Iranian students protest at the University of Tehran during a demonstration driven by anger over economic problems, in the capital Tehran on December. AFP
Iranian students protest at the University of Tehran during a demonstration driven by anger over economic problems, in the capital Tehran on December. AFP
Iranian students protest at the University of Tehran during a demonstration driven by anger over economic problems, in the capital Tehran on December. AFP
Iranian students protest at the University of Tehran during a demonstration driven by anger over economic problems, in the capital Tehran on December. AFP

Facing new sanctions, Iranians vent anger at rich and powerful


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More Iranians are using social media to vent anger at what they see as the corruption and extravagance of a privileged few, while the majority struggles to get by in an economy facing tighter US sanctions.

The country has been hit by a wave of protests during the past year, some of them violent, but as economic pressures rise, people are increasingly pointing fingers at the rich and powerful, including clerics, diplomats, officials and their families.

One person channelling that resentment is Seyed Sadrossadati, a relatively obscure cleric who has amassed 256,000 followers on his Instagram account with a series of scathing posts aimed at children of the elite.

In one recent post, he blasted the "luxury life" of a Revolutionary Guards commander and his son, who posted a selfie online in front of a tiger lying on the balcony of a mansion.

Openly criticising a well-known member of the powerful military unit that answers to Supreme Leader Ayatollah Ali Khamenei is in itself an unusual act of defiance.

"A house tiger? What's going on?" Mr Sadrossadati wrote. "And this from a 25-year-old youth who could not gain such wealth. People are having serious difficulty getting diapers for their child."

The Iranian rial has hit 149,000 to the US dollar on the black market used for most transactions, down from around 43,000 at the start of 2018, as US President Donald Trump vowed to pull out of the nuclear deal between Tehran and world powers aimed at curbing its nuclear programme.

That has sent living costs sharply higher and made imports less accessible, while the threat of financial punishment from the US has prompted many foreign companies to pull out of Iran or stay away.

The situation could get worse, as additional sanctions come into force this week.

Wary of growing frustration over the relative wealth of a few among the population of 81 million, Mr Khamenei has approved the establishment of special courts focused on financial crimes.

The courts have handed out at least seven death sentences since they were set up in August, and some of the trials have been broadcast live on television.

Among those sentenced to death was Vahid Mazloumin, dubbed the "sultan of coins" by local media, a trader accused of manipulating the currency market and who was allegedly caught with two tons of gold coins, according to the Iranian Students' News Agency (ISNA).

The tough sentences have not been enough to quell frustration, however, with high profile officials and clerics in the firing line.

"Because the economic situation is deteriorating, people are looking for someone to blame and in this way get revenge from the leaders and officials of the country," said Saeed Leylaz, an economist and political analyst in Tehran.

Washington is likely to welcome signs of pressure on Iran's political and religious establishment, as it hopes that by squeezing the economy it can force Tehran to curb its nuclear programme and row back on military and political expansion in the Middle East.

Public anger among Iranians has been building for some time.

Demonstrations over economic hardships began late last year, spreading to more than 80 cities and towns and resulting in at least 25 deaths.

In addition to his written contributions, Mr Sadrossadati has posted videos of debates between himself and some of those he has criticised.

In one, he confronted Mehdi Mazaheri, the son of a former central bank governor who was criticised online after a photograph appeared showing him wearing a large gold watch.

In a heated exchange, Mr Sadrossadati shouted: "How did you get rich? How much money did you start out with and how much money do you have now? How many loans have you taken?"

Mr Mazaheri, barely able to get in a reply, said he would be willing to share documents about his finances.

Children of more than a dozen other officials have been criticized online and are often referred to as "aghazadeh" - literally "noble-born" in Farsi but also a derogatory term used to describe their perceived extravagance.

High-profile clerics have also been targeted.

Mohammad Naghi Lotfi, who held the prestigious position of leading Friday prayers at a mosque in Ilam, west Iran, resigned in October after he was criticised on social media for being photographed stepping out of a luxury sports utility vehicle.

Facebook posts labelled Mr Lotfi a hypocrite for highlighting ways that ordinary Iranians could get through the economic crisis during his speeches. The outcry was a major factor in his decision to resign from a post he had held for 18 years.

"The hype that was presented against me in this position ... made me resign, lest in the creation of this hype the position of the Supreme Leader of the Islamic Revolution be damaged," Mr Lotfi told state media after stepping down.

"The issue of the vehicle ... was all lies that they created in cyberspace," he added.

He was one of at least four clerics in charge of Friday prayers who have resigned in the last year after being accused on social media of profligacy or financial impropriety.

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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Pot 1: Iran, Japan, South Korea, Australia, Qatar, United Arab Emirates, Saudi Arabia, China
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Etihad and Emirates fly direct from the UAE to Delhi from about Dh950 return including taxes.
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Double rooms at Tijara Fort-Palace cost from 6,670 rupees (Dh377), including breakfast.
Doubles at Fort Bishangarh cost from 29,030 rupees (Dh1,641), including breakfast. Doubles at Narendra Bhawan cost from 15,360 rupees (Dh869). Doubles at Chanoud Garh cost from 19,840 rupees (Dh1,122), full board. Doubles at Fort Begu cost from 10,000 rupees (Dh565), including breakfast.
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Amar Grover travelled with Wild Frontiers. A tailor-made, nine-day itinerary via New Delhi, with one night in Tijara and two nights in each of the remaining properties, including car/driver, costs from £1,445 (Dh6,968) per person.

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