Recent destruction in Lebanon has put the 'unity of arenas' between Hezbollah and Iran on shakier ground. Reuters
Recent destruction in Lebanon has put the 'unity of arenas' between Hezbollah and Iran on shakier ground. Reuters
Recent destruction in Lebanon has put the 'unity of arenas' between Hezbollah and Iran on shakier ground. Reuters
Recent destruction in Lebanon has put the 'unity of arenas' between Hezbollah and Iran on shakier ground. Reuters


Hezbollah's decisions have upended its relations with Shiites, Lebanon as a whole and Iran


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October 08, 2024

Shortly after Israel assassinated the head of Hezbollah’s elite Radwan unit, Israeli Prime Minister Benjamin Netanyahu declared his country was working to “change the Middle East”. The same refrain came from Israeli politician Naftali Bennett, who tweeted on October 2: “Israel has now its greatest opportunity in 50 years to change the face of the Middle East … This opportunity must not be missed.”

As Lebanon’s Shiite community looks at the wreckage all around, it must find such examples of Israeli hubris deeply disturbing, and not a little infuriating. The region has a gift for thwarting the most ambitious plans of major regional and international actors. As Israel celebrates what it regards as the defeat of Hezbollah, those Lebanese who back the party surely have a different interpretation.

And they may well be correct. Hezbollah is more than a political-military party; it is an organisation anchored in one of Lebanon’s largest religious communities. This not only has earned it formidable loyalty, but also something more potent in the context of the Lebanese sectarian system: identification with the fate of the Shiite community, so that anything that harms the party would be seen by many in the community as weakening all Shiites.

This should be remembered as we look ahead at what could happen to Hezbollah once the conflict in Lebanon ends. However, it’s a certainty the party will have a mountain to climb when the carnage comes to an end. Hezbollah opened a front against Israel that virtually no one in Lebanon wanted, since everyone was conscious of how vulnerable the country was only four years after its colossal, and still unresolved, financial collapse.

The party will have a mountain to climb when the carnage comes to an end

With entire villages, towns and quarters in Beirut’s southern suburbs now in ruins, as Israel has transposed the brutality it used in Gaza to Lebanon, the one question on everyone’s mind is: Who will rebuild what was destroyed? This time, there is a general belief that there will be no outside money for reconstruction, including from Gulf countries, some of whom contributed a significant amount in 2006. Nor does it seem that Iran can spare funds to rebuild Shiite-dominated areas.

While this need not mean that its supporters will turn fully against Hezbollah, resolving this problem and reviving a traumatised community will easily be a decade-long task, one that will neutralise the party militarily for many years ahead – as the 2006 war did for just under two decades. In that context, two questions stand out.

The first is what happened to the vaunted “unity of the arenas” strategy that Iran and Hezbollah formulated just last year? The macabre conclusion is that the arenas have been unified in ruination, as Lebanon’s Shiite-majority districts go the way of Gaza. The Palestinian and Lebanese fronts in this strategy appear to have been nullified, as the Israelis are able to escalate to ever-higher levels of destruction without Iran and its allies being able to do the same.

The second is that if Hezbollah is unable to rearm and mobilise its devastated community to support a new war against Israel in the foreseeable future, of what value is the party to Iran? Should the Iranians then consider whether it is time to alter their strategy focused on extending their military influence throughout the Arab world, thereby avoiding a head-on collision with most Arab states, the US and even Israel?

At this point, the outlook of Iran’s leadership apparently has not changed, and it is improbable it will for as long as supreme leader Ayatollah Ali Khamenei is in power. But Iran’s two most potent regional allies in the fight against Israel — Hezbollah and Hamas — have undermined their respective publics’ ability to endure new wars, which has had a crippling effect on their, and Iranian, power.

What about Hezbollah’s margin of manoeuvre inside Lebanon? The party’s domestic hegemony has resulted in a gradual build-up of resentment in recent years, to the point where it is largely isolated in its fight against Israel today. No one is blaming the party openly, and animosity towards Israel is high, but few Lebanese endorse Hezbollah’s decision to open a southern front without bothering to consult its Lebanese partners, let alone the state.

This will have repercussions on Hezbollah’s ability to impose its priorities on the political class. It now seems improbable that the party will be able to bring in the president it favours, Suleiman Frangieh, against the wishes of Mr Frangieh’s Maronite Christian community. Many Christians regard Hezbollah’s insistence on Mr Frangieh as an example of arrogance, considering the party never allowed other communities to choose Shiite state officials.

With Hassan Nasrallah dead, and his probable successor and cousin Hashem Safieddine reportedly also dead, both killed by Israeli bombs, it’s unclear who has the authority and charisma to lead the religious Shiite community from now on.

Many eyes will now be turned to Nabih Berri, the 86-year-old Parliament Speaker, and most senior Shiite figure in the state. He sits at the centre of two logics dominating Lebanon today — a logic of Hezbollah-led resistance and a logic of the state, with many Lebanese believing no armed non-state actor should ever again be allowed to carry Lebanon unilaterally into a war. Mr Berri will play a major role in helping one of these logics to prevail. Which way will he lean? Lebanon’s fate may be determined by his choice. Didn't Naim Qassem, Hezbollah's interim secretary general, call the Speaker "our big brother" in a speech on October 8?

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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.”

Innotech Profile

Date started: 2013

Founder/CEO: Othman Al Mandhari

Based: Muscat, Oman

Sector: Additive manufacturing, 3D printing technologies

Size: 15 full-time employees

Stage: Seed stage and seeking Series A round of financing 

Investors: Oman Technology Fund from 2017 to 2019, exited through an agreement with a new investor to secure new funding that it under negotiation right now. 

Updated: October 09, 2024, 4:27 AM