Israel launches relations with third Arab state as it signs deals with Morocco

A US-Israeli delegation signed agreements with Morocco in Rabat, cementing a Washington-sponsored normalisation of relations between Israel and the North African country.

The visiting delegation, led by Jared Kushner – son-in-law and adviser to outgoing US President Donald Trump – and Israeli Prime Minister Benjamin Netanyahu’s security adviser, Meir Ben-Shabbat, arrived in Rabat from Tel Aviv on the first direct commercial flight between Israel and Morocco.

Less than two weeks ago, Morocco became the third Arab state this year, after the UAE and Bahrain, to normalise ties with Israel under US-brokered deals.

Sudan promised to follow sui to become the fourth. There is no word, yet, on which other state may follow to become the fifth.

Israeli Regional Co-operation Minister Ofir Akunis told Israel’s Ynet TV on Wednesday that the country was working on establishing ties with a fifth Arab state before Mr Trump leaves office.

“I believe ... there will be an American announcement about another country that is going public with the normalisation of relations with Israel and, in essence, with the infrastructure for an accord – a peace accord,” he said.

The US-Israeli delegation met King Mohammed VI at the royal palace on Tuesday, before the signing of a tripartite declaration lauding Mr Trump’s December 10 decision to recognise Morocco’s sovereignty over the Sahara region, widely read as a quid pro quo for Rabat’s simultaneous pledge to restore ties with Israel.

Kushner and Israeli delegation in Morocco

Tuesday’s declaration included a commitment to “immediately resume full official contacts between Israeli and Moroccan counterparts”, with all parties agreeing to “fully implement” their sides of the bargain before the end of January.

Appearing alongside Morocco’s Foreign Minister Nasser Bourita, Mr Kushner said the visit had been “enormously productive so far”.

Mr Kushner and Mr Ben-Shabbat were received at the airport by Moroccan officials, albeit in a low-key welcome a far cry from the pomp of the delegation’s departure from Israel.

Alongside the tripartite declaration, four bilateral deals were signed on Tuesday between Israel and Morocco, centred on direct air links, water management, financial systems and a visa-waiver arrangement for diplomats.

Morocco has North Africa’s largest Jewish community, about 3,000 people, and Israel is home to 700,000 Jews with Moroccan ancestry.

Mr Kushner said on Tuesday that the US recognition of Moroccan sovereignty over the Sahara was “rejecting the failed status quo, which benefits no one”.

“Genuine autonomy is the only feasible option but it will take work. We urge all parties to constructively engage with the United Nations to move forward through the negotiations,” he said.

On Tuesday, King Mohammed congratulated Mr Kushner for his “substantial work ... which has led to the historic turning point in favour of Morocco’s territorial integrity and this promising development for peace in the Middle East”.

The US plans to open a consulate in Sahara region, and pledged investment that Moroccan media described as colossal.

Israel and Morocco plan to reopen diplomatic offices.

Morocco closed its liaison office in Tel Aviv in 2000, at the start of the second Palestinian intifada.

King Mohammed said Morocco will remain an advocate of the Palestinians.

Alongside the announcement of the resumption of relations with Israel, the king had earlier this month assured Palestinian President Mahmoud Abbas of Morocco’s “continued and sustained commitment to the just Palestinian cause”, based on the two-state solution to that conflict.

He restated his commitment in his statement on Tuesday.

But the Palestinians cried foul and condemned the normalisation announcement between Morocco and Israel.

Two pro-Palestinian demonstrations were banned last week in Rabat, and about 30 groups and far-left parties on Tuesday denounced the visit.

Morocco sought to temper the anger by insisting that relations with Israel are not new.

Morocco's Jewish community dates back to ancient times and grew with the arrival of Jews expelled from Spain by Roman Catholic kings from 1492.

It reached about 250,000 in the late 1940s, 10 per cent of the national population, but many Jews left after the creation of Israel in 1948.

About 70,000 Israeli tourists visit Morocco each year, but have to travel via third countries.

Mr Kushner said that while the UAE has become a popular destination for Israeli tourists since direct flights were recently opened between the states, “Morocco is going to give the UAE a run for its money very quickly”.

Under King Mohammed, several programmes were launched to conserve old Jewish districts, cemeteries and synagogues.

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Choose cars with GCC specifications
Get a service history for cars less than five years old
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Check for oil leaks
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Check the vehicle’s condition. You don’t want to buy a car that’s a good deal but ends up costing you Dh10,000 in repairs every month
Validate warranty and service contracts with the relevant agency and and make sure they are valid when ownership is transferred
If you are planning to sell the car soon, buy one with a good resale value. The two most popular cars in the UAE are black or white in colour and other colours are harder to sell

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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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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.

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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.

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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.

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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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Read part four: an affection for classic cars lives on

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Name: Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

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Israel launches relations with third Arab state as it signs deals with Morocco

Morocco is third of five Arab states expected to normalise ties with Israel

Kushner and Israeli delegation in Morocco

Race card

Tips for used car buyers

The specs

MAIN CARD

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TOP%2010%20MOST%20POLLUTED%20CITIES

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Bridgerton%20season%20three%20-%20part%20one

What are the influencer academy modules?

Key facilities

Abramovich&nbsp;London

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