The reconstruction of Beirut's destroyed port may become yet another flashpoint for great power rivalry in the Middle East. AFP
The reconstruction of Beirut's destroyed port may become yet another flashpoint for great power rivalry in the Middle East. AFP
The reconstruction of Beirut's destroyed port may become yet another flashpoint for great power rivalry in the Middle East. AFP
The reconstruction of Beirut's destroyed port may become yet another flashpoint for great power rivalry in the Middle East. AFP

The world's great powers will soon face off in Lebanon


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Iran has long been fault line in the politics of great power rivalries, and now it is increasingly so. China and Russia have been investing in the country based on their own calculated desires for the region, but also in the context of their respective rivalries with the US. This, however, does not stop them from being deeply concerned about the costs that could come with their investments in the form of US sanctions targeting Iranian interests.

A new flashpoint of the wider tension, however, is in Lebanon. Russia, which has an expensive alliance with Iran in Syria, has declined to take on the same level of involvement in Lebanon. Iranian allies in Beirut – namely, Hezbollah – have therefore eyed eyeing Chinese funds and expertise to restore the city and its port after this month’s devastating ammonium nitrate explosion demolished them. The speediness and lack of conditionality that comes with Chinese support would provide a shortcut for Hezbollah to pre-empt any other powers stepping in as the city’s saviour and to bring its dominance of Lebanese politics to the level of a monopoly.

Iran has unveiled a new surface-to-surface ballistic missile called "Martyr Qassem Suleimani" to reassert its growing influence in the Middle East, on August 20, 2020. West Asia News Agency via Reuters
Iran has unveiled a new surface-to-surface ballistic missile called "Martyr Qassem Suleimani" to reassert its growing influence in the Middle East, on August 20, 2020. West Asia News Agency via Reuters

Iran’s leadership is seizing the period running up to the US presidential elections to consolidate its agenda in Lebanon, Iraq and the wider region by imposing new facts on the ground while Washington is distracted. The distraction may even last until January, should the incumbent, Donald Trump, lose, requiring a transition period until the new president’s inauguration. For Iran, it is an opportunity to consolidate existing alliances or secure new support with Russia and China in arenas like Lebanon, Syria and Iraq. The next two to four months are, therefore, a precious gift that Tehran cannot afford to squander.

As Iran advances in the region, the Gulf states may be less exposed than their other Arab neighbours – not because they are not in Iran’s crosshairs, but because China and Russia have huge trade interests in the Gulf, especially Saudi Arabia and the UAE. Therefore, Moscow and Beijing may help to contain Iran’s designs for the Gulf region.

Lebanon, however, will not be so fortunate. There is little incentive for Russia and China to deter Iran’s prospective takeover of the country. The US will object loudly, and while Gulf states will be unwilling to ignore the implications of growing Iranian influence in Lebanon and a potential showdown between great powers there, there will be a limit to how much they would want to wade in.

At the UN Security Council, the great-power battle now revolves around a “snapback” of comprehensive international sanctions against Iran. The sanctions would be triggered by Iranian non-compliance with the nuclear deal Tehran signed with former US president Barack Obama and European powers in 2015. On Thursday, the US formally initiated Security Council proceedings to trigger the snapback, but it has been opposed by European signatories to the nuclear deal on the grounds that, as Mr Trump has since withdrawn the US from the agreement, Washington has no standing to do so.

US Secretary of State Mike Pompeo departs a meeting with members of the UN Security Council about Iran's alleged non-compliance with a nuclear deal at the United Nations in New York, August 20, 2020. AFP
US Secretary of State Mike Pompeo departs a meeting with members of the UN Security Council about Iran's alleged non-compliance with a nuclear deal at the United Nations in New York, August 20, 2020. AFP
There is little incentive for Russia and China to deter Iran's prospective takeover of Lebanon's political structure

The division between Western allies is encouraging for Russia, as it signals that a harsher, more comprehensive sanctions regime is unlikely to pass. Both Russia and China are eager to do more business in Iran, including potential arms deals. While the US would no doubt react punitively with its own sanctions directed at both countries, they will not be as biting. A full sanctions regime against Russia and even China would have devastating effects for both nations’ economies.

If the price of Russia and China’s endorsement of Iran is so costly, then why continue the alliance? And why recognise Hezbollah, which Washington and its allies classify as a terror organisation? Much of it is simply to do with counterbalancing the US, but it is possible that Moscow and Beijing will need to reassess. Indeed, allying with Iran as it embroils itself in increasing complexity – with Hezbollah in Lebanon and the Popular Mobilisation Front militias in Iraq, as well as the Houthis in Yemen – may just prove more expensive than it is worth.

For one thing, they risk alienating Gulf states, particularly if they begin supplying Iran with weapons it will threaten to use against Saudi Arabia or the UAE. Secondly, the US, regardless of which administration sits in the White House, is unlikely to tolerate any flow of Russian and Chinese weaponry to Iran that would allow it to monopolise influence in Iraq and Syria at the expense of American strategic interests.

Iran is no doubt unrelenting in its efforts to sway Russia and China to supply it with weapons, anxious that the two countries may hold back due to the threat of sanctions. Its efforts to supplant American and European influence over Beirut’s reconstruction are part of its sales pitch, by showing that in Lebanon Iran is the only game in town.

China may decide that Iran is a viable window to wider influence in the Middle East and that its relationships with Arab states are perfectly stable as exclusively bilateral ones. It is only likely to recalculate if it becomes clear that, in the regional polarisation between Iran and the majority of Arab states, it has to choose a clear side.

Raghida Dergham is the founder and executive chairwoman of the Beirut Institute

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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 Sector: Financial services

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World Cut Steakhouse, Habtoor Palace Hotel, Dubai. On Thursday evening, head chef Diego Solis will be serving a high-end sounding four-course meal that features chestnut veloute with smoked duck breast, turkey roulade accompanied by winter vegetables and foie gras and pecan pie, cranberry compote and popcorn ice cream.

Jones the Grocer, various locations across the UAE. Jones’s take-home holiday menu delivers on the favourites: whole roast turkeys, an array of accompaniments (duck fat roast potatoes, sausages wrapped in beef bacon, honey-glazed parsnips and carrots) and more, as  well as festive food platters, canapes and both apple and pumpkin pies.

Ruth’s Chris Steakhouse, The Address Hotel, Dubai. This New Orleans-style restaurant is keen to take the stress out of entertaining, so until December 25 you can order a full seasonal meal from its Takeaway Turkey Feast menu, which features turkey, homemade gravy and a selection of sides – think green beans with almond flakes, roasted Brussels sprouts, sweet potato casserole and bread stuffing – to pick up and eat at home.

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The app then gives users the option add their existing phone contacts, allowing them to immediately contact people also using the application by video or voice call or via message.

Users can also invite other contacts to download ToTok to allow them to make contact through the app.

 

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Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.

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Engine: 2-litre turbocharged

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