A woman cries as mourners bury the bodies of nearly 100 Lebanese people killed during the war between Israel and Hezbollah in the largest mass funeral in Lebanon, held in the southern village of Aitaroun. AP
A woman cries as mourners bury the bodies of nearly 100 Lebanese people killed during the war between Israel and Hezbollah in the largest mass funeral in Lebanon, held in the southern village of Aitaroun. AP
A woman cries as mourners bury the bodies of nearly 100 Lebanese people killed during the war between Israel and Hezbollah in the largest mass funeral in Lebanon, held in the southern village of Aitaroun. AP
A woman cries as mourners bury the bodies of nearly 100 Lebanese people killed during the war between Israel and Hezbollah in the largest mass funeral in Lebanon, held in the southern village of Aitar

Israel's free hand and the fallout of a 'secret agreement' Lebanon acknowledged but never signed


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Israel's army has struck at least 30 targets in Lebanon since the initial truce phase with Hezbollah ended three weeks ago, killing dozens. It has also escorted hundreds of ultra-Orthodox Jews inside Lebanon to visit the alleged burial site of a scholar.

On Tuesday, Israel and Lebanon agreed to form working groups to resolve disputes under the US-led committee overseeing the ceasefire. At the same time, Israeli fighter jets struck two locations inside Lebanon.

Hezbollah, once capable of challenging Israel’s defences, has not responded. Nor have the Lebanese armed forces. What was expected to become a lasting ceasefire following the end of the initial truce phase on February 18 has instead exposed a harsh reality for many Lebanese: this is now a one-sided war.

“Hezbollah was defeated, forcing the Lebanese government to swiftly negotiate an end to the war to save the state of Lebanon,” a senior political source in the former Lebanese government stressed. “However, what was officially signed is only part of the story; a so-called secret agreement between the US and Israel holds far greater significance.”

Israel's actions beyond the ceasefire deal are seen as part of US guarantees that granted the Israeli military the right to continue striking Hezbollah and any other “threat”. Political, military, and security sources told The National that politicians involved in the ceasefire negotiations knew this outcome. They had been informed by American and other foreign envoys that it was inevitable.

In response to The National's request for comment, the Israeli army said it “remains committed” to defending Israel “while operating in accordance with international law and the understandings made between Israel and Lebanon”, without commenting directly on the guarantees provided by the US.

It added that it is carrying out strikes on “military targets of the terrorist organisation Hezbollah that pose an immanent or continuing threat”, accusing Hezbollah of violating international law “by integrating its military assets within civilian areas”.

The defeat of the Iran-backed group has shattered the balance of deterrence established since the 2006 war. Unable to retaliate against Israel’s attacks, Lebanon and its underarmed, undertrained, and underequipped army were left to endure the long-term consequences, including military occupation and the constant threat of Israeli strikes.

Some Lebanese politicians even now think that the low-scale war may persist with a deeper, less visible objective: pushing towards a peace agreement between Lebanon and Israel.

Earlier this month, a US official told The National that “in addition to security concerns, there’s a long-term strategic reasoning to keep the Lebanese government in check and, eventually, push Lebanon toward a long-term peace agreement with Israel. It’s a long-game, steady-state approach".

A senior Israeli official told Israeli media on Wednesday that Israel’s aim of forming new working groups with Lebanon is “to reach normalization". Tuesday's meeting was military-to-military, but the next meeting will be political, according to the official.

Imminent threats

Actual negotiations for the ceasefire started only after the Iran-backed group suffered a series of significant setbacks in September, including the loss of its entire leadership, such as its long-serving secretary-general Hassan Nasrallah.

Lebanon was offered an agreement for a 60-day truce followed by a permanent ceasefire on the condition that the Lebanese army be posted in southern towns and Hezbollah retreats beyond the Litani river. The government signed and approved the deal. The militant group acknowledged it and accepted the terms.

While ceasefire negotiations were stalled for some time over a sticking point regarding the interpretation of a clause on “self-defence”, Israel was negotiating with the US the side agreement, in the form of guarantees, to secure freedom of action in exchange for halting the full-scale war.

Lebanese officials were informed of the details and terms, according to several Lebanese and regional diplomatic sources.

A document seen by The National stated that Israel “has an inherent right to defend itself” and it “retains the right to act in self-defence against imminent threats”. Such threats “include the production, storage or transportation of heavy weaponry, ballistic medium and long-range missiles and other advanced weaponry”. It was not clear if the document was signed or if it was eventually turned into verbal guarantees.

A US National Security Council spokesperson said "not true" when asked if the US signed the agreement. However, the spokesperson did not explain the circumstances that are allowing Israel to continue its military actions against targets in Lebanon despite the war's conclusion.

“The Israelis approved the ceasefire agreement because they obtained US promises the deal allows them to achieve what they wanted to achieve from the beginning of the escalation,” claimed an MP close to Hezbollah and its allies in the parliament.

