US and French warships in formation in the Arabian Sea, where the MV Mercer Street came under attack. AFP
US and French warships in formation in the Arabian Sea, where the MV Mercer Street came under attack. AFP
US and French warships in formation in the Arabian Sea, where the MV Mercer Street came under attack. AFP
US and French warships in formation in the Arabian Sea, where the MV Mercer Street came under attack. AFP

Nato and EU join condemnation of tanker attack blamed on Iran


Tim Stickings
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Nato and the EU have joined the condemnation of the deadly attack on an oil tanker blamed on Iran by world powers.

A British and a Romanian national were killed in the suspected drone attack in the Arabian Sea.

After the UK and US pointed the finger at Tehran, a Nato spokesman said the alliance was concerned by Iran’s “destabilising actions” in the region.

“We join allies in strongly condemning the recent fatal attack on the MV Mercer Street,” the spokesman said.

“Freedom of navigation is vital for all Nato allies, and must be upheld in accordance with international law.”

Welcoming Nato's comments, UK Foreign Secretary Dominic Raab said: "We believe this was a deliberate, targeted attack by Iran – it must end its destabilising actions immediately."

Brussels called for an independent investigation into the attack, which took place off the coast of Oman on Thursday.

“Such acts contrary to the security and freedom of navigation in the region are unacceptable,” European Commission spokeswoman Nabila Massrali said.

“All parties concerned must avoid all actions that could undermine peace and regional stability.”

Iran denied responsibility for the attack against a vessel linked to prominent Israeli billionaire Eyal Ofer.

The Liberian-flagged, Japanese-owned tanker was managed by the Israeli-owned company Zodiac Maritime, whose chairman is Mr Ofer.

The attack happened amid protracted negotiations on a revival of the nuclear deal between Iran and world powers, which the US abandoned in 2018.

US Secretary of State Antony Blinken said last week that the talks could not go on forever but that Washington was prepared to continue.

After the Mercer Street incident, he said Washington would seek a collective response and accused Iran of acting with “tremendous irresponsibility”.

He said it followed a “pattern of attacks and other belligerent behaviour” by Iran.

Israeli Prime Minister Naftali Bennett said his country was capable of responding alone if necessary. He said Israel had shared intelligence with the US, Britain and others tying Iran to the attack.

“Iran already knows the price we exact when someone threatens our security,” he said.

“The Iranians need to understand that it is impossible to sit placidly in Tehran and ignite the entire Middle East from there. That's over."

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: August 03, 2021, 2:58 PM