US policy regarding the crises in the aftermath of October 7, 2023, is hanging by a thread. Reckless actions by America's closest partner, Israel, and primary adversary, Iran, are demolishing Washington's goal of containing the conflict to Gaza. Tehran and Israel are both driving the region towards a multi-front conflict and war of missiles that could draw in the US. This is precisely what US President Joe Biden has been striving to avoid.
Last year, soon after October 7, the Biden administration concluded that US interests could probably withstand anything arising, strictly from the Gaza war. But they feared getting dragged into a conflict that would pose untold risks.
Therefore, Mr Biden developed a policy of conflict containment. The virtual carte blanche Washington gave Israel regarding Gaza was intended to help him restrain Israel, particularly in Lebanon.
For many months, it appeared to be working. Despite the emergence of flashpoints in Syria and Iraq, and Red Sea piracy by the Houthi rebels in Yemen, Israel was focused on Gaza rather than Lebanon and fighting wasn't spreading disastrously.
Ironically, the principal threat to this US imperative has come from Israel rather than Iran. In the week following the October 7 attacks, Israeli Defence Minister Yoav Gallant began pressing for a major offensive against Hezbollah. Mr Biden pressured Israeli Prime Minister Benjamin Netanyahu to reject these demands and focus on Hamas. A similar scenario was repeated at least twice.
But Israel sought two imperatives that were unavailable in Gaza. Both Israel and Iran assessed that Tehran had pocketed strategic benefits at the expense of Israel, Hamas and, above all, the Palestinians. That equation couldn't be altered in Gaza, which has no meaningful importance to Tehran, and especially since Hamas is a Muslim Brotherhood organisation and an unreliable ally that broke with the “axis” completely over the Syrian war.
The Israeli state badly needed a "win" to recuperate national security institutions whose reputations were damaged by the breathtaking failures on October 7. Mr Netanyahu needed an unequivocal "victory" to restore his own reputation in advance of any future investigation into those failures.
Neither goal was going to be absolutely achieved by fighting Hamas. Instead, taking the fight decisively to Hezbollah, the prototypical and most potent of Iran's Arab militias, offered the potential for both. But until recent weeks, Israel was largely content with gradual escalation against Hezbollah that made Washington distinctly nervous but never threatened to force the regional war the US was seeking, at virtually all costs, to avoid, although there were obviously making such a disaster ever more plausible.
When Israel's operation in Rafah marked the end of the primary war against Hamas and transformed the continued conflict in Gaza into an amorphous counter-insurgency rather than a conceptually-coherent campaign against clearly-identified targets, Israel's attention began to shift back north.
Neither Israel nor Hezbollah expressed genuine interest in a US-proposed compromise in which the Lebanese militia would agree to withdraw its fighters and heavy equipment seven or eight km north of the border. Israel was demanding at least 20km while Hezbollah was insisting on an elusive and implausible ceasefire in Gaza.
Instead, Israel steadily increased pressure against Hezbollah and Iranian assets in Syria, while Mr Netanyahu rebuffed the intensified US efforts to achieve a four-week ceasefire in Lebanon. Israel's extraordinary penetration of Hezbollah's interworkings was the key to a series of devastating assassinations of much of that organisation’s key leadership while thousands of its operatives and associates were killed or debilitated by booby-trapped pagers and walkie-talkies.
Meanwhile, Israel's ongoing air campaign severely damaged Hezbollah's infrastructure and equipment, including its all-important rocket launchers. These assets are crucial to Iran, serving as the primary deterrent against any attack on Tehran’s nuclear facilities.
The remarkably successful campaign culminated in the assassination of Hezbollah leader Hassan Nasrallah and several of his key deputies. But it was followed by precisely what Washington had, for a year, focused on preventing: an Israeli ground invasion of Lebanon.
While it is being marketed as "limited" and "targeted," – and therefore implicitly not supposed to be the beginning of a new, open-ended Israeli occupation of parts of southern Lebanon as a “security buffer zone” – Washington understands from its own bitter experiences that such adventures are easy to launch but difficult to end or even contain.
