Iran could be stoking tension in the Arabian Gulf as part of a campaign to distract attention from its dire domestic situation during the coronavirus pandemic, experts have said.
The Iranian Revolutionary Guard Corps navy has increased its operations. Eleven fast boats harassed US warships on Wednesday and navy members boarded a Hong Kong-registered ship the previous day.
The boats used aggressive tactics, coming within 10 metres of American warships in the Gulf in what the US Navy described as a series of “dangerous and harassing approaches”.
The Tehran government is suffering from international sanctions, the coronavirus and the exceptionally low prices for oil, on which it largely depends for income.
“Iran is attempting to show its strength while trying to avoid escalation,” said Malcolm Chalmers, deputy director general of the Royal United Services Institute.
“The government is under tremendous domestic and economic pressure because of sanctions and the virus.
“But Iran does not want to escalate beyond a certain point.
"It has not yet changed its calculus to do something above the US retaliation threshold that would provoke a severe response from Washington.
"Tehran clearly understands that killing US personnel is very much a red line for President Trump, with the chances of escalation extremely high.”
Mr Chalmers said that since the US killed top Iranian general Qassem Suleimani in a drone strike in January, it had been notable how much more restrained Iran and its proxies had become in military action.
Nick Childs, a maritime expert at the International Institute of Strategic Studies, said it was possible that the Iranians “are stepping up military activity during Covid 19 with a domestic audience in mind".
“This might also be a probing exercise to see if its enemies are on their guard during the current pandemic and how they will respond to having their nerve tested,” Mr Childs said.
An intelligence source said the Iranians could be “stepping up military activity in the Gulf as part of a campaign to deflect attention away from coronavirus fallout”.
Iran’s Health Ministry reported that the death toll from Covid-19 could be double the reported figure of 4,869.
With almost 80,000 reported cases of the virus, Iran has the eighth highest total in the world.
The Tehran regime has been accused of a chaotic approach to tackling the crisis, which has been compounded by its military activity.
“As expected, Iran is continuing to flex muscle amid the global pandemic,” Ariane Tabatabai, a Middle East fellow at the German Marshall Fund of the US, wrote on Twitter.
"It’s neither deterred nor about to hit the pause button on tensions with the US to focus on public health."
A Royal Navy officer said the Iranians were playing an “extremely high-risk strategy”, because fast boats could be mistaken for suicide attacks.
“Any miscalculation by either side could lead to loss of life and greater escalation,” the officer said.
The UK Maritime Trade Operations base has warned of "water-borne improvised explosive devices" in the wider area.
UAE currency: the story behind the money in your pockets
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.”
UAE currency: the story behind the money in your pockets
Heavily-sugared soft drinks slip through the tax net
Some popular drinks with high levels of sugar and caffeine have slipped through the fizz drink tax loophole, as they are not carbonated or classed as an energy drink.
Arizona Iced Tea with lemon is one of those beverages, with one 240 millilitre serving offering up 23 grams of sugar - about six teaspoons.
A 680ml can of Arizona Iced Tea costs just Dh6.
Most sports drinks sold in supermarkets were found to contain, on average, five teaspoons of sugar in a 500ml bottle.
Our legal advisor
Rasmi Ragy is a senior counsel at Charles Russell Speechlys, a law firm headquartered in London with offices in Europe, the Middle East and Hong Kong.
Experience: Prosecutor in Egypt with more than 40 years experience across the GCC.
Education: Ain Shams University, Egypt, in 1978.
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UAE currency: the story behind the money in your pockets
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