Lebanon border talks: Can diplomacy succeed as Hezbollah and Israel clash?


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“Serious” western-mediated talks towards the demarcation of Lebanon’s border with Israel have begun, a political source close to the negotiations told The National, but any agreement depends on the “cessation of hostilities” between Israel and Hezbollah.

The diplomatic initiative is an attempt by western powers to prevent the outbreak of a full-scale war between Israel and Hezbollah – which along with armed allies has engaged in daily cross-border exchanges with Israel since October 8, in an attempt to divert Israel from its assault on the Gaza Strip.

Talks, led by the US, are still “in the early stage,” the source said.

He declined to comment on how such a ceasefire agreement might materialise, but said he was “hopeful”.

The diplomatic efforts have been intensified to prevent a regional escalation, particularly on the tense border. Israel has increased pressure to ensure the safe return of tens of thousands of residents who have evacuated form the northern border – increasing its threats of a major military operation in Lebanon.

Smoke billows after Israeli bombardment over Lebanon's southern town of Kfar Kila near the border with Israel. AFP
Smoke billows after Israeli bombardment over Lebanon's southern town of Kfar Kila near the border with Israel. AFP

The Israelis demand that Hezbollah must retreat from their border.

Hezbollah is determined that any sort of peace on the southern frontier would only come with an end to hostilities in Gaza, where more than 23,000 Palestinians have been killed by Israeli bombardment.

Israel’s threats have has raised concerns for the US, which is wary of being drawn in to a wider regional war in support of Israel.

In the last week, Beirut has hosted senior western figures, including the EU’s foreign affairs chief Josep Borrell, US energy envoy Amos Hochstein and German Foreign Minister Annalena Baerbock to avoid a broader escalation.

No political solution without Gaza ceasefire

The renewed impetus by western officials comes as Hezbollah leader Hassan Nasrallah earlier this month hinted at a willingness to engage in negotiations on border demarcation.

“There are talks of some sort of compromise being offered: stopping the clashes and escalation in return for a political solution” to the border demarcation issue, a source close to Hezbollah said.

The gist of the talks is “stay away from the [Gaza] war, and let's engage politically,” said the source,

Hezbollah has repeatedly said that the end of its border conflict with Israel depends upon a permanent ceasefire in Gaza.

“Our position is clear: the Lebanon front is in support of Gaza ... So stop the aggression on Gaza. And after that we will talk,” Mr Nasrallah said during a speech on Sunday.

“We heard Israel is going into the third phase of its Gaza war and will soon focus some of their brigades from Gaza and move them to its northern front against Hezbollah. They think they are threatening us. It’s a tired, empty threat,” he added, suggesting that Hezbollah views Israel's heightened pressure as a bluff to leverage its demands.

There are 13 disputed points along the Israel-Lebanon border, mainly located across the areas of village Ghajar, the Shebaa Farms and the Kfar Chouba Hills.

Any deal would involve the reduction of Hezbollah's presence at the border, a condition on which Israeli officials said they will not compromise, in exchange for Israel’s withdrawal from occupied territories.

‘The groundwork for a ceasefire’

“This is a very important initiative but this plan will not be implemented unless there is a ceasefire in Gaza,” Kassem Kassir, a political analyst who has closely studied Hezbollah, told The National.

Israel has made clear that its will not stop its war on Gaza until Hamas is eradicated, which it says could take months.

This means that the agreement might not be implemented any time soon and constitutes one of the main stumbling points of the plan.

“Hezbollah perceives that the US seeks to divide fronts, while the group has conditioned progress in Lebanon to developments in Gaza,” a western diplomatic source told The National after Mr Hochstein’s visit.

For Mohanad Hage Ali, a researcher for Carnegie, a think tank, these negotiations “lay the groundwork for the day after a ceasefire” even if they might not materialise amid a raging war.

The plan to stop hostilities would include a reduction of Hezbollah's presence at the Israel-Lebanon border, according to several observers and western diplomatic sources.

The “process is important on both sides”, Mr Hage Ali said. “Hezbollah has an interest to a certain extent, not in the parameters per se, but in the process as a de-escalation measure.”

