A narrative that has persisted throughout the decades-long cold conflict between Iran and Israel is that, before the 1979 Iranian Revolution, the two countries had excellent relations that only soured after the Islamic Republic’s establishment.
Reza Pahlavi, Iran’s last crown prince, himself has repeatedly espoused a version of this narrative in his attempts to curry favour with Israel. It was front and centre when, on the invitation of its government, he visited Israel last year and met Prime Minister Benjamin Netanyahu.
But how much truth is there to this rather simplistic historical narrative? At best, this is only half of the story.
Iran and Israel did have extensive trade, cultural, commercial and military links before the revolution. Israel’s first prime minister, David Ben-Gurion, had envisioned an anti-Arab “Alliance of the Periphery” that also included Iran, Turkey and Ethiopia.
Boasting a large Jewish community and a desire to have good relations with all the region’s peoples, Tehran also hosted a Jewish Agency office from 1942, which later became the de facto Israel embassy. As Iraqi Jews began fleeing their country for Palestine/Israel, they often went through Iran. And rather than side with the Arab powers in their wars against Israel, the Shah of Iran preferred to stay neutral, offering himself as a mediator.
Yet it would be inaccurate to characterise the Shah’s regime as pro-Israel. Pre-1979 Iran, instead, maintained mutually beneficial ties with Israel while opposing its occupation of Palestinian territories and maintaining sound relations with the Arab states. In fact, the Shah never established full diplomatic relations with Israel and was adamant that he would do so only after it ended its occupation – a position similar to that of many Arab countries today.
Like in recent years, Israel remained a topic of intense political debate in Iran
As a Muslim-majority country, Iran long defended the Palestinian cause, including by providing financial assistance to the Palestine Liberation Organisation in the 1960s. As early as 1935, following skirmishes in Mandatory Palestine, the Iranian diplomat Baqer Kazemi spoke in favour of the Arab people at the League of Nations.
In 1947, Iran was among a minority of countries on a UN committee to have presented a one-state federal solution to resolve the Palestine-Israel conflict. They failed to win the votes in the nascent body, with a majority of members in the committee advocating for the partition of Palestine and formation of the state of Israel.
Two years later, when Israel sought admittance to the UN, Iran voted no. Yet despite this official rejection, the two countries enjoyed people-to-people ties.
The late 1940s and early 1950s were stormy days in Iranian politics. This meant that the various political actors could mobilise around hot-button issues such as Israel. The right-wing Ayatollah Kashani described Israel offensively as “a bunch of nationless smuggling Jews who have been turned away by all countries of the world and have settled over there with the force of the large states”.
On the opposite end of the spectrum, the communist Tudeh Party opposed Zionism and Israel’s policies while defending its right to exist and asking the Iranian government to establish diplomatic relations with it.
Iran finally recognised Israel in 1950 and sent Reza Safinia as its representative there. And although then prime minister Mohammad Mossadeq would recall Mr Safinia, citing financial constraints in running too many embassies, the relations between the two countries continued. In June 1953, months before Mr Mossadeq was overthrown in a CIA-staged coup, Bank Melli Iran signed an agreement with Israel’s Bank Leumi.
Regime change in Iran did not alter its foreign policy, with the Shah espousing a “national independent policy”, according to which Tehran maintained good relations with countries on both sides of the Cold War. It also established ties throughout the Mena region, including with those Arab states that called the Shah a stooge of the West.
Tehran even re-established diplomatic ties with Gamal Abdel Nasser’s Egypt in 1970, years after the latter had burnt bridges with it over its relations with Israel. His successor, Anwar Sadat, would go on to be the closest ally of the Shah, together with Jordan’s King Hussain.
Tehran’s relations with Arab countries were much more extensive than those with Israel. The Shah, for instance, intervened in key Arab civil wars such as those in Yemen (by sending arms to Saudi Arabia) and Oman (by sending boots on the ground to defend the Sultan against leftist rebels).
He opposed Israel’s occupation of Palestinian territories in the 1967 war, declaring: “The age of occupying other people’s lands by the force of arms has long passed.” At the same time, however, Iran urged Arab states to accept Israel’s existence and drop the unrealistic goal of its destruction.
In December 1970, when Abba Eban, Israel’s foreign minister, visited Iran, he met his Iranian counterpart, Ardeshir Zahedi, in the latter’s private villa outside Tehran. The two countries’ relations, after all, weren’t official.
Mr Zahedi denounced the occupation at the meeting, before promising Mr Eban something familiar: if Israel were to leave the occupied territories, Iran “would see no problem in making its relations with you open”.
Like in recent years, Israel has remained a topic of intense political debate in Iran. In 1963, dissident intellectuals such as Jalal Ale Ahmad and Simin Daneshvar visited Israel, writing positive travelogues and praising the Kibbutzim as examples of religious modernity in practice. Four years later, however, Mr Ale Ahmad became a critic of Israel’s occupation.
When the socialist Dariush Ashoori wrote in praise of Israel in 1967, Ali Shariati, a pioneering Islamic socialist, wrote a bitter critique in Tehran’s Ferdowsi magazine, in which he condemned Israel as colonialist and fascist.
Going a step further, Ayatollah Khomeini and other Islamist leaders made opposition to Israel central to their politics. Iranian Islamists, together with radical Marxist opponents of the Shah, built durable links with the PLO and other Palestinian groups, with dozens of Iranians training, fighting and even dying alongside the Palestinians in Jordan, Lebanon and Syria.
Such alliances help explain Iran’s post-1979, anti-Israel position. The record shows, however, that its pre-1979 stance was not wholly pro-Israel either, even though this myth continues to be propagated by the late Shah’s proponents and detractors alike.
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.”
Fireball
Moscow claimed it hit the largest military fuel storage facility in Ukraine, triggering a huge fireball at the site.
A plume of black smoke rose from a fuel storage facility in the village of Kalynivka outside Kyiv on Friday after Russia said it had destroyed the military site with Kalibr cruise missiles.
"On the evening of March 24, Kalibr high-precision sea-based cruise missiles attacked a fuel base in the village of Kalynivka near Kyiv," the Russian defence ministry said in a statement.
Ukraine confirmed the strike, saying the village some 40 kilometres south-west of Kyiv was targeted.
If you go
The flights
Etihad (etihad.com) flies from Abu Dhabi to Luang Prabang via Bangkok, with a return flight from Chiang Rai via Bangkok for about Dh3,000, including taxes. Emirates and Thai Airways cover the same route, also via Bangkok in both directions, from about Dh2,700.
The cruise
The Gypsy by Mekong Kingdoms has two cruising options: a three-night, four-day trip upstream cruise or a two-night, three-day downstream journey, from US$5,940 (Dh21,814), including meals, selected drinks, excursions and transfers.
The hotels
Accommodation is available in Luang Prabang at the Avani, from $290 (Dh1,065) per night, and at Anantara Golden Triangle Elephant Camp and Resort from $1,080 (Dh3,967) per night, including meals, an activity and transfers.
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
UAE currency: the story behind the money in your pockets
First Person
Richard Flanagan
Chatto & Windus
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
UNSC Elections 2022-23
Seats open:
- Two for Africa Group
- One for Asia-Pacific Group (traditionally Arab state or Tunisia)
- One for Latin America and Caribbean Group
- One for Eastern Europe Group
Countries so far running:
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
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
The specs: 2018 Audi R8 V10 RWS
Price: base / as tested: From Dh632,225
Engine: 5.2-litre V10
Gearbox: Seven-speed automatic
Power: 540hp @ 8,250rpm
Torque: 540Nm @ 6,500rpm
Fuel economy, combined: 12.4L / 100km