Popularity contest



Iran's violent domestic crackdown, Michael Wahid Hanna writes, will not necessarily dampen Arab enthusiasm for the regime's resistance to the West. The Iranian regime's harsh response to largely peaceful protests in the wake of the disputed presidential election has made it tempting for commentators to interpret the regime's apparent loss of internal legitimacy as a harbinger of diminished Iranian influence throughout the Arab world. Nabil Abdel Fattah, the assistant director of the Al Ahram Center for Political and Strategic Studies, was recently quoted in the Christian Science Monitor arguing that "people can see now that Iran has the same authoritarian political systems as the Arab world" and that "Ahmadinejad is not a hero". But this argument misunderstands the nature of Arab affinities for the Iranian regime by confusing admiration for Iran as a bulwark of resistance against the West with an appreciation of Iran's form of governance. It also understates the durability of Iran's positive regional profile absent major progress on the Arab-Israeli track, popular Arab perceptions of Iran will not be shaken by the contested aftermath of the recent elections; they will continue to be shaped by Iran's confrontational foreign policy.

Scenes of heavy-handed severity and violence on the streets of Tehran may indeed temper enthusiasm for the Iranian regime in some quarters, particularly among the limited number of Arab democracy activists. But a large majority of Arabs sympathetic to Iran will probably either disregard the bloody repression or view the turmoil as a sign that the regime change framework that guided the Bush administration is still in force. From the heyday of Gamal Abdel Nasser's pan-Arabism to the posturing of Saddam Hussein, the Arab world has often looked past the domestic shortcomings of leaders who presented themselves as the torchbearers of anti-western agitation and champions of the Palestinian cause.

Iran, particularly during the presidency of Mahmoud Ahmedinejad, has become associated among many in the Arab world with resistance to American and Israeli interests in the region. The pattern of violence between Arabs and Israelis has reinforced this ethic of muqawama, which is expressed most directly through widespread Arab support for resistance to foreign occupation; the bloodshed since the collapse of the peace processes has also hardened the grim and shortsighted logic of violence and reinforced the belief that the enemy only understands force.

Iran has skilfully used this posture to raise its prestige across the Arab world while discrediting the region's status-quo leaders. In many ways, it has provided an alternate outlet for the expression of domestic discontent. While Egypt, Saudi Arabia and Jordan have led the way in deploring the threat of Iran's hegemonic intentions, warning of a developing "Shiite Crescent", Ahmedinejad's incendiary rhetoric and Iran's material support to Hamas and Hizbollah spoke to widespread Arab anger about the plight of the Palestinians and the continued occupation of Arab lands. Despite attempts in the West to downplay its continued significance, the issue of Palestine still has lasting resonance in the Arab world and taps into longstanding historical narratives of Arab defeat and dispossession. It has also provided a convenient opening for Iran to divide swathes of the Sunni Arab world from the views of their anti-Iranian rulers.

The Bush administration's Manichean and militarised foreign policy also exacerbated regional divisions. Iranian intransigence and bellicosity were seen by many Arabs as an unbending response to the West contrasting favourably with the inability of America's Arab allies to influence the trajectory of US foreign policy in the region. It is certainly true that attitudes toward the United States have softened with Barack Obama's inauguration and his concerted outreach to the region. Regional tensions, which reached a dangerous juncture in the aftermath of the Gaza war, have also receded as Syria, Iran's primary Arab ally, has sought to mend its relations with the United States and its allies.

But recent developments have not displaced the broader support for muqawama in the Arab world. The reality is that frustration and disillusionment will quickly re-emerge if the peace process appears to be unserious about reaching a final status agreement or if there is a relapse of violence in Gaza or Lebanon. These developments would quickly reinvigorate the resistance narrative and offer Iran an easily exploitable point of leverage.

Iran's ability to assert itself in the Arab world should, however, be kept in perspective; Arab views of Iran have evolved on largely political lines tied to longstanding regional disputes and in spite of the sectarian divide between Sunnis and Shiites. The Islamic revolution in Iran did mark a watershed moment in the history of the region, and it helped propel the idea of political Islam to the forefront of Arab political discourse. But it must be seen in context as part of a broader historical process that gained particular momentum with the serial failures of secular Arab nationalism, the crushing Arab defeat by Israel in 1967, and the radicalising experience of Arab fighters assisting the Afghan mujahideen in their war against the Soviet occupation.