Although it initiated the cross-border conflict from south Lebanon in support of its ally Hamas, Hezbollah has remained relatively restrained in an attempt to keep the frontier war contained. The party has made clear that it is not interested in engaging in a full-scale war, which observers said would not be in its favour.

Israeli leaders have insisted on driving away Hezbollah’s elite Radwan forces north of the Litani River, threatening more violence if diplomacy fails.

An agreement would facilitate the return of the thousands of displaced Israeli residents who fear a repeat of the October 7 attacks by a militia much more powerful than Hamas.

The plan would also include a buffer zone at the border, where a strengthened Lebanese Armed Forces would be deployed along with Unifil, the UN peacekeeping mission. In exchange, Israel will withdraw from territories which Lebanon claims it occupies illegally.

While the war has brought the demarcation talks back to the spotlight, the issue is not new. In July, Israel's de facto annexation of the contested village of Ghajar sparked exchanges of fire at the border between the two sworn enemies.

As tensions flared along the border during the summer, Mr Hochstein visited Lebanon in August to meet officials in an effort to resolve the long-standing border dispute. He played a leading role in delineating the maritime border between the two countries in 2022, paving the way for offshore oil and gas exploration activities.

While Lebanese and diplomatic sources noted a renewed impetus from western interlocutors, there are significant roadblocks on the path to a ceasefire.

And the risk of miscalculation remains high. On January 2, Israel assassinated Hamas deputy Saleh El Arouri in Beirut, the first time it had targeted the Lebanese capital since the 2006 July war.

In response, Hezbollah launched more than 60 rockets at an Israeli surveillance base.

Earlier this week Israel killed Wissam Tawil, a commander in Hezbollah’s elite Radwan force and the most senior Hezbollah commander to die since October 7. The Lebanese armed group retaliated by attacking Israel’s northern command.

Roadblocks

“The land demarcation is not in the interest of Hezbollah, whose entire raison d'être as a resistance movement is built on the rhetoric of liberating the occupied land from Israel,” Karim El Mufti, a political-science professor at Sciences Po Paris, told The National.

In a meeting with Prime Minister Najib Mikati, Mr Hochstein called for a “temporary compromise” to ease tensions “even if it is not possible to reach a final solution agreement at the present time.”

The National reached out to several Hezbollah politicians for comment. A media co-ordinator for the party said it is not publicly commenting on the issue of border demarcation for the time being.

Things are also not straightforward on the Israeli side, which has long been divided over whether its forces should launch a military operation in Lebanon.

“There are signals of openness from one side, and on the other side, those who do not believe in a diplomatic resolution,” the western diplomatic source said.

Regarding Israel’s openness to negotiation, Mr Hochstein said “there is a narrow window, but that they prefer a diplomatic solution”.

At a cabinet meeting on Friday, Mr Mikati demanded “a ceasefire in Gaza take place as soon as possible, in parallel with a ceasefire in Lebanon”.

According to one minister present, “now it seems that things are much more on the right track as far as getting to peace.”

“There is a sense, yes, that they are trying harder than before definitely,” the minister said, referring to western interlocutors and claiming that demarcation points were being discussed seriously.

For Hilal Khashan, a professor of political science at the American University of Beirut, Hezbollah is facing a dead end. “The deal is unacceptable for Hezbollah, which cannot afford to lose its connection to the land,” he said.

“However, pushing Israel back will be challenging. Benjamin Netanyahu said that the attack by Hamas will reshape the Middle East, and Israel's pressure on Hezbollah is part of this project,” he added.

According to Mr Khashan, it is possible that Hezbollah will not abide by a potential deal, much like in 2006 when UN Security Council Resolution 1701 formally ended the war, calling for the withdrawal of armed forces from the south of Litani river.

However, this time, Israel has made it clear that it does not want to return to the prewar status quo.

“This issue will be resolved; how it is resolved is another matter, whether diplomatically or through a major military operation.”

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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.

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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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Updated: January 14, 2024, 4:31 PM