Hamas's demands and Israel's insistence on severe punishment stymie Cairo's bid to end war

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Ambitious demands by Hamas and Israel's insistence on punishing the militant Palestinian group for killing hundreds of Israelis in a surprise attack are stymying Egypt's efforts to end the latest outbreak of fighting, Egyptian officials said on Sunday.

Egypt's efforts, which are directly overseen by President Abdel Fattah El Sisi, are also being hindered by the “unavailability” of powerful field commanders from Hamas and Palestinian Islamic Jihad (PIJ) to talk to given that their attention is entirely focused on the fighting, according to the officials.

The officials, who have direct knowledge of Egypt's contacts, spoke to The National.

They said Egypt's contacts over the past 24 hours included talks with senior EU and US officials as well as regional heavyweights like the UAE, Saudi Arabia, Jordan and Qatar. They said contacts were also under way with Iran, Hamas' main regional backer whose relations with Egypt have thawed in recent months after decades of tension.

Israel, for its part, has sought Cairo's help to secure the release of the unspecified number of Israelis taken hostage by Hamas during the militant group's raid into southern Israel on Friday. However, the right-wing government of Prime Minister Benjamin Netanyahu was adamant about severely punishing Hamas before it could enter negotiations for a truce, the officials said.

Egypt borders Israel and the Hamas-ruled Gaza Strip and has in the past mediated truces between Hamas and Israel, most recently in the summer of 2021. Egypt has since then been trying unsuccessfully to arrange a prisoner exchange between the two sides.

Israeli air strikes battered Gaza overnight, killing more than 300 Palestinians and smashing buildings, tunnels and the homes of Hamas officials, as Mr Netanyahu vowed “mighty vengeance for this wicked day”.

“We're going to be attacking Hamas severely and this is going to be a long, long haul,” a military spokesman told reporters.

In a sign of possible further escalation, Israeli artillery responded to mortar fire from Lebanon and drone strikes hit a post of the Iranian-backed Hezbollah group along Israel's northern border.

Friday's attack by Hamas was Israel's bloodiest day since Egypt and Syria launched a sudden assault to reclaim lost territory 50 years ago.

The 1973 attack was Egypt's last full-fledged conflict against Israel, which it fought in 1948, 1956 and 1967. In 1979, Egypt became the first Arab nation to sign a peace treaty with Israel.

“Hamas has significantly raised its expectations from any negotiations over a truce now that it has a large number of hostages,” said one of the Egyptian officials.

“Their initial demands included the release of all those captured since Friday and hundreds of Palestinians in Israeli jails. They also want a freeze on Jewish settlements in the West Bank and international guarantees that Israel will not launch a ground offensive in Gaza.”

Egypt, for its part, is asking Israel not to send troops into Gaza and to spare hospitals, basic services installations and civilians in the narrow coastal strip from its continuing air strikes, said the officials.

Separately, Cairo is in contact with Lebanon's Iranian-backed Hezbollah group to urge its leaders not to join the fight, which would raise the danger of the Hamas-Israel conflict spiralling out of control, the officials said.

Egypt has long viewed stability in the Gaza Strip as part of its national security.

The Gaza Strip borders an area in the north of the Sinai Peninsula where Egyptian militants have been fighting government forces for years. Cairo has also been courting Hamas and the more radical PIJ, in large part because it did not want them to turn into a source of support for the Sinai-based militants.

Separately, Egypt has been trying to reconcile rival Palestinian factions in the hope that the long-stagnant peace negotiations with Israel could be revived if the Palestinians spoke with one voice.

Now that Israel and Gaza's militant groups are fighting again, Egypt has put its security forces in the Sinai region close to the strip on high alert.

It has also set up field hospitals near the border with Gaza to treat wounded civilians and instructed hospitals in the Sinai city of El Arish and Ismailia to the West to prepare for a possible influx of Palestinian casualties.

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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.”

Hamas's demands and Israel's insistence on severe punishment stymie Cairo's bid to end war

Egypt's efforts are further hindered by the unavailability of powerful Hamas and Palestinian commanders

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