The National

Israel's strategy in Gaza leads to endless conflict

'Cutting the grass' is the euphemism some Israeli strategists are using to describe the policy being conducted in Gaza. The problem is the policy is realist nonsense.

National Editorial

November 21, 2012

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'Cutting the grass" is the euphemism some Israeli strategists have used to describe the policy that has been conducted in Gaza. The idea behind it is that Israel - unable on the one hand to make peace with its neighbours, and unable, on the other, to completely dominate or deter them by force - must resort to regular military incursions and strikes to degrade their military capability.

Such a policy explains the latest Gaza offensive. If Israel cannot deter Hamas and extremist groups from firing rockets, the theory goes that it must regularly degrade the military groups' weapons capabilities. It also explains the belligerence towards Iran: even though Israel lacks the ability to end Iran's nuclear programme, it can set it back a couple of years.

The problem is the policy is realist nonsense. It ignores or reinterprets the facts to fit a military-first and military-only doctrine, blatantly disregards the experience of Palestinians (for whom, as the occupying power, Israel has legal responsibility) and ignores the rather obvious point that Israel's actions are not considered in isolation - they bring with them consequences and reactions.

Israel's military adventures are always framed by the country's apologists as inevitable and proportionate reactions. Yet these actions incur reactions, and those reactions are making the country less safe. After every conflict, whether with Hizbollah in Lebanon or with Hamas in Gaza, and after every threat against Iran, the hardliners in those countries are strengthened and new weapons and technologies are developed to stop Israel's next bombardment.

In 2006, Israel barely fought Hizbollah to a standstill. That conflict revealed that Hizbollah could utilise anti-ship missiles, in the same way as the latest conflict in Gaza has proved the supposition that Hamas has rockets that can hit Tel Aviv, although that arsenal has been degraded to a degree.

Most importantly, the idea that Israel cannot reach a peace with its neighbours is ridiculous. Palestinians have been extending the hand of diplomacy for decades. If Israel ended its occupation of the West Bank, ended the siege of Gaza, withdrew settlers and stopped threatening its other neighbours, there would be no need to wage war against anyone, and no "grass" to cut. That equivocation fools no one - Israel's campaign is killing civilians.

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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