Iran will significantly expand its military arsenal by buying high-grade weapons from both China and Russia once the arms embargo ends in October, leading defence analysts have said.
The world’s most advanced air defence missiles – bar those from the United States – are likely to be snapped up by Tehran along with advanced jets and submarines if the United Nations ban is lifted.
The Iranians will be able to “radically increase their capabilities” if they can buy hardware at a much reduced price as the country plays off Russia and China against each other in a “beauty competition”, said analysts at the International Institute for Strategic Studies (IISS).
To prevent the high-end arms sale the US will work hard to stop the 13-year embargo being lifted in October and has already circulated a draft UN resolution. The Americans fear that despite the current ban Iran is still arming proxies in Yemen and Syria; lifting it will make the process significantly easier.
With its most likely opponents to be the Gulf States, the US or Israel, which could conduct a bombing raid, Iran will prioritise the air defence forces, said Henry Boyd, author of IISS's The Military Balance publication. "It's the air force and air defence sector they will look to prioritise if they can get access to it. More advanced systems from China could radically increase their capabilities."
He added: “They look enviously at the capabilities that Russia and China have put into the field in recent years and would look to put that in their architecture.”
Iran could buy Russia’s highly advanced S-400 missile defence system – controversially purchased by Turkey – that would threaten both Gulf and US combat aircraft.
If that proves too expensive Iran would look to buy the Chinese long-range homing missile, the FD-2000 Fang Dun.
A number of the world’s most proficient aircraft could also be available for sale. While not as advanced as US or European fighter planes, the Russian Sukhoi Su-30 Flanker combat jet along with China’s J-10 Firebird and the joint China-Pakistan JF-17 Thunder multi-role jets are available for export.
Iran already operates the Russian-built Kilo class submarines, which it could look to update, but it may also look to purchase the Chinese Yuan, which is said to be the world’s quietest diesel-electric submarine.
Both warships and cargo vessels in Gulf waters will come under severe threat if the Iranians are allowed to buy either the Chinese YJ-18 anti-shipping cruise missile or the Russian Klub ‘Sizzler’ system that can also hit targets on land. Both are submarine-launched, making a surprise attack near impossible to detect. Iran has shown it can and will use cruise missiles after the precision attack on Saudi Arabia’s oil production site last September.
Douglas Barrie, of IISS, said Tehran was “desperate to upgrade” its military equipment but hoped to play off China and Russia to get better deals.
“They are going to have a beauty competition between Beijing and Moscow over who will get the deal – if Iran wants to stay in the conventional air-power business, and every indication is that they do,” the IISS Senior Fellow for Military Aerospace said.
While Iran’s air force has been severely underfunded, it has still managed to keep fighter jets such as the US-built F-14 and F-4, both now more than 40 years old, operational. New advanced jets, Mr Barrie said, will put Gulf States “at risk”.
Limited finances have forced Iran to develop its own defence industry with drones, accurate missiles and fast patrol boats.
With the embargo lifted military analysts believe Iran will put a "moderate investment" into foreign military hardware that will provide opponents "with a wider range of threats to counter," Mr Boyd told The National.
“If possible, it is likely to buy from both countries, possibly in the form of a high to low mix of capabilities – ordering small numbers of more capable, but more expensive systems from one country with cheaper, but less capable versions from the other.”
Professor Michael Clarke, of the Royal United Services Institute, said Iran would go for quality rather than large quantities of military hardware.
“They are going for the high-tech specialist kit, which might in the long term turn out to be cheaper than a big military. It will be a force to hold off the Americans and deal with whatever the Saudis can put against them.”
The Iranians are also eager to purchase an Awacs early warning aircraft that would allow them to control the aerial battle space, he added. Additionally they are looking to upgrade their satellite communications, surveillance and cyber capacity – “They do a lot of hacking but they’re not that good at it,” Mr Clarke added.
If the embargo lifts, Iran’s limited budget means the rearming of its military could potentially take two decades, the IISS experts added.
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.”
Fireball
Moscow claimed it hit the largest military fuel storage facility in Ukraine, triggering a huge fireball at the site.
A plume of black smoke rose from a fuel storage facility in the village of Kalynivka outside Kyiv on Friday after Russia said it had destroyed the military site with Kalibr cruise missiles.
"On the evening of March 24, Kalibr high-precision sea-based cruise missiles attacked a fuel base in the village of Kalynivka near Kyiv," the Russian defence ministry said in a statement.
Ukraine confirmed the strike, saying the village some 40 kilometres south-west of Kyiv was targeted.
If you go
The flights
Etihad (etihad.com) flies from Abu Dhabi to Luang Prabang via Bangkok, with a return flight from Chiang Rai via Bangkok for about Dh3,000, including taxes. Emirates and Thai Airways cover the same route, also via Bangkok in both directions, from about Dh2,700.
The cruise
The Gypsy by Mekong Kingdoms has two cruising options: a three-night, four-day trip upstream cruise or a two-night, three-day downstream journey, from US$5,940 (Dh21,814), including meals, selected drinks, excursions and transfers.
The hotels
Accommodation is available in Luang Prabang at the Avani, from $290 (Dh1,065) per night, and at Anantara Golden Triangle Elephant Camp and Resort from $1,080 (Dh3,967) per night, including meals, an activity and transfers.
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
UAE currency: the story behind the money in your pockets
First Person
Richard Flanagan
Chatto & Windus
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
UNSC Elections 2022-23
Seats open:
- Two for Africa Group
- One for Asia-Pacific Group (traditionally Arab state or Tunisia)
- One for Latin America and Caribbean Group
- One for Eastern Europe Group
Countries so far running:
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
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
The specs: 2018 Audi R8 V10 RWS
Price: base / as tested: From Dh632,225
Engine: 5.2-litre V10
Gearbox: Seven-speed automatic
Power: 540hp @ 8,250rpm
Torque: 540Nm @ 6,500rpm
Fuel economy, combined: 12.4L / 100km
