel and the US aren't able to fully deter Iran.

The other point is that the Gulf states realise they're more vulnerable to Iranian retaliation than Israel is. And so Israel has extremely sophisticated air and missile defence capabilities. It's geographically farther from Iran. It has exceptional western support. And so, in a sense, seeking neutrality and trying to de-escalate tensions with Iran is a big priority for them.

And I think the other point is that Gulf states see the West and the US as being a fickle partner. All you need to do is to look at the state of the debate in the West at the moment over support for Ukraine. If the West proves fickle on Ukraine, then you can imagine what lessons are being drawn in the Gulf vis-a-vis the reliability of the US. And they see the fact Iran is isolated and needs this relationship as well.

NA: There are historically long and credible US-allied Arab states. They have been calling for a ceasefire long before the US did and have condemned Israel's military strategy in Gaza, Lebanon, and now Iran - Yemen and Syria, of course, on the side - despite the obvious advantages to them of weakened Iranian proxies in the region.

Are we simply seeing diverging policies between the US and its Arab allies, or could there actually be a damage or an impact to that relationship?

HA: To my mind, an ally is a country with which there is a binding defence commitment, and the US doesn't have binding defence commitments with any Arab states. So I would say there are US-aligned or US-partnered states in the region.

Beyond that, I think we've been seeing divergence in US and regional priorities, geostrategic priorities, for quite some time. If you think back to the Arab uprisings, the way the US reacted, I think that was already divergent with the preference of its partners in the region.

If you think back to the Iranian nuclear accord that was signed in 2015, there was already a very significant gap in preferences. What we're seeing at the moment, again, is this gap materialising.

The Arab states obviously want to see Iran's partners in the region weakened. None of the Arab states are fans of Hezbollah or Hamas. But I think they are more concerned about the long-term effects that Israel's brazen, reckless war could generate for their immediate neighbourhood.

And so think about, not only Palestine and Lebanon, but the spillover effects for countries like Jordan and Egypt. And then, if the conflict with Iran escalates, what that could also mean for the Gulf.

Beyond the immediate war, we are poised to see divergences on a different front, which is a geo-economic front. We've seen the US policy in global oil markets, US technological protectionism on AI, on semiconductors, how the US has been pressing countries to implement western sanctions on Russia and so on. That has also contributed to this divergence and to this gap between the US and many of its partners in the Middle East.

NA: Iran is often called an expansionist regime with proxies all over the region. But Israel has now started fronts in Gaza, in the occupied West Bank, Lebanon, Yemen and Syria. Are there fears that Israel may become a bigger threat in the region than Iran or its proxies ever could?

HA: It's possible. Israel could be perceived as being a bigger threat, partly because it's very aggressive and is also expansionist in many ways. So it's obviously very expansionist when it comes to Palestinian territories. We've seen the pace of annexation in the West Bank and the building of illegal settlements.

There is a question of what Israel might end up doing to southern Lebanon and what southern Lebanon is going to look like after this war. There's a question as to the future of Gaza and whether Israel, under an extreme right-wing government, will try to annex Gaza.

It's quite clear that Israel is bringing about a permanent demographic, topographical change to its strategic environment. I think this is perceived as being very dangerous in the Gulf.

One of the main differences is that Israel has nuclear weapons already. I think that contributes to the threat perception. The trajectory of Israel's domestic politics is also extremely concerning, given how powerful the extreme right-wing government has been. It's not the kind of government that countries in the region can work with comfortably.

The fact Israel is rejecting outright the prospect of a Palestinian state puts everyone in the region, the Gulf states included, in a difficult position. Because the cornerstone of regional diplomacy on this issue is the two-state solution.

I don't want to draw comparisons with Iran, because it depends on how Iran's behaviour evolves as well. But I think the chances that Israel is perceived in a very negative light are real.

NA: That's it for Beyond the Headlines this week. Visit TheNationalNews.com for the latest developments on this story as they happen. This episode was produced by Ban Barkawi and audio engineered by Arthur Eddyson. Yasmeen Altaji is our assistant producer and Doaa Farid is our editor. And I'm your host Nada AlTaher.

Day 2, Abu Dhabi Test: At a glance

Moment of the day Dinesh Chandimal has inherited a challenging job, after being made Sri Lanka’s Test captain. He responded in perfect fashion, with an easy-natured century against Pakistan. He brought up three figures with a majestic cover drive, which he just stood and admired.

Stat of the day – 33 It took 33 balls for Dilruwan Perera to get off the mark. His time on zero was eventful enough. The Sri Lankan No 7 was given out LBW twice, but managed to have both decisions overturned on review. The TV replays showed both times that he had inside edged the ball onto his pad.

The verdict In the two previous times these two sides have met in Abu Dhabi, the Tests have been drawn. The docile nature of proceedings so far makes that the likely outcome again this time, but both sides will be harbouring thoughts that they can force their way into a winning position.

'Gehraiyaan'
Director:Shakun Batra

Stars:Deepika Padukone, Siddhant Chaturvedi, Ananya Panday, Dhairya Karwa

Rating: 4/5

COMPANY PROFILE
Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Nayanthara: Beyond The Fairy Tale

Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni

Director: Amith Krishnan

Rating: 3.5/5

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Living in...

This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home. 

Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
Rating: 2/5
 
The biog

Favourite book: You Are the Placebo – Making your mind matter, by Dr Joe Dispenza

Hobby: Running and watching Welsh rugby

Travel destination: Cyprus in the summer

Life goals: To be an aspirational and passionate University educator, enjoy life, be healthy and be the best dad possible.

