Tehran’s overtures to the Gulf present a historic opportunity



Consider this for a contradiction. In most western media outlets, the UAE and other Gulf states are invariably described as fearful of Iran, and mistrustful of the recent interim nuclear deal concluded between Iran and the P5+1, the permanent members of the UN Security Council and Germany.

However, it was Sheikh Abdullah bin Zayed, Minister of Foreign Affairs, who became the first senior Arab official to visit Iran after the interim deal was concluded. Even better, the UAE also chose precisely this moment to open its newly- built embassy in Tehran.

The President, Sheikh Khalifa, has accepted an invitation to visit Iran while the Iranian foreign minister, Mohammed Jawad Zarif, has just visited Abu Dhabi.

That is not the mark of a nation allegedly fearful of Iran, but of a new, dynamic UAE foreign policy that, while never losing sight of our long-term interests and aspirations, also adapts and adjusts to changed circumstances.

It is pointless to deny the fact that there are different interpretations about what the nuclear agreement with Iran has achieved. Supporters of the deal claim that Iran is now pledged to halt the enrichment of uranium to weapon-grade purity, “neutralise” stockpiles of highly-enriched uranium, and halt all activities at the Natanz and Fordow installations.

Critics of the deal point out that the agreement has not dismantled even one nuclear centrifuge or removed even one ounce of enriched uranium from Iran, which is what western governments had initially demanded.

These differences in assessing the deal are significant. Yet it is crucial to note that they may not be ultimately so important, provided the initial purpose of this deal is kept firmly in mind: this is just a temporary, interim agreement, one which only gives negotiators some time to move forward to a long-term settlement.

The real danger, therefore, is not so much with what has been agreed on, but lies in the possibility that, as is often the case in world politics, the temporary can become permanent, and the interim deal would remain the only agreement we have. That would condemn the Gulf region to further years of uncertainty, and the wider region to a prolonged period of instability.

The UAE, in conjunction with all its Gulf Cooperation Council partners, will be working hard to ensure that, while the provisions of the current deal are respected, the promise of a comprehensive agreement is neither ignored nor forgotten.

And, although we are not a party to these diplomatic negotiations with Iran, which very often take place in secret, the UAE is determined to play its part in pushing the process forward.

We start from the assumption that while the nuclear dossier currently attracts the world’s attention, no longer-term settlement will be durable unless it addresses the broader and more fundamental questions of Gulf security.

That, in turn, entails a resolution to all real territorial disputes and imaginary territorial claims, respect for the sovereignty, form of government and way of life of all regional states, a genuine commitment to treat neighbours as equals and a decisive contribution to ending the unspeakable humanitarian horror in Syria, which represents a blot on all humanity. Or, as Sheikh Abdullah succinctly put it during his stay in Tehran, relations between Iran and the rest of the Gulf should be based on “respect, cooperation and good neighbourliness”.

It is in this context that we interpret Mr Zarif’s recent visits to the Gulf, including the UAE, and his government’s promise that Iran will from now on “contribute to regional security”. If such words are followed by deeds, then a truly historic opportunity beckons.

The UAE has made it clear that we are ready to shoulder our part of this effort to consolidate regional stability. We were the first GCC nation to publicly welcome the conclusion of the interim nuclear deal with Iran. And we are pushing forward with economic links as well.

As Sheikh Abdullah pointed out, the UAE-Iran Joint Committee, tasked with promoting investment and trade between the two nations, will meet during the first half of next year. Our new embassy in Iran is not only a sign of our commitment to this process, but will also act as a facilitator for better trade and human contacts, the first port of call for our citizens as they go about their business in Iran.

Success in this process does not depend only on us, although failure, should it come about, will affect us all. But for someone like me, who has studied and researched our country’s diplomatic activity, the fact that the UAE is now such an active, forward-looking contributor to regional stability can only be a source of pride and satisfaction.

Dr Khalid bin Sultan Al Nahyan is the author of the recently published The Three Islands – the UAE-Iran Dispute

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How to play the stock market recovery in 2021?

If you are looking to build your long-term wealth in 2021 and beyond, the stock market is still the best place to do it as equities powered on despite the pandemic.

Investing in individual stocks is not for everyone and most private investors should stick to mutual funds and ETFs, but there are some thrilling opportunities for those who understand the risks.

Peter Garnry, head of equity strategy at Saxo Bank, says the 20 best-performing US and European stocks have delivered an average return year-to-date of 148 per cent, measured in local currency terms.