After months of perceived passivity, Tehran finally intervened with a large-scale rocket and missile attack against civilian targets deep into Israel and the headquarters of its intelligence services. While the attack has been deemed unsuccessful by Washington, it's unlikely that Israel will accept Mr Biden‘s renewed calls for restraint any more than it has so many other such calls over the past few months.
The Israelis knows that the weeks before a presidential election are a time of maximum impunity from US pressure, and they are taking full and cynical advantage of this. Washington's reticence was on full display when Mr Biden bizarrely stated he "would not object" if Israel ended its invasion and eased its bombardment.
Israel seems unlikely to react with restraint. And the Biden administration is divided, with some senior figures privately encouraging Israel's battering of Hezbollah and humiliation of Iran, while others increasingly fear that Mr Netanyahu is trying to drag the US into a military confrontation with Tehran and at last secure his long-sought goal of maneuvering Washington into intervening on Israel’s behalf and bombing Iran's nuclear facilities. The US has the firepower to potentially set Iran's nuclear weapons programme back a decade or more, while Israel probably doesn't.
But Mr Biden has little to work with. He's clearly unwilling to exercise the kind of US leverage that could keep Israel in check. He must now hope that Iran and Hezbollah will seek an understanding with Israel to remove militia forces from the border area, even though Israel may no longer be in any mood to compromise.
If the Israelis persist, and Iran and Hezbollah won't employ “strategic patience” and back down, the nightmare of a multi-front regional war that could force Washington's hand in defence of Israel – particularly in the month before a crucial election – may become a reality. This is a profound threat to US interests and goals, and would constitute the complete meltdown of Mr Biden's entire approach to the crises started by Hamas a year ago.
Live updates: Follow the latest on Israel-Gaza
Motori Profile
Date started: March 2020
Co-founder/CEO: Ahmed Eissa
Based: UAE, Abu Dhabi
Sector: Insurance Sector
Size: 50 full-time employees (Inside and Outside UAE)
Stage: Seed stage and seeking Series A round of financing
Investors: Safe City Group
Mohammed bin Zayed Majlis
Company%20profile
%3Cp%3EName%3A%20Tabby%3Cbr%3EFounded%3A%20August%202019%3B%20platform%20went%20live%20in%20February%202020%3Cbr%3EFounder%2FCEO%3A%20Hosam%20Arab%2C%20co-founder%3A%20Daniil%20Barkalov%3Cbr%3EBased%3A%20Dubai%2C%20UAE%3Cbr%3ESector%3A%20Payments%3Cbr%3ESize%3A%2040-50%20employees%3Cbr%3EStage%3A%20Series%20A%3Cbr%3EInvestors%3A%20Arbor%20Ventures%2C%20Mubadala%20Capital%2C%20Wamda%20Capital%2C%20STV%2C%20Raed%20Ventures%2C%20Global%20Founders%20Capital%2C%20JIMCO%2C%20Global%20Ventures%2C%20Venture%20Souq%2C%20Outliers%20VC%2C%20MSA%20Capital%2C%20HOF%20and%20AB%20Accelerator.%3Cbr%3E%3C%2Fp%3E%0A
Racecard
6pm: The Pointe - Conditions (TB) Dh82,500 (Turf) 1,400m
6.35pm: Palm West Beach - Maiden (TB) Dh82,500 (T) 1,800m
7.10pm: The View at the Palm - Handicap (TB) Dh85,000 (Dirt) 1,400m
7.45pm: Nakeel Graduate Stakes - Conditions (TB) Dh100,000 (T) 1,600m
8.20pm: Club Vista Mare - Handicap (TB) Dh95,000 (D) 1,900m
8.55pm: The Palm Fountain - Handicap (TB) Dh95,000 (D) 1,200m
9.30pm: The Palm Tower - Handicap (TB) Dh87,500 (T) 1,600m
Ten tax points to be aware of in 2026
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
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.”
