Britain has boldly made its move on recognising a Palestinian state but the question remains, will Israel listen?
It is less than likely that Israel will seek to fulfil the four conditions that Prime Minister Keir Starmer set out on Tuesday, in his major foreign policy reversal, as it has vehemently criticised the British move.
But academics have told The National that there is a chance that the major change in UK foreign policy could influence the Israeli government’s decisions.
More importantly, with a number of countries moving towards recognition, including France, it could have an impact on Donald Trump’s thinking.
The US President, it is argued, is the only leader who can sufficiently influence Israeli Prime Minister Benjamin Netanyahu.
UK recognition of Palestine as a state is now “highly likely” to happen in September as Israel will not meet the conditions set out, Sir William Patey, co-chairman of the Labour Middle East Council, told The National.
While he believed that recognition should have been made without conditions, it would at least give the Palestinians “some hope that the international community has not gone soft on a two-state solution, even if one is not immediately in prospect”.
Sir William, who is a former British ambassador to Saudi Arabia and Afghanistan, believes that Britain acting together with France and Saudi Arabia, could help “end the carnage and to move things forward in a more positive light”.
“But they are up against the two most intransigent set of people that we've ever seen in the Middle East, Hamas and the most right-wing Israeli government that ever existed,” he added.
President Sheikh Mohamed on Wednesday received a phone call from UK Prime MinisterKeir Starmer when he praised Mr Starmer’s statements regarding Britain's intention to recognise the Palestinian state. He also stressed the priority of reaching an urgent ceasefire in Gaza and continuing the flow of humanitarian aid into the enclave.
Israel rejection
Mr Starmer's conditions demand that Israel ends the starvation in Gaza, achieves a ceasefire with Hamas, refrains from annexing the occupied West Bank and commits to the two-state solution, otherwise Britain will recognise a Palestinian state at the UN General Assembly in September.
Israel's immediate response was to utterly reject the proposal with Mr Netanyahu condemning Mr Starmer’s position as one that “rewards Hamas’s monstrous terrorism” and could ultimately threaten Britain.
Co-operation on the conditions therefore seems unlikely, especially with a host of others pitching in, including former hostage and dual British-Israeli citizen Emily Damari, who said the UK’s new policy would not “advance peace – it risks rewarding terror” and sent a message “that violence earns legitimacy”.
There is also little hope from the Israeli opposition, with Yair Lapid, leader of the centrist Yesh Atid party, stating that Britain’s position “does not advance the two-state solution – if anything, it distances it”.
Eyes on Trump
The words are strong but ultimately all eyes will be on Mr Trump’s reaction. “Many people, even in Israel, really hope that this time Trump will be the one who will say, ‘game over, no more war’, and that it will put an end to the fighting,” said Dr Michael Milshtein, head of Palestinian studies at Tel Aviv University.
The Israeli peace activist Gershon Baskin, who has close contacts with Hamas, agreed that “everything is dependent – the war in Gaza, the hostages and agreements – on what Donald Trump does and nothing else”.
“If he tells Netanyahu to end the war, the war ends,” he added. “If he tells Israel they can stay in Gaza, they'll stay in Gaza. If he says 'you got to get out of Gaza', they'll get out of Gaza.”
He cited the Israeli government’s rapid U-turn on aid after Mr Trump expressed dissatisfaction over the images of starving Gazan children as the far reach of this influence.
So far, Mr Trump has been equivocal, stating he had “no view” on the issue and did not vehemently object to it.
“I guess Starmer is doing the same thing as [French president] Macron, and that’s OK. It doesn’t mean I have to agree,” he said before departing Scotland on Tuesday.
Pressure building
But others see this as a longer-term shift that goes beyond Mr Netanyahu’s time in office. Recognition is needed to “kick-start a process” that would “reach over the head of the Israeli government to the Israeli people” showing that “this is the way forward”, suggested MP Emily Thornberry, chairwoman of parliament’s foreign affair committee.
She told the BBC that Britain would remain “long-term allies” with Israel but would not do so “with this far-right government” and it is now down to Mr Trump to “lean on” Mr Netanyahu
Allied with France’s decision last week to recognise Palestine, alongside the Netherland barring entry to Israel's far-right Finance Minister Bezalel Smotrich and National Security Minister Itamar Ben-Gvir, the UK's move could influence the US position.
Just as Israel's population has been affected by images of starving Palestinians broadcast by its popular Channel 12 news, those same pictures are influencing Americans.
“People speak here about an international tsunami against Israel, that the gathering of American and European pressure on Israel can really have a massive impact,” said Dr Milshtein.
‘Things can change’
But what makes Mr Netanyahu highly unlikely to accept the British conditions is that the moment he agrees a ceasefire it will entail an Israeli withdrawal from Gaza and his coalition government will almost certainly collapse.
“But everything is very dynamic, so things can change,” said Dr Milshtein. “Right now it is Trump's opinion and let's see what will happen with that. He has already surprised us when he spoke about starvation in Gaza so it can happen again.”
Bronwen Maddox, director of the Chatham House think tank, argued that Palestinian recognition would be an “an unequivocal statement” that Britain views that as the only way to a secure future.
“The alternative to the creation of a Palestinian state is conflict without end, one that jeopardises Israel’s security,” she added.
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
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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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MATCH INFO
Uefa Champions League semi-final, first leg
Tottenham 0-1 Ajax, Tuesday
Second leg
Ajax v Tottenham, Wednesday, May 8, 11pm
Game is on BeIN Sports
'Shakuntala Devi'
Starring: Vidya Balan, Sanya Malhotra
Director: Anu Menon
Rating: Three out of five stars
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