Online marketplace Etsy was the best performer with a return of 330.6 per cent, followed by communications software company Sinch (315.4 per cent), online supermarket HelloFresh (232.8 per cent) and fuel cells specialist NEL (191.7 per cent).

Mr Garnry says digital companies benefited from the lockdown, while green energy firms flew as efforts to combat climate change were ramped up, helped in part by the European Union’s green deal. 

Electric car company Tesla would be on the list if it had been part of the S&P 500 Index, but it only joined on December 21. “Tesla has become one of the most valuable companies in the world this year as demand for electric vehicles has grown dramatically,” Mr Garnry says.

By contrast, the 20 worst-performing European stocks fell 54 per cent on average, with European banks hit by the economic fallout from the pandemic, while cruise liners and airline stocks suffered due to travel restrictions.

As demand for energy fell, the oil and gas industry had a tough year, too.

Mr Garnry says the biggest story this year was the “absolute crunch” in so-called value stocks, companies that trade at low valuations compared to their earnings and growth potential.

He says they are “heavily tilted towards financials, miners, energy, utilities and industrials, which have all been hit hard by the Covid-19 pandemic”. “The last year saw these cheap stocks become cheaper and expensive stocks have become more expensive.” 

This has triggered excited talk about the “great value rotation” but Mr Garnry remains sceptical. “We need to see a breakout of interest rates combined with higher inflation before we join the crowd.”

Always remember that past performance is not a guarantee of future returns. Last year’s winners often turn out to be this year’s losers, and vice-versa.

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Company name: Revibe
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Founders: Hamza Iraqui and Abdessamad Ben Zakour
Based: UAE
Industry: Refurbished electronics
Funds raised so far: $10m
Investors: Flat6Labs, Resonance and various others

Company profile

Company name: Fasset
Started: 2019
Founders: Mohammad Raafi Hossain, Daniel Ahmed
Based: Dubai
Sector: FinTech
Initial investment: $2.45 million
Current number of staff: 86
Investment stage: Pre-series B
Investors: Investcorp, Liberty City Ventures, Fatima Gobi Ventures, Primal Capital, Wealthwell Ventures, FHS Capital, VN2 Capital, local family offices

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Name: Direct Debit System
Started: Sept 2017
Based: UAE with a subsidiary in the UK
Industry: FinTech
Funding: Undisclosed
Investors: Elaine Jones
Number of employees: 8

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Company: Eco Way
Started: December 2023
Founder: Ivan Kroshnyi
Based: Dubai, UAE
Industry: Electric vehicles
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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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If you go

Flights

Emirates flies from Dubai to Phnom Penh with a stop in Yangon from Dh3,075, and Etihad flies from Abu Dhabi to Phnom Penh with its partner Bangkok Airlines from Dh2,763. These trips take about nine hours each and both include taxes. From there, a road transfer takes at least four hours; airlines including KC Airlines (www.kcairlines.com) offer quick connecting flights from Phnom Penh to Sihanoukville from about $100 (Dh367) return including taxes. Air Asia, Malindo Air and Malaysian Airlines fly direct from Kuala Lumpur to Sihanoukville from $54 each way. Next year, direct flights are due to launch between Bangkok and Sihanoukville, which will cut the journey time by a third.

The stay

Rooms at Alila Villas Koh Russey (www.alilahotels.com/ kohrussey) cost from $385 per night including taxes.

Milestones on the road to union

1970

October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar. 

December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.

1971

March 1:  Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.

July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.

July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.

August 6:  The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.

August 15: Bahrain becomes independent.

September 3: Qatar becomes independent.

November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.

November 29:  At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.

November 30: Despite  a power sharing agreement, Tehran takes full control of Abu Musa. 

November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties

December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.

December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.

December 9: UAE joins the United Nations.

ASIAN RUGBY CHAMPIONSHIP 2024

Results
Hong Kong 52-5 UAE
South Korea 55-5 Malaysia
Malaysia 6-70 Hong Kong
UAE 36-32 South Korea

Fixtures
Friday, June 21, 7.30pm kick-off: UAE v Malaysia
At The Sevens, Dubai (admission is free).
Saturday: Hong Kong v South Korea

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School: Year 8 pupil at Elite English School in Abu Hail, Deira

Role Models: Mark Zuckerberg and Elon Musk

Dream City: San Francisco

Hometown: Dubai

City of birth: Thiruvilla, Kerala

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