Iran has ramped up weapons transfers, via sea and air, to the government of Nicolas Maduro in Venezuela, according to US Admiral Craig Faller.
Co-operation between the staunchly anti-American regimes is not unusual, but Adm Faller, who spoke to The Wall Street Journal on Thursday, said arms transfers could be part of a plan to threaten US interests across South America.
“We’re real concerned about what Iran is up to, not just globally, but here in this hemisphere,” Adm Faller said.
Iran has said it will retaliate not only for last Friday’s assassination of Iranian scientist Mohsen Fakhrizadeh but also for the death of high-ranking general Qassem Suleimani, who was killed in a US drone strike in Baghdad on January 3.
Any attack in response to these killings may not necessarily occur in the Middle East.
One of two Iranian airlines alleged to be supplying Mr Maduro with arms is Mahan Air. The US imposed sanctions on the civilian airline in October 2011, after Washington accused it of working on behalf of the Islamic Revolutionary Guard Corps to supply the forces of President Bashar Al Assad in Syria.
In October, an aircraft belonging to Qeshm Fars Air, also under US sanctions, landed in Caracas, showed the flight-tracking website Flightradar24.
New capabilities
Financial challenges facing Caracas and Tehran, which have worsened in 2020, could explain one area of reported co-operation – drones.
Conflicts such as the recent Nagorno-Karabakh war have shown that relatively inexpensive unmanned aerial vehicles (UAVs) can be devastating in a conventional conflict. No military power has yet developed proven countermeasures.
"Iranian arms transfers to Venezuela, especially UAV technology, would be a grave concern for the US and regional stability," said Ryan Berg, a research fellow at The American Enterprise Institute and specialist on security in Latin America.
"In the wake of another prominent assassination of someone linked to Iran's nuclear program, it is important to note that Iran has strategically penetrated several areas of South America, making retaliation for such a strike possible," he said.
"Through proxy groups like Hezbollah, the Iranians have struck in South America before, most devastatingly in Buenos Aires in 1992 and again in 1994," added Mr Berg, referring to devastating terrorist attacks targeting the Israeli embassy and a Jewish community group, killing over 100 people.
Drones would be particularly attractive to Venezuela, which has spent billions on more conventional Russian weapons such as the S-400 anti-missile system, equipment thought by some to be inoperable due to a lack of funds. But this has not stopped Mr Maduro from deploying his forces in the Caribbean, sending anti-aircraft missiles to the island of Orchila in May.
Mr Maduro also announced that his country was developing its own drones, technology on which Iran and Venezuela have been co-operating since 2012.
During a televised speech by Mr Maduro, made in an aircraft hangar on November 20, analysts noted what appeared to be a model of an Iranian Mohajer-6 unmanned combat aerial vehicle.
This suggests Tehran is serious about helping Venezuela to develop more nimble capabilities to complement its underfunded conventional military.
Caribbean attack?
Iran claims one of its recent drones, the Kian, has a 965-kilometre range, which means that Tehran could – if the IRGC desire, harass US interests or those of its allies across much of the Caribbean, as Iran has targeted US interests, including the oil infrastructure of allies, across the Gulf.
If Iran decides to strike US interests in the Caribbean, the IRGC could claim innocence, particularly if forces loyal to Mr Maduro have the equipment to conduct the attack.
Tehran has used similar tactics in Iraq and Yemen. After missiles struck oil processing infrastructure at Abqaiq in Saudi Arabia in September 2019 – one of the largest attacks on oil infrastructure in history – Iran denied any role. Houthi militias, backed by Iran, claimed credit, but a UN report in June 2020 concluded the missiles used in the attack were "of Iranian origin".
Militia franchise
In 2010, a partially redacted Pentagon report was released to Congress, stating that the IRGC had established networks “in Latin America, particularly Venezuela”.
Whatever Iran’s intentions – to supply fuel and condensate for Mr Maduro’s ailing regime in exchange for Venezuelan gold, or something more hostile, Tehran’s involvement is quickly reaching an advanced stage.
In September, former chief commander of the IRGC, Maj Gen Yahya Rahim Safavi told the state-run Mehr News Agency that Iranian advisers were creating a “popular force” of militias in Venezuela.
Caracas already has a large force of paramilitaries, akin to Iran’s Basij militia and Iran-backed elements of Iraq's Popular Mobilisation Forces. These groups have taken part in brutal crackdowns on demonstrators.
Even if Tehran’s aims are not openly hostile to US interests in the Caribbean, Iranian assistance to Venezuela will likely strengthen Mr Maduro’s rule.
The arms transfers are "bad news for average Venezuelans, as their government prioritises buying weapons over attending to the country's unfolding humanitarian crisis," said Mr Berg.
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.
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
ONCE UPON A TIME IN GAZA
Starring: Nader Abd Alhay, Majd Eid, Ramzi Maqdisi
Directors: Tarzan and Arab Nasser
Rating: 4.5/5
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The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
ESSENTIALS
The flights
Fly Etihad or Emirates from the UAE to Moscow from 2,763 return per person return including taxes.
Where to stay
Trips on the Golden Eagle Trans-Siberian cost from US$16,995 (Dh62,414) per person, based on two sharing.
The%20specs
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THE BIO
Age: 33
Favourite quote: “If you’re going through hell, keep going” Winston Churchill
Favourite breed of dog: All of them. I can’t possibly pick a favourite.
Favourite place in the UAE: The Stray Dogs Centre in Umm Al Quwain. It sounds predictable, but it honestly is my favourite place to spend time. Surrounded by hundreds of dogs that love you - what could possibly be better than that?
Favourite colour: All the colours that dogs come in
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.”
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
THURSDAY'S FIXTURES
4pm Maratha Arabians v Northern Warriors
6.15pm Deccan Gladiators v Pune Devils
8.30pm Delhi Bulls v Bangla Tigers
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
The Vile
Starring: Bdoor Mohammad, Jasem Alkharraz, Iman Tarik, Sarah Taibah
Director: Majid Al Ansari
Rating: 4/5