Raghida Dergham is the founder and executive chairwoman of the Beirut Institute, and a columnist for The National
July 17, 2022
The Biden administration’s vision for the Middle East has been set back by a conceptual paradox. It presumes that it can create a security, economic and political architecture in the region, bringing together Israel and the Arab states, while simultaneously investing in nuclear talks with Iran seeking a deal that would lift all sanctions on Tehran.
True, it would be a stroke of genius if the current US administration could pull off a strategic Iranian-Israeli understanding, whereby Iran would consent to such an architecture and Israel would consent to Iran being part of a new security order that complements it, bringing together the GCC nations, Iraq and Yemen. However, this is far-fetched.
A realistic political reading indicates that the Iranian regime will not relinquish its ideology. It cannot publicly accept Israel as a legitimate state, neither can it stop exporting its revolutionary guards’ model to Arab states, not only to control them but also to prevent them from charting an independent course in their bilateral relations with Israel.
But, just like it is expedient for Iran that Israel continues to exist and reject a two-state solution with the Palestinians, it is expedient for Israel that Iran pursues its nuclear weapons programme, as this is precisely what Israel needs to illustrate the danger Tehran poses to its existence. One can argue that both states are theocratic in nature, no matter Israel’s pretensions of being a democracy fundamentally contradicted by its insistence on being first and foremost a Jewish state.
The time of absolute trust in America and full reliance on it is over
The flaws in US President Joe Biden’s vision include its detachment from this reality, coupled with a condescending approach towards the Arab world and an ignorance of the dogmas that govern both Iran and Israel. As a consequence, Mr Biden will not be able to forge a so-called new Middle East. He has set out to do this too late, with both Iran and Israel having already finished building their forts. Moreover, most Arab states have already developed policies and choices based on breaking free of US expectations. This was put in motion after former US president Barack Obama, to whom Mr Biden was vice president, shocked them with a policy of abandonment and disregard.
Mr Biden’s visit to the Middle East was rushed, forced on him by the war in Ukraine and Europe’s dire need for alternative oil and gas streams to offset lost Russian supplies. If not for the war and its upending of the global economic and energy landscapes, Mr Biden would possibly not have hastened to visit Saudi Arabia, meet its leaders, and participate in the Jeddah GCC summit also attended by leaders of Egypt, Iraq and Jordan. Indeed, Mr Biden had been preoccupied with reviving the JCPOA (as the Iran nuclear deal is called).
Mr Biden’s visit to Saudi Arabia is essentially a mea culpa on his part, as he indirectly admits to his errors. Yet, he hasn't yet given up on reviving the JCPOA at almost any cost – and as long as he remains committed to doing so, he will be unable to build long-term, sustainable strategies with America's traditional allies in the region.
Mr Biden’s vision for a stable Middle East is hindered by three factors: Iran's adversarial relationship with Israel, its ideologically motivated regional policy, and its hostility towards American presence in the Middle East. The current administration believes it can use a magic wand to change Tehran’s malign behaviour. Another flaw in Washington’s thinking is that merely reiterating its support for a two-state solution and meeting Palestine President Mahmoud Abbas, as Mr Biden did, will be enough to tamp down the so-called resistance movement and its links to Iran. This problem lies in the determination of the current administration, like in the case of previous US administrations, to withhold justice from the Palestinians and crush their right to statehood, because Israel does not want a Palestinian state.
Iranian Foreign Minister Hossein Amir-Abdollahian meets EU representative Joseph Borrell in Tehran in June 2022. AFP
Until recently, American politicians feared angering Israel because of the latter’s influence over the US electoral scene. Today, alongside this fear, they are wary of inviting Iranian anger if the nuclear negotiations fail.
To some extent, Mr Biden has walked into a trap by seeking to revive the nuclear deal that his predecessor, Donald Trump, withdrew from after citing its shortcomings. The current incumbent has become hostage to this process, navigating between Iran’s impossible conditions and the latter's persistent march towards acquiring nuclear weapons. Mr Biden finds himself unable to resume the Trump-era policy of "maximum pressure" on Iran, although he has not hesitated in adopting his predecessor’s policy that helped to launch the Abraham Accords.
The Biden administration wants to create a new Middle East, but it needs to be pragmatic and its vision clear. It cannot continue Mr Trump’s Israel policy while at the same time undo his Iran policy. Indeed, Tehran will now allow for the creation of a regional security order that brings together the Arab states and Israel, while Iran remains outside it. Tehran’s capability for subterfuge is immense, and it will not hesitate to use it.
Further complicating matters, the Biden administration was late to clarify the features of its policy vis-a-vis the Arab world. In the time that it was preoccupied with the JCPOA, the Arab states charted a different course. Several of themadopted policies independent of the norms of the traditional US-Gulf relations, without, of course, entirely divorcing themselves from them. There is a chance for Mr Biden to repair relations, but the time of absolute trust in America and full reliance on it is over.
For this reason, the Biden administration has its work cut out – not just with Iran and Israel, but also with the Arab states.
Company profile
Name: Dukkantek
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Number of employees: 140
Sector: B2B Vertical SaaS(software as a service)
Investment: $5.2 million
Funding stage: Seed round
Investors: Global Founders Capital, Colle Capital Partners, Wamda Capital, Plug and Play, Comma Capital, Nowais Capital, Annex Investments and AMK Investment Office
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.”
FA Cup quarter-final draw
The matches will be played across the weekend of 21 and 22 March
Sheffield United v Arsenal
Newcastle v Manchester City
Norwich v Derby/Manchester United
Leicester City v Chelsea
THE BIO
Bio Box
Role Model: Sheikh Zayed, God bless his soul
Favorite book: Zayed Biography of the leader
Favorite quote: To be or not to be, that is the question, from William Shakespeare's Hamlet
Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra
Rating: 4/5
What is the FNC?
The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning.
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval.
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
T10 Cricket League
Sharjah Cricket Stadium
December 14- 17
6pm, Opening ceremony, followed by:
Bengal Tigers v Kerala Kings
Maratha Arabians v Pakhtoons
Tickets available online at q-tickets.com/t10
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
What is Bitcoin?
Bitcoin is the most popular virtual currency in the world. It was created in 2009 as a new way of paying for things that would not be subject to central banks that are capable of devaluing currency. A Bitcoin itself is essentially a line of computer code. It's signed digitally when it goes from one owner to another. There are sustainability concerns around the cryptocurrency, which stem from the process of "mining" that is central to its existence.
The "miners" use computers to make complex calculations that verify transactions in Bitcoin. This uses a tremendous amount of energy via computers and server farms all over the world, which has given rise to concerns about the amount of fossil fuel-dependent electricity used to power the computers.
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
The flights Flydubai offers three daily direct flights to Sarajevo and, from June, a daily flight from Thessaloniki from Dubai. A return flight costs from Dhs1,905 including taxes. The trip
The Travel Scientists are the organisers of the Balkan Ride and several other rallies around the world. The 2018 running of this particular adventure will take place from August 3-11, once again starting in Sarajevo and ending a week later in Thessaloniki. If you’re driving your own vehicle, then entry start from €880 (Dhs 3,900) per person including all accommodation along the route. Contact the Travel Scientists if you wish to hire one of their vehicles.