“There must be a Lebanese discontent with the implicit US mandate granted to Israel to target anything it may consider a threat. But the state reaction is less than it should be,” added the MP. Many in Lebanon have long accused Hezbollah of hijacking Lebanon's war and peace decision.

The Lebanese government has filed complaints with the US-led monitoring committee and has formally requested the UN Security Council to intervene. It also urged regional actors to pressure Israel to halt its continuing military actions, but none of these efforts succeeded.

The only breakthrough came on Tuesday when Israel released Lebanese prisoners taken during the war with Hezbollah and agreed to discuss the violations to the ceasefire in exchange for direct talks with Lebanese army officers.

US Senator Lindsey Graham wrote on X: “Congratulations to the Trump Team for negotiating high-level discussions between Lebanon and Israel regarding border security. This is a major breakthrough, and it is my hope that Lebanon – which is trending in a very positive direction – will continue to engage with Israel and be part of regional peace and stability rather than conflict.”

"The American talk about committees confirms what was previously suspected, that the goal of maintaining the occupied outposts was to push Lebanon to open channels of communication with Israel and address political and other issues and matters unrelated to the results of the war," said on Wednesday a source close to Hezbollah's political bloc.

'I didn't sign anything'

For months, Lebanese officials involved in the negotiations avoided acknowledging that they had been informed of the side guarantees. However, after the initial truce phase expired on February 18 following an extension, and with Israel maintaining its readiness to strike while continuing to hit targets without a response from the Lebanese side, many in Lebanon have started seeking answers.

During last month's parliamentary session to approve the government, several MPs asked for clarification on why Israel continues to strike Lebanon despite the ceasefire deal and whether a “secret agreement” exists. Speaker Nabih Berri, the lead negotiator, responded vaguely. “I didn't sign anything in this regard,” he said, referencing the US-Israeli agreement.

Hezbollah has to step aside
Lebanese security official

MP Firas Hamdan had said days before the session that “what is happening today is the implementation of a secret agreement between Israel and the US with the knowledge of the Lebanese state”. During the same session, he raised the issue again but received no clear answers.

Lebanese politicians fear that Israel not just aims to weaken Hezbollah but also to continue its attacks against Lebanon to completely eradicate the Iran-backed militant group, the country's most powerful force since the civil war of 1975 to 1990. For them, this is the worst-case scenario as it could lead to an indefinite war, a no-man’s-land along the southern border, and, potentially, internal strife. Earlier this month, Lebanese, French, and US sources have told The National that Israeli troops are unlikely to withdraw from five military positions in southern Lebanon any time soon, despite calls from Lebanon for a complete pullout.

“The situation remains unclear and challenging. The main reason is Israel's occupation of the five posts it currently holds, without providing a timeline for withdrawal,” a senior Lebanese security official told The National.

“Meanwhile, Israel is struggling to facilitate the return of all of its residents to the north, leading its army to believe that its operations are not yet complete. Drone attacks and assassinations are expected to continue.”

Fighting between Israel and Hezbollah broke out a day after Gaza-based militant group Hamas launched attacks on southern Israel on October 7, 2023. More than 4,000 Lebanese were killed in the fighting, with 16,600 injured, according to figures from the UN Office for the Co-ordination of Humanitarian Affairs. The World Bank has said Lebanon’s postwar reconstruction would cost an estimated $11 billion.

Israel's actions are also hindering reconstruction efforts, as politicians begin to suspect a connection between exerting military and financial pressure to weaken Hezbollah and the release of necessary funding for rebuilding. The group has been struggling to compensate those who lost their homes during the war, despite earlier promises of support, amid a crackdown that led to the arrest of individuals at Lebanon's only airport carrying large sums of cash and a ban on Iranian planes suspected of transferring money to the militant faction, which was established by Iranian military commanders in the early 1980s.

“Lebanon has been informed by several western ambassadors that there is a link between facilitating the reconstruction process and attracting funds, and disarming Hezbollah,” claimed an MP close to Hezbollah and its allies in the parliament.

The security official described Lebanon as being in a phase of “incomplete surrender”, lacking any means to respond to Israeli attacks while watching “nervously” the developments in neighbouring Syria since the fall of the Assad regime, as chaos on the ground begins to spread with attacks on forces loyal to the new rulers and revenge killings along the coast.

Ten thousand members of the Alawite minority fleeing sectarian violence have crossed into Lebanon already and settled in northern towns and areas, Lebanese security sources told The National. The situation has heightened tension and rekindled past conflicts.

“To avoid any further complications, Hezbollah must stay put,” stressed the security official.

“It can no longer launch a war, smuggle weapons, or move cash. It simply has to step aside and recognise that the price it paid, and Lebanon paid, is far greater than anyone expected.”

Sara Ruthven contributed to this report from Washington

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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

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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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Updated: March 12, 2025, 2:06 PM