“This is just the beginning,” said the new US Secretary of State Mike Pompeo yesterday as he promised new financial sanctions against the Iranian government, warning that “the sting of sanctions will be painful if the regime does not change course”.
It has only been two years since the US lifted sanctions against Tehran as part of the Iran nuclear deal. Now those sanctions, plus undisclosed new ones, will come back into effect, pressuring Iran to give up its nuclear programme.
The arrival of Mr Pompeo as America’s top diplomat marks a significant change in US foreign policy and a very welcome change in most capitals of the Gulf.
That his predecessor Rex Tillerson was viewed as ineffectual in most of the Gulf states is common knowledge. Months into his tenure, Mr Tillerson alienated most of the Gulf states by saying that Saudi Arabia and its allies should end their isolation of Qatar – as if that thought had never occurred to the kingdom’s diplomats.
What Mr Tillerson didn’t seem to understand was that the criticism that the Gulf states had over Qatar’s funding of groups around the region touched on the vital interests of their states. For them, these were not small issues but matters of national and regional security.
Exactly the same criticism was made of Mr Tillerson's view of the Iran deal, which he appeared to think was broadly working or could be tweaked. The view from the Gulf – and the view from the White House, it now appears – was that the deal was fundamentally flawed and needed to be comprehensively renegotiated or scrapped.
How different were Mr Tillerson's views from Mr Pompeo’s first major speech as secretary of state, when the latter called on Iran to remove all its forces from Syria and end its support for Hezbollah and Hamas.
Those, admittedly, are the US’s maximalist positions and even the most hardline hawks must realise Tehran will not simply offer them up. But as a statement of intent and as a message to allies that the new secretary of state takes the dangers the Gulf states in particular face from Iran seriously, it was powerful. In Abu Dhabi and Riyadh, the sense is that here, finally, is someone who understands the threat across the water.
Yet Mr Pompeo’s hardline stance, if implemented, carries certain risks and challenges.
He has to ensure that the American political machine treads a fine line between using enough financial leverage to force a new round of concessions without pushing Iran towards all-out war. There are voices within the US administration that appear eager to march to war. But the Middle East can ill afford another major conflict after the invasion of Iraq and the civil war of Syria.
The reason why the Gulf states are so against the Iran nuclear deal as it stood was because they believed it gave Iran time and money to pursue its own policies – policies that invariably threatened to destabilise the wider Middle East. But Iran has spent decades pursuing these aims and that gives it considerable leverage to retaliate against US pushback. Therein lies the great danger.
If the medium-term goal of this new American policy is to isolate Iran and force it back to the negotiating table to get a better deal – perhaps including concessions on its ballistic missile programme, for example – then it might be possible to see an end in sight that doesn’t spark all-out war.
But the real danger is that, in the inevitable back-and-forth and retaliatory attacks that will follow as Iran feels increasingly isolated, a spark will ignite a wider conflict or the US will be pushed into a corner where it feels it must strike Tehran. That could start an enormous conflagration.
The politics of this new policy are immensely tricky.
There's the internal politics of the White House, the interplay between Donald Trump, Mr Pompeo, National Security Adviser John Bolton and Secretary of Defence Jim Mattis.
There’s the interplay inside Tehran between the supreme leader, the Iranian president and powerful factions like the Iranian Revolutionary Guard Corps. Iran faced its strongest anti-government protests at the end of last year, focused on economic development. There is every chance that further sanctions could make those tensions worse – or instead push the Iranian public to blame the outside world and back their government.
There’s the wider field of the Middle East, where countries such as Russia, Turkey, Syria and Israel are all competing for influence. And there's the European aspect, with major powers still trying to make the deal work. European companies like Denmark’s shipping giant Maersk and France’s energy company Total will probably pull out of the Iran deal, costing them millions in lost sales as Russian and Chinese companies fill the gap. That will have political repercussions.
Tellingly, Mr Pompeo did not threaten allies who want to keep the nuclear deal going, simply saying “that is their decision to make and they know where we stand”. That could suggest the state department isn’t looking to fight on several fronts and will accept Europe conducting its own foreign policy.
But it will be tricky. Negotiating the Iran deal was a multi-year effort by countries right across the globe. Unpicking it will be just as difficult. In a volatile region, America's top diplomat has to ensure that the sting of new sanctions against Iran do not become the spark for a new regional conflict.
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
If you go
Flight connections to Ulaanbaatar are available through a variety of hubs, including Seoul and Beijing, with airlines including Mongolian Airlines and Korean Air. While some nationalities, such as Americans, don’t need a tourist visa for Mongolia, others, including UAE citizens, can obtain a visa on arrival, while others including UK citizens, need to obtain a visa in advance. Contact the Mongolian Embassy in the UAE for more information.
Nomadic Road offers expedition-style trips to Mongolia in January and August, and other destinations during most other months. Its nine-day August 2020 Mongolia trip will cost from $5,250 per person based on two sharing, including airport transfers, two nights’ hotel accommodation in Ulaanbaatar, vehicle rental, fuel, third party vehicle liability insurance, the services of a guide and support team, accommodation, food and entrance fees; nomadicroad.com
A fully guided three-day, two-night itinerary at Three Camel Lodge costs from $2,420 per person based on two sharing, including airport transfers, accommodation, meals and excursions including the Yol Valley and Flaming Cliffs. A return internal flight from Ulaanbaatar to Dalanzadgad costs $300 per person and the flight takes 90 minutes each way; threecamellodge.com
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
Where to buy art books in the UAE
There are a number of speciality art bookshops in the UAE.
In Dubai, The Lighthouse at Dubai Design District has a wonderfully curated selection of art and design books. Alserkal Avenue runs a pop-up shop at their A4 space, and host the art-book fair Fully Booked during Art Week in March. The Third Line, also in Alserkal Avenue, has a strong book-publishing arm and sells copies at its gallery. Kinokuniya, at Dubai Mall, has some good offerings within its broad selection, and you never know what you will find at the House of Prose in Jumeirah. Finally, all of Gulf Photo Plus’s photo books are available for sale at their show.
In Abu Dhabi, Louvre Abu Dhabi has a beautiful selection of catalogues and art books, and Magrudy’s – across the Emirates, but particularly at their NYU Abu Dhabi site – has a great selection in art, fiction and cultural theory.
In Sharjah, the Sharjah Art Museum sells catalogues and art books at its museum shop, and the Sharjah Art Foundation has a bookshop that offers reads on art, theory and cultural history.
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.”
