The British oil tanker Stena Impero has been captured by Iran. AP
The British oil tanker Stena Impero has been captured by Iran. AP

British tanker seizure is a menacing provocation



With Iran's seizure of the British Stens Impero tanker in the Strait of Hormuz, we are now just one mistake away from a serious confrontation. In spite of the Iranian foreign minister Javad Zarif's recent assertions that Tehran is prepared to negotiate with the US, the regime has decided to further escalate a perilous situation – vindicating the Trump administration's strategy of maximum pressure.

This is the second time in just over a week that the UK has been the target of escalatory violence, after Iranian boats tried to impede a British oil tanker in busy international waters, before being warned off by a royal navy ship. Both incidents follow the seizure of an Iranian vessel carrying oil to Syria, in violation of EU sanctions, off the coast of Gibraltar.

Alongside France and Germany, Britain has been trying to salvage the 2015 Iran nuclear deal after US President Donald Trump withdrew last year. With attacks on British vessels, Iranian foreign policy looks increasingly rash and erratic. That is why all countries must endeavour to de-escalate tensions in the Gulf, and defend freedom of navigation.

However, while only diplomacy can avert war, Iran must be reminded that raids on commercial vessels will not be tolerated. Put simply, this cannot become the new normal.

Just days away from welcoming a new prime minister into Downing Street, and still committed to the nuclear deal, perhaps Britain is viewed as an easy target. In a measured statement, UK foreign minister Jeremy Hunt expressed deep concern about this "unacceptable" seizure, and promised "serious consequences" if the situation is not quickly resolved.

The incident came just one day after Mr Trump vowed to “aggressively” defend vessels in the Gulf. Tehran knows it is no military match for the US and UK, and yet, as this case makes clear, it is now pursuing a strategy of escalatory tanker attacks.

The US is working on a multinational maritime effort to increase surveillance of, and security in, the vital waterways of the Gulf. Still, it is worth asking why the British-flagged Stena Impero was allowed to sail, unprotected, through the Strait of Hormuz, following a series of threats by Iran against British vessels. Individual nations have a responsibility to protect and escort their ships, to ensure Iran is denied small victories of this kind. Meanwhile, shipping companies have been urged to avoid hiring private armed security for their ships, as the world tries to avert a serious escalation.

Picking a fight with Britain will not help Iran in the long run, but that does not seem to matter to hardliners in Tehran. That is what makes them so dangerous. The international community must defuse the situation, seek the tanker’s return, and remind Iran that attacks of this kind will not be tolerated.

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Secret Nation: The Hidden Armenians of Turkey
Avedis Hadjian, (IB Tauris)
 

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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