LONDON // British ministers were playing a wait-and-see game yesterday as Iran pondered downgrading diplomatic relations between the two countries.
The worsening of the already sour bilateral ties could owe as much to a row over ancient artefacts as it has to do with sanctions and the UK's alleged role in fomenting civil unrest.
Officials at the foreign office in London have been monitoring the threat since Manouchehr Mottaki, the Iranian foreign minister, said last week that relations between the two countries were being "reconsidered".
The UK government is declining to comment on the reports but in a message posted on its website, the embassy in Tehran said: "We are working to foster links between the Iranian people and the British people. There is much potential for educational, scientific, sporting and cultural exchanges.
"However, the UK and many other countries have serious concerns about the Iranian government's behaviour: its nuclear ambitions, support for terrorism and promotion of instability in its region, as well as its continued denial of the rights to which its own people aspire.
"Ultimately, the decision lies with Iran's leaders. We hope they will choose to work with the international community to give Iranian people the future they deserve, and not choose a path of continued confrontation and isolation."
A senior diplomat in London said yesterday: "If Tehran did decide to downgrade ties, the British would be bound to retaliate and reduce the level of Iranian representation here.
"That would probably suit the Iranians fine. But worse news for them could come if other EU states back the UK and begin taking similar action of their own. The whole thing could escalate dramatically.
"Not only could that influence the attitude of both Moscow and Beijing towards Tehran, but it could also be highly embarrassing to the Tehran regime if diplomats ordered to return to Iran simply refused to go back and, instead, sought asylum in their host countries - and that could happen."
The Iranian government seems to have been particularly annoyed by Britain's backing for new financial sanctions against the regime.
"We believe that financial sanctions have an important role to play in exerting pressure at the appropriate points in the regime and not affecting the Iranian people," David Miliband, the UK foreign secretary, said last week.
Beyond the questions of sanctions, Iran's nuclear programme and the West's supposed support of unrest on the streets, there is a much smaller affair that is causing fresh tremors in relations between London and Tehran. It centres, almost absurdly, on two small pieces of clay found in a drawer at the British Museum in London.
This month, the Cyrus cylinder - a document inscribed in clay about the Persian king Cyrus the Great, which has a monumental status in Iran - was meant to have been sent by the museum to the National Museum in Tehran on loan.
Officials in London agreed to loan the precious artefact, dating back to the sixth century BC, under a cultural exchange programme that last year had seen Iranian museums lend their London counterparts several major works for an exhibition on Shah Abbas.
The discovery of the two clay pieces, which contain hieroglyphics that could provide the key to finally deciphering the Cyrus cylinder, has forced the British Museum to decide to delay sending it to Iran for several months.
The decision enraged the Iranians. Hamid Baqaei, Iran's vice president and head of the country's cultural heritage organisation, told the Fars news agency: "We will cut off all our cultural relations with the museum if we realise later that the British Museum has been wasting time and seeking excuses to shrug off our requests."
The dispute, though seemingly minor, almost certainly represents one of the "10-12 working fields" that Mr Mottaki referred to last week, adding: "We are currently reviewing each area."
dsapsted@thenational.ae
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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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Globalization and its Discontents Revisited
Joseph E. Stiglitz
W. W. Norton & Company
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
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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
Ferrari
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