Israel strike threat on Iran back on table


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JERUSALEM // A flurry of media reports in Israel and elsewhere, as well as comments by US officials, past and present, have suddenly put the possibility of an Israeli military strike on Iran firmly back on the agenda. But analysts are divided over whether the recent media noise indicates anything more than political posturing or if the idea of an Israeli strike, set aside ever since Barack Obama, the US president, took office with a pledge to engage Tehran, is now a serious possibility if not an imminent one.

Certainly, the turmoil in Iran after elections that saw the incumbent Mahmoud Ahmadinejad returned under controversial circumstances, has contributed to a firming of the tone by US officials on Iran. This was most notable in an interview Joe Biden, the US vice president, gave ABC News in which he said Israel, as a sovereign nation, would decide for itself how to deal with Iran. His comments followed an article last week in The Washington Post by John Bolton, a senior Republican, in which the former US ambassador to the United Nations under George W Bush opined that an Israeli strike on Iran was now the only way to stop Tehran's nuclear programme.

In Israel, there is a sense of vindication on behalf of officials in Benjamin Netanyahu's government. Mr Netanyahu ran for elections this year on a ticket that posited Iran as an existential threat to Israel and the greatest source of instability in the region, relegating the Palestinian-Israeli conflict down the list of priorities. Mr Obama's insistence, however, on expending a significant amount of energy on the Palestinian-Israeli conflict put Mr Netanyahu on the defensive and saw the Israeli government defer its position on Iran to Washington, while eventually forcing Mr Netanyahu to bow to pressure to make a commitment, however conditional and lukewarm, to a two-state solution.

"One explanation [for Mr Biden's remarks] is that a deal was done between the US and Israel," said Yossi Alpher, an Israeli analyst and a former Iran specialist with Mossad, Israel's foreign intelligence service. "On the same day that Biden made his remarks, Netanyahu opened his cabinet meeting by saying that in the first 100 days of his government, an Israeli consensus had been reached on the two-state solution."

Mr Alpher said Mr Netanyahu felt that Israel needed to make concessions on the Palestinian issue to secure US support for his government's position on Iran "if and when" Israel needs to strike Iran. "It certainly looked like a deal had been done," he said. Mr Alpher also suggested that the international community was coming to the conclusion that the unrest in Iran was over and that a "tougher posture" on Iran might be in order to soften up Tehran before any serious diplomatic engagement could be possible.

Aluf Been, the diplomatic editor of the liberal Israeli daily newspaper Haaretz, suggested that the issue of Iran had now, after a hiatus of several weeks, been put "clearly back on the table". "There are two ways to look at recent events in Iran. One is that the clear presence of a strong reformist movement in Iran basically puts an end to any talk of bombing Iran because that would undermine the reformists. The other way of looking at it is, given the crackdown of the Iranian regime on protests, there is no point in engaging this regime and therefore the only way to stop the country's nuclear programme is through force."

The reason the issue of an Israeli strike is back on the table, Mr Benn said, was that the second strand of thinking was gaining traction. Mr Benn said he did not believe Mr Biden's remarks constituted a "green light" to Israel. More likely, Mr Benn said, Mr Biden's remarks were a "veiled threat" that if Iran does not respond to Mr Obama's invitation to engage, the United States has options. Neither Mr Benn nor Mr Alpher set much store in a report by the Sunday Times that said Saudi Arabia had allowed Israel the use of its airspace in the event of a strike. Mr Alpher noted that Israel, unusually, had gone out of its way to deny then newspaper's report. Saudi Arabia has also strenuously denied the report.

Nevertheless, there is little doubt that the Israeli government is now again seriously looking into the idea of a strike on Iran, though no one suggests this is an imminent possibility. Much will still depend on how US efforts at engaging Tehran go and what the general regional climate will look like in the months to come. In addition, there is the not small matter of what the consequences of such a strike would be.

From Gaza, the message was very clear. Israel would be "foolish" to strike Iran. "I don't think Israel would dare strike Iran," said Ahmed Yousef a senior Hamas official, who dismissed the recent reports as "media hype". "The latest events notwithstanding, Iran is a strong state and I don't think Israel would be able to escape the consequences of a strike on Iran. Iran has the military capability to make Israel hurt."

okarmi@thenational.ae

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.”