Arab League leaders arrive for a summit in Manama on Thursday. EPA
Arab League leaders arrive for a summit in Manama on Thursday. EPA
Arab League leaders arrive for a summit in Manama on Thursday. EPA
Arab League leaders arrive for a summit in Manama on Thursday. EPA


The Manama summit has given us a peek into changing Arab-Israel relations


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May 19, 2024

Despite some success being achieved at the 33rd Arab League Summit in Manama on Thursday, a war of attrition is almost certain to prolong in Gaza, making both Palestine and Israel losers.

The idea of holding an international peace conference in the Middle East, as proposed by Bahrain’s King Hamad at the summit, is unlikely to find consensus. Nor will the Arab world’s call be heeded for the deployment of UN peacekeeping forces in Palestinian territories until the “two-state solution” is implemented.

Israel will not agree to the establishment of a Palestinian state, not only because of Prime Minister Benjamin Netanyahu’s obstinacy but also because the Israeli public has revealed its opposition to the idea, despite global consensus around it. On the flipside, the disparate Palestinian factions will not reconcile with one another, and the Palestinian “Axis of Resistance” won’t accept the Palestine Liberation Organisation taking power.

The Gaza war won’t cease as long as the US fails to exert serious pressure on Israel, and as long as Hamas’s allies in the region do not persuade its leaders to leave Gaza.

The group, absent from the Manama summit, was nonetheless at the receiving end of some cutting remarks from Palestinian President Mahmoud Abbas, who accused it of “providing excuses” for Israel to attack Gaza in the first place. Mr Abbas said that “the military operation carried out by Hamas unilaterally on October 7 provided Israel with more pretexts and justifications to attack Gaza, kill, destroy and displace its people”.

The group shot back, saying in a statement that the October attack represented “the most significant episode in our Palestinian struggle ... restoring our issue to the top of the priorities list”.

However, the strategic gains that Hamas is talking about exist only in their leadership’s imagination. Gaza’s reality today is complete devastation, Israel’s occupation of a significant part of the territory, the forced displacement of more than a million people, and an unprecedented hunger crisis.

Palestinians look at the destruction after an Israeli strike on a residential building in Nuseirat Refugee Camp, Gaza Strip, on Sunday. AP
Palestinians look at the destruction after an Israeli strike on a residential building in Nuseirat Refugee Camp, Gaza Strip, on Sunday. AP
Riyadh has put its future relationship with Israel on hold, pending serious steps towards the creation of a viable Palestinian state

True, Israel’s actions stand exposed to the world. But it also true that its leadership – and that of Hamas – has accomplished the demolition of the “two-state solution” and the indefinite postponement of the establishment of a Palestinian state.

There is no doubt that Mr Abbas’s remarks in Bahrain were bold, and Palestinian Authority deserves tangible support from Arab countries. Not only does he need consistent affirmation that the Palestinian Authority is the sole legitimate representative of the Palestinian people, but action needs to be taken to address the less-than-expected financial support Ramallah's government receives from the international community.

For his part, Jordanian King Abdullah emphasised the need to support the PA and to mobilise international efforts to prevent the separation of the West Bank and Gaza Strip. He, after all, understands that the threat to Jordan comes not only from Israel but also from extremist Palestinian factions.

At the same time, however, the PA needs to prove that corruption within its ranks has been eradicated and that it is diligently working to form a serious technocratic government commensurate with the current situation. Otherwise, Mr Abbas’s call will garner little sympathy and raise few funds.

Meanwhile, speeches made by other Arab leaders in Manama were noteworthy – particularly those directed at Israel.

Saudi Crown Prince Mohammed bin Salman, for instance, criticised Israel’s “brutal aggression” against “our Palestinian brothers”, affirming that Riyadh is serious about placing the two-state solution at the forefront of its conditions for establishing relations with Israel.

Prince Mohammed called for working jointly with the international community to stop the “aggression of the occupying forces”. He also reiterated the Arab Peace Initiative proposed at a summit in Beirut in 2002, detailing Saudi Arabia’s position supporting the Palestinian people’s right to “establish their independent state on the 1967 borders with East Jerusalem as its capital”.

He welcomed the recent UN General Assembly resolution recognising that the state of Palestine is eligible for full membership in the body and called on countries to “bilaterally recognise” the state.

Taken together, these are primarily messages directed at Israel. And they are essentially reminding its government of the various conditions – including the equation of land for peace – that need to be met before ties between Saudi Arabia and Israel can be established.

In other words, Riyadh has put its future relationship with Israel on hold, pending serious steps towards the creation of a viable Palestinian state. In the process, it has shown firmness towards Israel while being simultaneously being comfortable in its relationship with the US, with which it is seeking a security agreement, independent of any American-Saudi-Israeli trilateral arrangement.

A displaced Palestinian carries a box of food aid that entered the southern Gaza Strip through the UN World Food Programme, past ships, in the Wadi Gaza area of central Gaza, on Saturday. Bloomberg
A displaced Palestinian carries a box of food aid that entered the southern Gaza Strip through the UN World Food Programme, past ships, in the Wadi Gaza area of central Gaza, on Saturday. Bloomberg

Egyptian President Abdel Fattah El Sisi, meanwhile, highlighted his concerns about the forced displacement of Palestinians and the outbreak of further chaos in the region amid deterioration in Cairo’s relationship with Israel.

There is no threat to the collapse of the peace treaty between the two countries, but Mr El Sisi said that “this critical moment imposes a choice on all parties involved”, which is “between the path of peace, stability and hope, or the path of chaos and destruction driven by the ongoing military escalation in Gaza”. This is a serious statement from the Egyptian President.

Also noteworthy is King Hamad’s call for a peace conference in the region. But while this is a worthy cause, it needs to be accompanied by a concrete proposal with a coherent roadmap.

The US is also not prepared for such a conference because it prefers to focus on its efforts to end the Gaza war, which involves defeating Hamas, before moving forward with any major regional deal. Besides, the question of who will partake in this conference remains. For instance, will American diplomats be willing to sit across from Russian officials at the peace table, at a time when there is a war raging in Ukraine?

Moreover, the Manama summit’s proposal to deploy international forces in Palestinian territories until a two-state solution is achieved was nipped in the bud when Washington signalled that this proposal could harm Israel’s efforts to defeat Hamas. (For its part, the group appears determined to keep fighting, as its leadership believes that a war of attrition – involving urban and tunnel combat – may be in its interest.)

Much of note was broadcast from the Manama summit, ranging from Arab security and global security through navigation, to addressing Iran’s impact in the region. But, perhaps, the most notable takeaway was the absence of a collective will to confront Israel but, at the same time, a receding collective desire to build relations with it.

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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: May 19, 2024, 2:00 PM