If you go

The flights

Emirates flies from Dubai to Seattle from Dh5,555 return, including taxes. Portland is a 260 km drive from Seattle and Emirates offers codeshare flights to Portland with its partner Alaska Airlines.

The car

Hertz (www.hertz.ae) offers compact car rental from about $300 per week, including taxes. Emirates Skywards members can earn points on their car hire through Hertz.

Parks and accommodation

For information on Crater Lake National Park, visit www.nps.gov/crla/index.htm . Because of the altitude, large parts of the park are closed in winter due to snow. While the park’s summer season is May 22-October 31, typically, the full loop of the Rim Drive is only possible from late July until the end of October. Entry costs $25 per car for a day. For accommodation, see www.travelcraterlake.com. For information on Umpqua Hot Springs, see www.fs.usda.gov and https://soakoregon.com/umpqua-hot-springs/. For Bend, see https://www.visitbend.com/.

PROFILE BOX:

Company/date started: 2015

Founder/CEO: Rami Salman, Rishav Jalan, Ayush Chordia

Based: Dubai, UAE

Sector: Technology, Sales, Voice, Artificial Intelligence

Size: (employees/revenue) 10/ 100,000 downloads

Stage: 1 ($800,000)

Investors: Eight first-round investors including, Beco Capital, 500 Startups, Dubai Silicon Oasis, Hala Fadel, Odin Financial Services, Dubai Angel Investors, Womena, Arzan VC

 

The specs: 2017 Dodge Viper SRT

Price, base / as tested Dh460,000

Engine 8.4L V10

Transmission Six-speed manual

Power 645hp @ 6,200rpm

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How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

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The biog

Name: Younis Al Balooshi

Nationality: Emirati

Education: Doctorate degree in forensic medicine at the University of Bonn

Hobbies: Drawing and reading books about graphic design

The specs

Engine: 3-litre twin-turbo V6

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Electoral College Victory

Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate. 

 

Popular Vote Tally

The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.

MATCH INFO

Manchester United 1 (Fernandes pen 2') Tottenham Hotspur 6 (Ndombele 4', Son 7' & 37' Kane (30' & pen 79, Aurier 51')

Man of the match Son Heung-min (Tottenham)

What is dialysis?

Dialysis is a way of cleaning your blood when your kidneys fail and can no longer do the job.

It gets rid of your body's wastes, extra salt and water, and helps to control your blood pressure. The main cause of kidney failure is diabetes and hypertension.

There are two kinds of dialysis — haemodialysis and peritoneal.

In haemodialysis, blood is pumped out of your body to an artificial kidney machine that filter your blood and returns it to your body by tubes.

In peritoneal dialysis, the inside lining of your own belly acts as a natural filter. Wastes are taken out by means of a cleansing fluid which is washed in and out of your belly in cycles.

It isn’t an option for everyone but if eligible, can be done at home by the patient or caregiver. This, as opposed to home haemodialysis, is covered by insurance in the UAE.

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COMPANY PROFILE
Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4
UAE currency: the story behind the money in your pockets
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.

When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.

How to get there: Emirates currently flies from Dubai to Orlando five times a week.
The biog

Hometown: Cairo

Age: 37

Favourite TV series: The Handmaid’s Tale, Black Mirror

Favourite anime series: Death Note, One Piece and Hellsing

Favourite book: Designing Brand Identity, Fifth Edition

Packages which the US Secret Service said contained possible explosive devices were sent to:

  • Former first lady Hillary Clinton
  • Former US president Barack Obama
  • Philanthropist and businessman George Soros
  • Former CIA director John Brennan at CNN's New York bureau
  • Former Attorney General Eric Holder (delivered to former DNC chair Debbie Wasserman Schultz)
  • California Congresswoman Maxine Waters (two devices)
Result

2.15pm: Maiden Dh75,000 1,950m; Winner: Majestic Thunder, Tadhg O’Shea (jockey), Satish Seemar (trainer).

2.45pm: Handicap Dh80,000 1,800m; Winner: Tailor’s Row, Royston Ffrench, Salem bin Ghadayer.

3.15pm: Handicap Dh85,000 1,600m; Winner: Native Appeal, Adam McLean, Doug Watson.

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4.15pm: Handicap Dh100,000 1,400m; Winner: Pilgrim’s Treasure, Tadhg O’Shea, Satish Seemar.

4.45pm: Maiden Dh75,000 1,400m; Winner: Sanad Libya, Richard Mullen, Satish Seemar.

5.15pm: Handicap Dh90,000 1,000m; Winner: Midlander, Richard Mullen, Satish Seemar

Review: Tomb Raider
Dir: Roar Uthaug
Starring: Alicia Vikander, Dominic West, Daniel Wu, Walter Goggins
​​​​​​​two stars

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Wicked
Director: Jon M Chu
Stars: Cynthia Erivo, Ariana Grande, Jonathan Bailey
Rating: 4/5

Film: In Syria
Dir: Philippe Van Leeuw
Starring: Hiam Abbass, Diamand Bo Abboud, Mohsen Abbas and Juliette Navis
Verdict: Four stars

The specs

Engine: 6.2-litre supercharged V8

Power: 712hp at 6,100rpm

Torque: 881Nm at 4,800rpm

Transmission: 8-speed auto

Fuel consumption: 19.6 l/100km

Price: Dh380,000

On sale: now 

The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Power: 268bhp / 536bhp
Torque: 343Nm / 686Nm
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
On sale: Later this year

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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Updated: November 11, 2024, 5:46 AM

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