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Cairo's dispute with Israel over control of the Palestinian side of the Gaza-Egypt land crossing and a border strip has strained relations between the two neighbours to a level not seen since they signed their landmark peace treaty 45 years ago, sources have told The National.
In the past 48 hours, Egypt has informed Israeli security officials during talks in Cairo that it will never tolerate the presence of Israeli forces, regardless of their number, in either area, according to the sources, who have direct knowledge of the issue. Egypt has also accused Israel of violating bilateral agreements that, among other things, prohibit the deployment of Israeli troops in those regions.
Israel captured the Palestinian side of the Rafah crossing in May and later seized the Salah Al Din border strip, also known as the Philadelphi Corridor, which runs the length – about 12km – of the Egypt-Gaza border.
“The Israelis insisted on keeping their forces there and pledged that they will share real-time satellite images that show that only a limited number will be deployed there,” said one of the sources on Tuesday. However, “the Egyptians flatly rejected the offer and instead suggested the deployment of US or UN troops there, which Israel has in turn rejected”.
While tensions between Egypt and Israel are high, both nations fully understand that their 1979 peace treaty is a cornerstone of Middle East stability and recognise that annulling that deal due to the dispute would have severe consequences for the entire region.
Fears that the Israel-Gaza war could escalate into a wider conflict have gripped the Middle East since the late-July assassination of Hamas leader Ismail Haniyeh in Tehran. Iran has vowed to avenge his death, which is widely attributed to Israel.
If a compromise is not reached soon, the dispute between Israel and Egypt, the most populous Arab nation, could bring the region closer to a wider conflict involving Iran and its powerful proxies in Yemen, Iraq, Lebanon, and Syria.
In a recent television interview, Samir Farag, a retired Egyptian army general-turned-analyst, said Egypt would seek a ruling from the International Court of Justice or complain to the UN Security Council if Israel does not withdraw from the crossing and the border strip.
Israel's capture of the two areas, he added, violated agreements made between Egypt and Israel in 2005 and 2014. The first was established to regulate the flow of goods and people between Gaza and Egypt, and the second further reinforced these regulations and set additional security measures to prevent military escalation.
“Egypt will never accept the de facto situation created by Israel,” said Gen Farag, whose views reflect those of the government. “We will never quit on the two agreements because they are binding international accords. If Israel persists, then we could respond by deploying an armoured division on our side of the border.”
The Israeli move deeply angered Egypt, which saw it as a breach of its national security and a violation of the two accords that have since been added to the text of their US-sponsored 1979 peace treaty. In response, Egypt closed its side of the Rafah crossing, which has been the main entry point for humanitarian assistance flowing into Gaza since the war broke out in October last year.
It has also said it intended to join South Africa in its case before the International Court of Justice accusing Israel of committing genocide in Gaza. It has yet to take concrete action.
Meanwhile, Israeli and Egyptian officials have been engaged in talks to resolve the dispute without making headway. Hamas has made Israel's withdrawal from the land crossing and the border strip one of its conditions to accept a ceasefire deal and release the hostages it has held in Gaza since October.
Israel contends that underground tunnels running under the Egypt-Gaza border have been used to smuggle weapons and dual-use materials for Hamas. Cairo has categorically denied the charge and insisted its military destroyed all tunnels nearly a decade ago.
Egypt has already agreed to an Israeli suggestion that a wall standing six metres high and another six underground should be built along the entire Egypt-Gaza border with sensors and security cameras fitted on top of the structure.
The sources confirmed that the dispute was a key topic during the talks on Tuesday between US Secretary of State Antony Blinken and Egyptian President Abdel Fattah El Sisi in New Alamein, the government's summer seat.
The US, said the sources, was fully engaged as a mediator in the dispute, which has in recent weeks been discussed separately from indirect negotiations between Israel and Hamas mediated by the US, Egypt and Qatar to reach a Gaza ceasefire and secure the release of hostages held by Hamas.
Egypt has also rejected a US offer for a gradual Israeli withdrawal from the Rafah crossing and the border strip, fearing that Israel would drag its feet or abandon the process altogether if it deems it necessary to return to the area for security reasons.
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Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana
Rating: 2/5
The President's Cake
Director: Hasan Hadi
Starring: Baneen Ahmad Nayyef, Waheed Thabet Khreibat, Sajad Mohamad Qasem
Rating: 4/5
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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.”
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