The peculiarities of the Iranian revolution also limited its appeal, particularly among Sunni Islamists, who remained theologically suspicious of Shiite intentions and Iran's bid to lead the Islamic world, with the most extreme salafis among them viewing Shiites as apostates. The revolution's espousal of the largely unknown concept of wilayat al-faqih (the rule of the jurisprudent) was alien to Sunni Arabs and found a mixed reception even among the Shiites of the Arab world. While religious affinities have created some basis for solidarity with Iran, it was Tehran's shift to a more confrontational stance, particularly during the Bush administration, that did the most to boost its popularity.

While the Obama administration was prudently cautious in its public statements on the Iranian uprising, familiar tropes about American and western meddling in Iran to foment civil unrest and chaos have appeared in Arab media outlets. Speaking on Al Jazeera, Nasser's former confidant Mohamed Hassanein Heikal pointed a finger at foreign intervention and emphasised the continued "regime-change policy" of the United States. In a similar vein, Fahmy Howeidi, a prominent Egyptian commentator, noted Iran's central role in support of the Arab resistance camp and upbraided those in the Arab media sympathetic to the protesters, chiding them for parroting western and Israeli thinking on the elections with "no consideration of the serious Arab strategic considerations" that depended on an Ahmedinejad victory.

The present crackdown is also not the first time in recent memory that Iran's role in the Arab world has been threatened by its own actions. In this regard, the recent experience of Iranian involvement in Iraq is instructive, as the repercussions of the 2006-2007 sectarian civil war did little to undermine Iran's overall regional popularity even while their policies in Iraq generated considerable ill will. The fact that Iran's popular legitimacy remained resilient in the face of these events is truly remarkable in light of the broad sympathy in the Arab world for the Sunni insurgency, the grisly nature of the sectarian conflict, and the widely accepted assumption that Iran was providing extensive support to Shiite militias and death squads who engaged in widespread reprisals and ethnically cleansed large swathes of Baghdad of their Sunni inhabitants.

Abu Musab al Zarqawi and his ilk preached the infidel status of the Shiites, while more mainstream pillars of Sunni scholarship such as the Egyptian cleric Yusuf al Qaradawi warned that Shiites were invading Sunni societies. Media coverage of the Iraq war and the ensuing sectarian conflict was often harshly critical of Iran's role, and it was not uncommon for Tehran to be accused of facilitating the US invasion and overthrow of the Baathist regime. Yet this narrative of Sunni-Shiite division and conflict existed alongside and did not overtake the carefully constructed narrative of resistance that was given added salience following Hizbollah's summer 2006 war with Israel. This cognitive dissonance is difficult to reconcile and suggests a hierarchy of perceived interests that gives primacy to the Arab-Israeli arena.

Current events have not provided an effective platform for Sunni Arab governments to undermine Arab perceptions of Iran - for obvious reasons, Arab governments are not in a position to forcefully criticise the Islamic Republic for its disproportionate and violent crackdown on free expression and assembly. Such denunciations would also draw more attention to the outpouring of popular anger in the streets of Iran, which is an uncomfortable proposition for the authoritarian Arab order.

A defensive Iranian leadership concerned with suppressing internal dissent and ensuring regime survival may indeed have fewer resources to devote to events beyond its borders. Without the beginnings of a significant regional realignment and the resumption of a credible and finite peace process, it is these sorts of domestic political considerations that could limit Iran's regional role - not a sea-change in Arab attitudes toward the Iranian regime and its legitimacy. In this sense, America's autocratic Arab allies, who are keen to tamp down the level of regional polarisation and popular frustration, remain dependent on Washington's commitment to resolve the core territorial disputes that have, for far too long, animated the region's political discourse and destabilised its security.

Michael Wahid Hanna is a fellow at The Century Foundation.

Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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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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