US envoy Amos Hochstein is set for his fifth trip to the Middle East since October. Reuters
US envoy Amos Hochstein is set for his fifth trip to the Middle East since October. Reuters

US envoy visits Israel and Lebanon as Middle East tensions peak



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US envoy Amos Hochstein is set to visit Israel and Lebanon in a last-minute effort to prevent a regional war, as Israel braces for a possible large-scale counterstrike by Iran and the Lebanese group Hezbollah.

Israeli media reported that Mr Hochstein was visiting Israel on Tuesday. A Lebanese political source told The National he will then visit Beirut on Thursday to meet officials and try to prevent the conflict between Israel and Hezbollah at the border from escalating into a full-blown war.

“It seems the US wants to prepare the ground for successful negotiations,” the source said.

Mr Hochstein's trip comes as mediators from the US, Egypt and Qatar have called on Israel and Hamas to meet on August 15 to resume ceasefire talks and reach a hostage release deal.

“This is what the US wishes but what guarantees do they have from the Israelis? We will see,” the source added.

Mr Hochstein is one of the several senior Biden administration officials being sent this week to the Middle East, as the US is continuing to boost its military presence in the region amid peaking tensions. William J. Burns, the CIA director, is travelling to Qatar and Brett McGurk, Mr Biden’s Middle East co-ordinator, is heading to Egypt and Qatar.

The Middle East has been bracing for a potential escalation since the assassination of Hamas political chief Ismail Haniyeh in Tehran, which was blamed on Israel, and of Fouad Shukr, a top Hezbollah commander, in Beirut nearly two weeks ago. Both Hezbollah, Iran's most powerful proxy, and Tehran have vowed retaliation, while maintaining they are not seeking an all-out war.

Lebanese officials previously told The National that western mediators had indirectly offered incentives to fix Lebanon's political and financial crisis in exchange for a limited Hezbollah response.

Backchannel diplomacy

Western diplomats have launched concerted efforts to defuse tensions in the region. But border clashes between Hezbollah and Israel have gradually intensified, with the armed group escalating attacks and reaching new Israeli towns and military bases, further testing Israel's Iron Dome missile defence system. The group has already paid a heavy price, with about 400 fighters killed since October – more than during the 2006 war, when 250 fighters were estimated to have been killed.

In the past two weeks, backchannel diplomacy has faced even greater obstacles.

Pro-Hezbollah media said Mr Hochstein is visiting Beirut to send “additional messages of intimidation” in his fifth trip to the region since October, labelling him a “partner” in the killing of Mr Shukr.

Iran’s supreme leader, Ayatollah Ali Khamenei, has pledged “severe punishment” for those responsible for assassination on Iranian soil, while Hezbollah leader Hassan Nasrallah said he would avenge Mr Shukr’s death “whatever the consequences”. But neither Iran nor Hezbollah have clarified the nature or timing of their retaliation. Mr Nasrallah said the wait is “part of the punishment”. Yet several statements suggest retaliatory attacks could happen this week should diplomatic efforts fail.

On Monday, National Security Council spokesman John Kirby said the US was prepared for what could be significant attacks by Iran and its proxies in the Middle East. The US shares Israel’s concerns about a possible Iranian attack and President Joe Biden is confident his military has the capability to help defend Israel, he said.

Iran's President Masoud Pezeshkian and the Foreign Ministry have dismissed numerous European calls for restraint as fears grow that Tehran will launch an attack on Israel.

The UK, France and Germany released a statement calling for restraint on Sunday, saying an attack would ruin any possibility of regional peace and stability. Iran's Foreign Ministry spokesman Nasser Kanaani called the statement “impudent” and said Tehran was determined to “deter Israel”. European nations must stand up “once and for all” against the war in Gaza, he said.

Mr Pezeshkian told British Prime Minister Keir Starmer he considers an attack on Israel “a solution to stop crime and aggression”, the state-run Irna news agency reported.

Thursday talks

Meanwhile, Hamas informed mediators on Thursday that it is “insisting on boycotting” ceasefire talks planned for this week, sources said, adding that there is “little hope” for a breakthrough.

“Hamas told mediators today it is still insisting on its position not to attend the talks and to instead implement what has been agreed on last month. Their argument is that new talks mean more time for Israel to bomb Gaza,” a Palestinian political source close to the negotiations told The National.

“The Israeli PM is putting forward new conditions and these talks are giving a platform to ask for more,” added the source.

According to another source involved in the negotiations, there's “little hope for a breakthrough to emerge from this week's talks, with Israel's continuing insistence on prosecuting the war until Hamas's demise, which is undermining the efforts of mediators”.

A ceasefire has been linked in the last few days to Iran and Hezbollah's retaliation against Israel for the killing of Hamas's chief and a top military commander.

Diplomatic sources said that reaching a deal could “limit” the avowed response and diffuse regional tensions.

Sources told The National that the information available to the Egyptian and Qatari mediators is that Iran and its proxies Hezbollah in Lebanon and the Houthis in Yemen will most likely jointly attack Israel if this round of talks fails to make any tangible progress.

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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.”

If you go...

Fly from Dubai or Abu Dhabi to Chiang Mai in Thailand, via Bangkok, before taking a five-hour bus ride across the Laos border to Huay Xai. The land border crossing at Huay Xai is a well-trodden route, meaning entry is swift, though travellers should be aware of visa requirements for both countries.

Flights from Dubai start at Dh4,000 return with Emirates, while Etihad flights from Abu Dhabi start at Dh2,000. Local buses can be booked in Chiang Mai from around Dh50

Updated: August 13, 2024, 2:48 PM