Israel pushes for 'crippling sanctions' against Iran



Israel's prime minister, Benjamin Netanyahu issued an appeal to US political leaders in telephone conversations over the weekend calling on the congressional leadership to impose "crippling sanctions" on Iran in an effort to halt its nuclear programme. "Senior Israeli officials said that the exposure of the enrichment facility near Qom by the US was done in coordination with Israel. 'All the events of the past week came as no surprise to us,' one senior official said. US officials last week informed National Security Advisor Uzi Arad and Netanyahu about the letter that Iran had sent to the International Atomic Energy Agency (IAEA), in which it informed the agency of the new enrichment facility," the Israeli newspaper Haaretz reported. "The Israeli intelligence community first learned of the Qom facility for enrichment of uranium several years ago. Foreign media reported that Israel took part in gathering intelligence on the facility, along with Germany, the UK and France." The report also said: "Foreign Minister Avigdor Lieberman, meanwhile, said yesterday that the newly exposed Iranian facility proves without a doubt the Islamic republic is pursuing nuclear weapons. " 'This removes the dispute whether Iran is developing military nuclear power or not and therefore the world powers need to draw conclusions,' Lieberman told Israel Radio. 'Without a doubt it is a reactor for military purposes not peaceful purposes,' Lieberman added." Whether in response to the Israeli prime minister's appeal or purely through their own volition, calls for sanctions echoed across Washington as senior Obama administration officials and leading members of the US congress spoke in support of tougher measures against the Islamic republic. Bloomberg reported: "Iran's construction of a secret nuclear facility may prompt additional economic sanctions, including restrictions on banking and on oil and gas technology, US Defense Secretary Robert Gates said. " 'There is no military option that does anything but buy time,' Gates said in an interview on CNN's State of the Union today. The US and the other members of the United Nations Security Council should also continue to pursue negotiations, such as the meeting scheduled with Iran on October 1, he said. " 'There are a variety of options still available, including sanctions on banking, particularly sanctions on equipment and technology for their oil and gas industry,' Gates said. 'I think there's a pretty rich list to pick from.' " In an interview on CBS television, US Secretary of State Hillary Clinton said: "we're exploring how you broaden and deepen sanctions. Now sanctions are already in place as you know, but like many sanction regimes they're leaky. But in the last eight months since we've been dealing with North Korea on a similar set of issues we have forged an international consensus around very tough sanctions. And that's given us some additional information about how to proceed on the Iranian front. "But this is a very serious matter. The Russians have come out with a - a strong statement saying that the burden has now shifted. It has shifted to Iran. They have to come to this meeting on October 1 and present convincing evidence as to the purpose of their nuclear programme. We don't believe that they can present convincing evidence that it's only for peaceful purposes, but we are going to put them to the test on October 1." Howard L Berman, chairman of the US House of Representatives' Foreign Affairs Committee and an outspoken Zionist told The Jerusalem Post last year: "Israel's security and the US-Israeli relationship is for me an issue that shapes my whole agenda [in] Congress, and guides it." In The Washington Post on Saturday, Mr Berman wrote: "If Tehran is serious about engagement, it should agree early on to meaningful steps, such as a 'freeze for freeze' in which Iran does not add to its enrichment capabilities - including halting construction on the second enrichment facility, as verified by the International Atomic Energy Agency (IAEA) - in exchange for an agreement that no additional international sanctions would be imposed during this period. Iran must also agree to verifiably suspend nuclear enrichment by year's end. Were that to happen, the international community could enter into detailed negotiations with Iran about all issues of concern and the incentives that could be offered in exchange for a satisfactory understanding of Iran's nuclear intentions and assurance that Iran would not be able to acquire a nuclear weapons capability. "But if, as I expect, that scenario does not come to pass, we should be ready immediately to impose what Secretary of State Hillary Clinton has called 'crippling sanctions'. Iran's economy is in terrible shape, and the regime no longer can take for granted the support of its citizens. The best conduit for such sanctions would be a mandatory UN Security Council resolution. That would require the difficult-to-obtain acquiescence of Russia and China. Failing that, multilateral agreement by the Europeans, Japan, Australia and Canada to impose coordinated financial, trade and investment sanctions would be a serious alternative. If even that proves impossible, I believe the threat posed to our national security by the possibility of a nuclear-armed Iran obligates the United States to impose sanctions unilaterally. "The Iran Refined Petroleum Sanctions Act, which I, along with Rep Ileana Ros-Lehtinen, the ranking Republican on the House Foreign Affairs Committee, introduced, provides such authority to act. The bill, which has more than 300 co-sponsors (its companion in the Senate has 75 co-sponsors), provides President Obama with a mandate to increase the level of financial penalties against Iran and would prevent companies that facilitate the provision of gasoline and other refined petroleum products to Iran from doing business in the United States. Much of the world's trade is conducted through international financial transactions in dollars that must be cleared through American banks. So if the United States were to prevent any bank doing business with Iranian banks from clearing dollar transactions, the Iranian banking system would collapse. And because Iran has to import 25 per cent or more of its daily demand for refined petroleum, its economy would be seriously impaired if it were denied those imports. Indeed, a credible threat of both these sanctions might provide the best chance to persuade the Iranian regime to agree to suspend its nuclear enrichment." Gary Sick, a former national security council member who served three US presidents, wrote: "Sanctions have not worked after 15 years of trying, and sanctions alone are almost certainly not going to get Iran to abandon its basic nuclear programme. Sanctions are and always have been more useful as a threat or a trading card than as an effective tool in practice. Iran clearly dislikes the sanctions that are in place now, and they are eager to avoid more in the future. So there is room for discussion. But there is no evidence whatsoever that if increased sanctions are actually applied Iran will dismantle its enrichment programme. Instead, they will escalate. The reality today is the same as before: The end game of sharply increased sanctions is war. "In my view, the objective of these negotiations has also not changed. We want Iran to stop its nuclear growth and agree to much more intrusive inspections. The West should be willing to pay a price for such concessions, perhaps in the form of conditional removal of sanctions, freezing United Nations Security Council action on Iran in the interim, and inviting greater inclusion of Iran in regional affairs as Iran implements concrete steps of confidence-building. That is not easy, but neither is it an unreachable goal."

pwoodward@thenational.ae

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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

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.”