Iran's Qasef-1 drones such as the one pictured above have passed to Houthi rebels. Conflict Armament Research
Iran's Qasef-1 drones such as the one pictured above have passed to Houthi rebels. Conflict Armament Research
Iran's Qasef-1 drones such as the one pictured above have passed to Houthi rebels. Conflict Armament Research
Iran's Qasef-1 drones such as the one pictured above have passed to Houthi rebels. Conflict Armament Research

Germany stops Iran buying mini-engines after they were found in Houthi drones


Damien McElroy
  • English
  • Arabic

German officials imposed a ban on the sale of model aircraft engines to Iran after a shipment ended up in drones used by the Houthis in Yemen to attack Saudi Arabia.

The move prompted a shift in Iranian procurement to advanced engine technology that is smuggled in drones bought from Chinese makers and shipped from Xiamen to Mombasa,

From there the units are smuggled to Salalah in Oman and on to Houthi strongholds, intelligence reports say.

It emerged that a small maker of engines for miniature versions of well-known aircraft was approached by Germany’s domestic intelligence service, which had been monitoring sales of units later found on the battlefield.

The shipment of 42 twin-cylinder propeller motors in 2015 was routed through Athens to Tehran.

Intelligence officials working for Germany’s Federal Office for the Protection of the Constitution (BfV) stepped in weeks later to prevent further sales to Iran.

“There was no indication that the engines would be delivered to Iran,” said Karsten Schudt, managing director of manufacturer 3W-International.

At the instigation of the BfV, the order was prevented.

Iran has used German and Dutch precision-engineered small engines for more than a decade to boost its own drone production.

These include powerful machines of more than 80 brake horsepower, made by Limbach Flugmotoren, a German manufacturer.

Experts believe that for at least five years the Iranians have built up drone-making capability to arm its Houthi allies.

In mid-2018, the Houthis began using more advanced drones from Iran’s Sammad series, which is believed to have three variants with an operational range well beyond 1,000 kilometres.

These drones have powerful engines and can carry larger warheads.

A dossier circulating in Europe, compiled by an undercover agent, suggests Houthi-Iran drone production is financed by Qatar.

At the centre of the web is a front company in Cyprus that uses funds from gold trading to make payments to European suppliers.

The dossier also shows links between the front company and leading Qatari financial institutions.

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In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458. 

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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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