Eilat is home to Israeli energy infrastructure, a port and a small naval base. Reuters
Eilat is home to Israeli energy infrastructure, a port and a small naval base. Reuters
Eilat is home to Israeli energy infrastructure, a port and a small naval base. Reuters
Eilat is home to Israeli energy infrastructure, a port and a small naval base. Reuters

Drone strikes Eilat naval base in Israel as Iraqi militia claims attack


Robert Tollast
  • English
  • Arabic

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A drone struck the southern Israeli port city of Eilat early on Sunday morning, hitting a naval base in the first successful strike on the city since the Gaza war began in October.

The attack, which caused no casualties and only lightly damaged the building, followed what the Israeli army said was a “suspicious aerial target that entered Israeli territory from the east” which struck “in the Eilat Bay area”.

Images on social media showed smoke billowing from a distinctive warehouse next to a small dock that is regularly used by Israeli Navy Corvettes, a class of small warship.

The army later confirmed the drone struck a naval base in the city and confirmed minor damage at the site.

The incident is being investigated, it added.

Eilat is home to Israeli energy infrastructure, a port and small naval base and has been a frequent target of Houthi drone and missile attacks, but until now drones and missiles targeting the city have been shot down.

In one case last month, a Houthi cruise missile was monitored by Israeli air defences before crashing in an open area.

The attack may have been the work of an Iraqi militia, after the Israeli military said the weapon had “come from the east”, which in Eilat would mean Jordan, as opposed to Houthi drone flight paths from the south.

On Monday, the Islamic Resistance, a small coalition of Iraqi militias that includes Kataib Hezbollah, one of the most powerful Iran-backed groups in a network of Tehran-backed units called the Popular Mobilisation Forces, claimed responsibility for the attack.

The group said it had struck a “vital target” in Israel.

Iran-backed militias in Iraq have claimed a number of drone attacks against Israel in recent months. They say that they are working in solidarity with Hamas in the war in Gaza. However, there has been no visual evidence of their attacks.

The groups have also come under frequent air attacks in Syria, where they maintain a network of bases that the US says are used to store weapons such as drones and missiles.

The US has claimed some of the air strikes, but denied being involved in others. Israel rarely comments on individual strikes but has admitted to the ongoing air campaign in Syria.

Recent videos by the Islamic Resistance in Iraq show drones similar to the Iranian Shahed model being fired from launching rails. The drones have claimed ranges of up to about 2,000 kilometres, putting Eilat within reach of the group.

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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.”

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