An Iraqi child, Salam, walks past a US soldier in Narwan, Iraq. Warrick Page/The National
An Iraqi child, Salam, walks past a US soldier in Narwan, Iraq. Warrick Page/The National
An Iraqi child, Salam, walks past a US soldier in Narwan, Iraq. Warrick Page/The National
An Iraqi child, Salam, walks past a US soldier in Narwan, Iraq. Warrick Page/The National


The US needs its friends in the Middle East


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September 11, 2021

It may be hasty to assume that a nuclear deal between the US and Iran will mean that America will abandon its allies in the Middle East, especially in the Arab Gulf States.

It is plausible that the Biden administration would repeat the policies of former US President Barack Obama, given its determination to revive the nuclear deal. But a key difference may lie in US relations with the Arab Gulf states, which were strained by Mr Obama’s disregard for traditional alliances with major Arab powers led by Egypt.

With the ascendancy of the China-Russia-Iran axis that is now co-ordinating in an unprecedented manner in a strategic region overlooking vital waterways, it is not logical for the Biden administration to burn its bridges in the Arab world, despite its desire to pivot east to focus on the threat to its interests in China.

Afghanistan has also shown Americans the benefits of the strategic partnership with states such as Saudi Arabia, the UAE, Qatar, Kuwait, Oman, and Bahrain – the GCC six member states. Most of these countries eagerly and professionally helped in the evacuation of Americans from Kabul airport. They were friends in a time of need. On the other hand, China, Iran, Russia, along with terror groups like Al Qaeda and ISIS, share a deep animus towards the US. These players are repositioning themselves in the Middle East, North Africa and the Gulf to fill the vacuum left behind by US withdrawals.

Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, meets then Vice President Joe Biden, at Emirates Palace in Abu Dhabi, on March 7, 2016. Crown Prince Court
Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, meets then Vice President Joe Biden, at Emirates Palace in Abu Dhabi, on March 7, 2016. Crown Prince Court

Regardless of the predilections of the Biden administration, its responsibilities vis-a-vis US national security and the Middle East must lead it to conduct an honest review of the policies it pursued in response to the Trump-era. This is not the time for half-baked solutions. It is the most important transitional period for the US after the erosion of America’s prestige and the collapse of its reputation because of the disastrous withdrawal from Afghanistan.

Clearly, the Biden administration is eager to revive the nuclear deal with Iran – do not believe the negotiations are in danger. America desperately needs a foreign policy success story.

Iran's priorities are to expand the economic base for its domestic and regional projects, consolidating influence in Syria, Iraq and Lebanon

Indeed, all Tehran wants from the revival of the nuclear deal is the windfall gain from unlocked funds and oil exports that will result from the lifting of US sanctions and a subsequent boost to its international trade. The rulers in Tehran want the Biden administration’s signature on the document resurrecting the nuclear deal and do not care about US Congressional restrictions on Mr Biden after the signature, which will have great value for Iran, not just for dealings with China and Russia, but also with Europe.

Among Iran’s other priorities is to expand the economic base for its domestic and regional projects, consolidating influence in Syria, Iraq and Lebanon. This would be with direct Russian participation, in return for expanded Russian and Chinese influence and presence in the Gulf. In Syria, Russia will not abandon its control of bases and political decisions, nor the military alliance with Iran on the ground. However, Russia is keen to play its cards carefully when it comes to Israel in the Syrian and Lebanese equations.

Russian Foreign Minister Sergei Lavrov, during a recent press conference with his Israeli counterpart Yair Lapid, appeared to walk a tightrope. Russia is allied to Iran, the Syrian regime and Hezbollah. The latter all claim to be enemies of Israel and advocate the right to resist Israeli occupation in the Golan Heights and to respond to Israeli attacks in Syria. Yet, at the same time, Russia wants to be allied with Israel.

Russian Foreign Minister Sergei Lavrov, left, and his Israeli counterpart, Yair Lapid met in Moscow, Russia, on September 9. Reuters
Russian Foreign Minister Sergei Lavrov, left, and his Israeli counterpart, Yair Lapid met in Moscow, Russia, on September 9. Reuters

Mr Lavrov reiterated Russia’s commitment to Israel’s security, saying Moscow did not want the Syrian territories to be used to attack Israel or any other country. He said Israel had legitimate interests there, such as its security interests, and said that this is one of the top Russian priorities in the Syrian issue and other conflicts. Mr Lavrov appeared confident that his comments would not upset Syrian President Bashar Al Assad, the Iranians, or Hezbollah.

