Iran's fractured political elite


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While mass demonstrations suggest a threat to Iran's political establishment, the real contest for power comes from within its own opposing factions, each making its own claim to sustain the Islamic revolution. As this struggle plays out, the individual whose power may ultimately face the strongest challenge is not President Mahmoud Ahmadinejad but the Supreme Leader himself, Grand Ayatollah Ali Khamenei. "What's often forgotten amid the genuinely awe-inspiring spectacle of hundreds of thousands of long-suppressed people risking their lives on the streets to demand change is the fact that the political contest playing out in the election is, in fact, among rival factions of the same regime," wrote Trita Parsi in Time magazine. "Ahmadinejad represents a conservative element, backed by the Supreme Leader, that believes the established political class has hijacked the revolution and enriched themselves and is fearful that the faction's more pragmatic inclination toward engagement with the West could lead to a normalisation of relations that will 'pollute' Iran's culture and weaken the regime. Mousavi is not really a reformer so much as a pragmatic, moderate conservative who has campaigned with the backing of the reform movement because it recognises that he has a better chance of unseating Ahmadinejad than one of their own would have. (The reformists' own economic performance, during their eight years in power from 1997 to 2005, unfortunately also left much to be desired, and was a key reason for Ahmadinejad's election to the presidency.) "Both political camps contain stalwart members of the political establishment, and both claim to be trying to hold the Islamic Republic to the promise of the revolution that created it in 1979. Ahmadinejad may talk about rescuing a revolution that has strayed from its wayward path, but Mousavi's supporters have made a ritual of going onto their roofs every night at an appointed hour to scream 'Allah u'Akbar' (God is great), the Islamic chant popularised as a political slogan by the revolution of 1979. It's hard to style this as a revolt against the system when, in fact, the primary demand of the millions who have joined the protests is that their votes, for one of the more managerially competent and pragmatic stalwarts of the regime, be counted." In The New York Times, Neil MacFarquhar noted: "many analysts say the differences between factions have never been quite so pronounced nor public as in the past few days. Former President Ali Akbar Hashemi Rafsanjani, once a close Khamenei ally who helped him become supreme leader, sent an open letter to him in the days before the election warning that any fraud would backfire... If he allowed the military to ignore the public will and to destroy senior revolutionary veterans, the decision would haunt him, Mr Rafsanjani warned: 'Tomorrow it is going to be you.' "Everyone speaking of Ayatollah Khamenei tends to use the word 'cautious,' a man who never gambles. But he now faces a nearly impossible choice. If he lets the demonstrations swell, it could well change the system of clerical rule. If he uses violence to stamp them out, the myth of a popular mandate for the Islamic revolution will die." Robert Baer, a former CIA operative, wrote in The New Republic: "What makes this such a tenuous situation is that Khamenei's legitimacy has been in question from the day he succeeded Ayatollah Khomeini in 1989. It was widely understood among intelligence analysts that Khamenei did not have the religious credentials to succeed Khomeini as supreme leader, Iran's head of state who is supposed to be the most learned religious cleric. In fact, Khamenei is not even really an ayatollah - his license was in effect bought - and he has no popular religious following as other legitimate ayatollahs do. It doesn't help that Iranian leaders of Khomeini's generation have never particularly liked Khamenei and see him as a man who muscled his way into power, perhaps even by killing Khomeini's son, the person most likely to challenge his rule. "A sure signal of Khamenei's political weakness occurred when Ahmadinejad attacked former president Rafsanjani for corruption during the election campaign. Rafsanjani is and always has been a threat to Khamenei's legitimacy. Not only is he more of a real ayatollah, but he is also Chairman of the Assembly of Experts and the Expediency Council, two powerful government bodies. The Assembly of Experts has the power to remove Khamenei and appoint a new Supreme Leader. And though facts are impossible to come by, it is almost certain that Ahmadinejad's attack on Rafsanjani could not have been made without a green light from Khamenei, who knew that charges of Rafsanjani's corruption would strike a chord with Iranians. Khamenei saw and probably still sees Rafsanjani as a threat to his power, even to his position as supreme leader, and this was an effective way to pounce. "Still, if the protests and demonstrations in Tehran cannot be controlled, we should seriously start to wonder about Khamenei's future. Rafsanjani is rumoured to be in the holy city of Qum plotting against Khamenei, seeing if he has enough votes in the 86-member Assembly of Experts to remove Khamenei. A vote recount is unlikely to change the results of the election, but it could lead to more demonstrations, which backed by Rafsanjani and the other mullahs, might just end Khamenei's 20 year run." In The New Yorker, Laura Secor pointed out that the political challenge coming from Mir Hossein Mousavi is unprecedented. "He is an entirely different kind of animal from reformist politicians of the past; he is identified not with students and intellectuals but with the hardscrabble war years and the defense of the poor. But as one analyst explained to me, the problem he faces is that he is perhaps the only person on the Iranian political scene whose public stature is equal to Khamenei's. He was a favourite son of Ayatollah Ruhollah Khomeini in the nineteen-eighties. Many Khomeinists in the power structure respect and support him; within the Revolutionary Guards, as well as within the upper clergy, he has a constituency. Traditional, religious people are among his supporters, too. On the morning of June 12th, he may have been the uncharismatic compromise candidate for the anyone-but-Ahmadinejad crowd. But to other voters he was then, and he has increasingly become, something else: the vehicle both for the memory of the utopia that never came, and for the hopes of a younger generation that imagines he shares its vision of the future." Writing in Newsweek, Michael Hirsh who visited Iran two years ago said: "For an autocratic police state, the Iranian power structure is uniquely pluralistic. It is governed by system of clerical checks and balances that leaves no figure, even Khamenei, with unquestioned authority. Rafsanjani, for example, is head of the Assembly of Experts, a council of senior clerics that at least theoretically has the power to remove Khamenei if he is judged unqualified to serve (highly unlikely, even now, given that Khamenei has stocked the assembly with allies). When I visited the religious city of Qom, where Khomeini got his start, I interviewed a few dissident clerics. One of that group, Grand Ayatollah Yusef Saanei, urged me to write critically about the Guardian Council, which has the power to vet presidential candidates and has now called for at least a partial recount of Sunday's vote results. " 'Why don't you warn your readers about the Guardian Council?' Saanei said reproachfully. Saanei told me he believes this all-powerful body, created to ensure that Iranian laws and practices adhere to Islamic code, was out of control, intruding far too much in the lives and politics of Iran. He said the entire budget for the Guardian Council in the early days of the revolution 'was only like $2,000; it's getting millions of dollars now,' and argued the council has become a means of eliminating reformers and dissidents from running for office when it should play a much more low-key role. "During our talk in 2007, Saanei even acknowledged that, while he believed in Islamic rule, he was open to the idea that the Iranian people might decide to vote the clerics out of power one day. 'It's entirely possible,' he said. 'There's no need for the clerics to be in charge. If people don't want them, they don't want them.' He said that Ayatollah Ali Sistani's 'quietist' approach to religion and politics next door in Iraq - which prevents clerics from directly running government - was just fine with him."

pwoodward@thenational.ae

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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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