Israel Prime Minister Benjamin Netanyahu embraces US President Joe Biden at Ben Gurion airport on October 18. AFP
Israel Prime Minister Benjamin Netanyahu embraces US President Joe Biden at Ben Gurion airport on October 18. AFP
Israel Prime Minister Benjamin Netanyahu embraces US President Joe Biden at Ben Gurion airport on October 18. AFP
Israel Prime Minister Benjamin Netanyahu embraces US President Joe Biden at Ben Gurion airport on October 18. AFP


Can Biden's bearhug of Israel work to restrain its bombing of Gaza?


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October 30, 2023

Israel's vengeance is terrible indeed. Only the US has any real influence over Israel's policies. But is Washington trying to restrain Israel – appearances notwithstanding – and if so, will that work?

Readers may dismiss the idea that the Biden administration is doing anything serious to hold Israel back from bombarding Gaza, given its ostentatious bearhug since the October 7 Hamas attacks.

US policy towards Israel's latest war is, as always, operating on different registers simultaneously. First, there is the President's personal affection for Israel, which is reflective of his identity as a Democratic elder statesman.

Mr Biden came of political age during the Cold War, when support for Israel among liberals was key, in contrast to Israel-scepticism on the traditionalist right.

For decades, Israel was widely viewed in the US as a plucky young “democracy” in a sea of hostile Arab and Muslim societies with which westerners supposedly couldn’t identify. Until the late 1970s, Israel was ruled by the socialist-lite Labour party, which excelled at cultivating identification with liberal westerners.

Mr Biden’s instinct to identify with Israel whenever it comes under attack is thus both personal and political. Despite false diagnoses from Republicans, and even some conservative Democrats, the Democratic party has not been taken over by left-wing radicals. The mainstream’s willingness to pay lip service to identity politics and catchphrases doesn’t leave the party actually resembling the “woke” caricature of the ultra-left.

So, most Democrats rallied around Mr Biden in his embrace of Israel. Even the Palestinian voices in Congress, such as Michigan Democrat Rashida Tlaib, refused to say much about October 7. There isn't much Democratic opposition to the Biden administration's policies towards Israel, except a few groups and people now vowing not to vote for him even if he faces former president Donald Trump in next year's presidential election.

In addition to being personally consistent for him, and politically useful to a Democratic leader, Mr Biden is also leaving little space for the born-again pro-Israel Republicans, dominated by apocalyptic evangelical Christian fundamentalists, to attack him as insufficiently supportive of Israel. Loud voices on the far left and Maga right are howling, but none of the reactions yet seem likely to impede his election chances.

The most important question is, do these policies make sense for US national interests? As usual, the answer can only be, yes and no.

It's obvious that the Biden administration is focused on trying to prevent that scenario from playing out, but unclear if it can

What galls so many Democrats, liberals, Arab and Muslim Americans and sympathisers with Palestinians and their morally unimpeachable and imperative cause, is that Mr Biden's strategic positioning is simply not designed to stop the Israeli assault immediately and thereby save countless innocent lives.

He obviously concluded that there is little he can do to secure that in the short term, especially considering the domestic political constraints. Indeed, Mr Biden might not even have wanted to, given the rage that was prevalent among pro-Israel figures, such as himself, in the immediate aftermath of the October 7 attacks.

Nonetheless, Mr Biden has a clear overriding objective and coldly rational policy goal: preventing the conflict from spreading beyond Gaza to involve the West Bank, East Jerusalem, Jordan, Iraq, Syria and, above all, Lebanon and Hezbollah.

From the outset, the administration calculated that Hamas was counting on Hezbollah leaders to fulfil their word, reportedly given to them from last summer, that if they entered into a war with Israel, the Lebanese militia would intervene to support them. But Washington is also convinced that Hezbollah doesn’t want to get involved in a major way, that Iran is not pressuring it to do so, and that Israel also wants to avoid this.

Given the dire Lebanese political and economic situation, in which perforce Hezbollah must operate, the group has very little incentive to enter into a devastating conflict with Israel now. For Iran, Hezbollah primarily serves as a deterrent against Israeli attacks on Iranian nuclear and other installations. Tehran would be loath to waste such an invaluable external weapon on anything it considers to be as strategically, culturally and religiously marginal as Gaza.

But, as Washington is well aware, at least two obvious scenarios could drag Hezbollah into the fray, nonetheless. One would be the spread of the fighting into East Jerusalem and involving Al Aqsa Mosque complex, which would tug powerfully on Muslim heartstrings from Nigeria to Indonesia and back. That could re-orient Iranian and/or Hezbollah cost-benefit perceptions and make getting involved in the “defence of Islam and Al Quds” far more appealing.

Another possibility is that third parties in Lebanon, including Hamas, attack Israel and “get lucky” with a strike that prompts what Hezbollah regards as an unacceptable Israeli response. Once both sides start misinterpreting each other's actions and intentions and begin attempting to “restore deterrence” against each other, a vicious cycle that no one can control could ensue.

The Biden administration's bearhug of Israel is designed to place Washington in a position from which it can credibly urge the Israelis in private, from a background of trust, to hold back. It already succeeded in doing so, apparently, first on the grounds that hostages might still be rescued and secondly, reportedly, to bolster missile defences for US troops stationed in Iraq, Syria and various waters around the Middle East, and elsewhere.

Israel may well have fully launched its pledged ground incursion into Gaza. But the Biden administration is obviously hoping to limit what Israel does in Gaza, particularly to Palestinian civilians, precisely in order to reduce the pressure on pro-Iranian militia groups, even Tehran itself, and above all Hezbollah, from joining the fray and creating a regional conflagration that might quickly draw in Washington.

It's obvious that the Biden administration is focused on trying to prevent that from happening, but unclear if it can. It’s not obvious that Israel will listen to even the US in what the Netanyahu government is inexplicably describing as “the second war of independence”. And there are limits to what the US government can politically defend at home, both among Democrats and in fending off Republicans, in pressuring the Israelis – at least without much more significant atrocities reported in world media than have already visited upon the devastated Palestinian population in Gaza.

Nonetheless, and undoubtedly counter-intuitively to many in the Middle East, perhaps the only person with the means and the ability – and perhaps the willingness – to try to restrain Israel is none other than Mr Biden.

Live updates: Follow the latest news on Israel-Gaza

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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

Updated: October 31, 2023, 7:00 AM