His Israeli counterpart, Mr Lapid, was firm only in stating Israel’s unwillingness to discuss the Golan Heights, which Israel annexed officially with the blessing of Russia and America. Indeed, Israel also fears the weakening of its alliance with the US in the Biden era. Like other US allies, Israel is committed to its alliance with Washington, but is keeping one eye on protecting its security and interests on its own as America’s might declines and the influence of Iran and Hezbollah ascends in Syria, Iraq and Lebanon.

The Russian-Iranian alliance in Syria wants to put an end to what Mr Lavrov termed America’s “illegal occupation” of Syrian territory and exploitation of its natural, agricultural, water and petrochemical resources, as he put it. According to Mr Lavrov, western sanctions on Syria are illegal and are impeding efforts at reconstruction. Mr Lavrov’s comments are accurate in that they underscore the importance of the regions controlled by the US, especially because this is preventing full control of Syria and her decision and wealth by Russia, Mr Al Assad, Iran and Hezbollah.

This alliance wants the US withdrawal from Iraq to trigger chaos and replicate what happened in Afghanistan, hoping this would lead the Biden administration to rush to the exit door in Syria. But Iran does not hold all the keys in Iraq, even though it's co-ordinating its moves with Russia.

The developments in Afghanistan have certainly overturned many considerations, restoring Al Qaeda and ISIS to the policy and strategy drawing boards. The deals concluded by Russia with the Taliban have affected Al Qaeda’s orientations, shifting its direction to Central Asia, but also towards the Middle East, especially Iraq.

Both withdrawing and staying in Iraq will bring new tests for the US. Withdrawing will favour Iran in Iraq; and staying will encourage Al Qaeda to wage war on the US. The Biden administration must therefore think profoundly about both an exit and remain strategy. Here, it will need its partners and friends in Arab Gulf states. Saudi Arabia, the UAE, Qatar, Oman, Kuwait, and Bahrain will remain crucial in the geopolitical position of the US. Indeed, China itself needs the Arab states in the context of its rivalry with the US. It may be incredibly costly for Washington if it makes a decision that emboldens the China-Russia-Iran axis.

Where does Lebanon stand in the context of this axis? Recently, French President Emmanuel Macron went all the way to ask Iranian President Ebrahim Raisi to facilitate the formation of a Lebanese government. Thus, it appears the orders were issued and a government was formed on Friday.

What is "reassuring" is that none of these players wants Lebanon to implode and trigger a geopolitical shift that would shake up the neighbourhood. What is not reassuring is that these international players perceive Lebanon through only this lens, and thus are lenient towards its local corrupt leaders and its authoritarian forces such as Hezbollah.

According to a Russian assessment, Iran is the primary player in Lebanon. An Iranian loss in Lebanon would be like losing the front door keys to its entire regional project. In Moscow’s view, it is easier to outsource Lebanon to Iran, while ensuring the delicate equation between Iran and Israel is maintained. Beyond that, the Iran-China-Russia axis sees Mr Biden’s indifference to Lebanon and Syria as a golden opportunity to further their interests under Iran’s leadership and in total disregard for Lebanon’s sovereignty.

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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What sanctions would be reimposed?

Under ‘snapback’, measures imposed on Iran by the UN Security Council in six resolutions would be restored, including:

  • An arms embargo
  • A ban on uranium enrichment and reprocessing
  • A ban on launches and other activities with ballistic missiles capable of delivering nuclear weapons, as well as ballistic missile technology transfer and technical assistance
  • A targeted global asset freeze and travel ban on Iranian individuals and entities
  • Authorisation for countries to inspect Iran Air Cargo and Islamic Republic of Iran Shipping Lines cargoes for banned goods
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If you go...

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There is no simple way to get to Punta Arenas from the UAE, with flights from Dubai and Abu Dhabi requiring at least two connections to reach this part of Patagonia. Flights start from about Dh6,250.

Touring
Chile Nativo offers the amended Los Dientes trek with expert guides and porters who are met in Puerto Williams on Isla Navarino. The trip starts and ends in Punta Arenas and lasts for six days in total. Prices start from Dh8,795.

Updated: September 12, 2021, 6:14 AM