Protesters gather in Tel Aviv. Prime Minister Benjamin Netanyahu is at a political crossroads almost nine months into the Gaza war. Reuters
Protesters gather in Tel Aviv. Prime Minister Benjamin Netanyahu is at a political crossroads almost nine months into the Gaza war. Reuters
Protesters gather in Tel Aviv. Prime Minister Benjamin Netanyahu is at a political crossroads almost nine months into the Gaza war. Reuters
Protesters gather in Tel Aviv. Prime Minister Benjamin Netanyahu is at a political crossroads almost nine months into the Gaza war. Reuters

Gaza truce plan creates new cracks in fragile Netanyahu government


Thomas Helm
  • English
  • Arabic

The future of Israel’s war effort was overshadowed at the weekend by US President Joe Biden's proposed ceasefire plan, piling pressure on Prime Minister Benjamin Netanyahu to end the fighting.

As part of a proposed deal, remaining Israeli hostages held by Hamas are to be released.

Mr Biden said the plan he set out was an Israeli proposal, although the extent to which the Netanyahu government endorses it is uncertain, with leading far-right figures in the Israeli coalition government strongly objecting to the measures.

Mr Netanyahu appeared to resist parts of Mr Biden’s proposal on Monday, saying that his government “maintained the aims of the war, primarily the elimination of Hamas”.

He claimed that despite political divisions, Israel's plan was simple, to eliminate Hamas and free hostages, "agreed on in the war cabinet unanimously."

The cabinet increasingly appears to be cracking and on Monday, Finance Minister Bezalel Smotrich called Mr Biden's suggestions "an offer of surrender" and repeated threats to leave government if it was accepted.

There have been reports quoting Israeli sources as saying Mr Biden’s plan does not entirely match the original proposal.

The confusing picture about the future of the Gaza War increases domestic pressure on Mr Netanyahu, who faces rebellions from both poles of his government as the conflict drags into its ninth month.

Centrist politicians Benny Gantz and Gadi Eisenkot have spent recent weeks amplifying calls for elections and threats to abandon the administration, accusing Mr Netanyahu of not setting clear objectives for the war and abandoning Israeli hostages held in Gaza.

Far-right ministers Itamar Ben-Gvir and Bezalel Smotrich have threatened to bring down the government if Mr Netanyahu pursues anything other than a full-throttle war effort in Gaza, despite mounting international concern over the humanitarian toll. There is also growing uncertainty among the Israel public that total victory over Hamas is possible.

An increasing number of Israelis are prioritising the release of hostages held by Hamas above all other war aims. AFP
An increasing number of Israelis are prioritising the release of hostages held by Hamas above all other war aims. AFP

Mr Smotrich reportedly held meetings with rabbis associated with his party to discuss conditions that would prompt his movement to leave the government, and Mr Ben-Gvir, the National Security Minister, was reportedly scheduled to meet Mr Netanyahu to discuss the framework.

Israeli security concerns about the deal centre on the extent to which it would allow Hamas to remain intact and possibly to rebuild to threaten Israel again.

Kobi Michael, a researcher at Israeli think tanks INSS and the Misgav Institute, said that “unfortunately, once again, Biden gave Hamas reason to be optimistic”.

“[The proposals] will make Hamas think that the president and the international community are about to heavily pressure Israel [into accepting a deal], so they believe time is on their side and that they have no incentive to make any significant movements,” he said.

“Hamas leadership feels as if it’s in a strategic comfort zone.”

Chuck Freilich, a senior researcher at INSS, believes Mr Biden, knowing the pressure that ultra-religious politicians would put on Mr Netanyahu to reject the plan, chose to make his speech as Israel wound down for Shabbat, on Friday evening.

“Religious parties wouldn’t have been able to respond over Shabbat, so Biden gave Netanyahu some time to prepare before they chimed in,” Mr Freilich said.

“Smotrich, Ben-Gvir and some in Likud want to keep the war going perpetually. The real question is what Netanyahu’s interest is, because until now, the determining factor for the prime minister's actions has been his political survival.

“I don’t think he wants to be in a coalition with just the right-wingers. The imminent departure of Gantz and Eisenkot is very problematic for him because it would lead to exactly that.”

Itamar Ben-Gvir, left, and Bezalel Smotrich are threatening to leave Prime Minister Benjamin Netanyahu's coalition. EPA
Itamar Ben-Gvir, left, and Bezalel Smotrich are threatening to leave Prime Minister Benjamin Netanyahu's coalition. EPA

The political tumult came amid some of the heaviest bombardments from Hezbollah in Lebanon, adding yet more pressure on the government to take decisive action to restore calm in northern Israel and return the roughly 60,000 residents who were evacuated after October 7 to the homes.

Hezbollah launched attacks on the cities of Acre and Nahariya at the weekend, causing residents to run for shelters and fires across the territory as the summer heat increases.

“May has seen the largest number of attacks in the north since the war began,” said Sarit Zehavi, founder of Alma Research Centre that focuses on security in northern Israel.

“Anti-tank missile and UAV [drone] attacks are up, and while rocket attack numbers are stable, the problem now is the barrages in which they are fired, which makes them harder to intercept,” Ms Zehavi said.

“I don’t think we have ever had control of the situation and every option should be on the table.”

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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

AI traffic lights to ease congestion at seven points to Sheikh Zayed bin Sultan Street

The seven points are:

Shakhbout bin Sultan Street

Dhafeer Street

Hadbat Al Ghubainah Street (outbound)

Salama bint Butti Street

Al Dhafra Street

Rabdan Street

Umm Yifina Street exit (inbound)

Updated: June 04, 2024, 6:06 AM