UN Special Coordinator for Lebanon Jan Kubis, US Assistant Secretary David Schenker, Ambassador John Desrocher and Ambassador Elizabeth Shea pose for a picture after delegations from Israel and Lebanon met to start talks on their shared maritime boundary. Courtesy UN
UN Special Coordinator for Lebanon Jan Kubis, US Assistant Secretary David Schenker, Ambassador John Desrocher and Ambassador Elizabeth Shea pose for a picture after delegations from Israel and Lebanon met to start talks on their shared maritime boundary. Courtesy UN
UN Special Coordinator for Lebanon Jan Kubis, US Assistant Secretary David Schenker, Ambassador John Desrocher and Ambassador Elizabeth Shea pose for a picture after delegations from Israel and Lebanon met to start talks on their shared maritime boundary. Courtesy UN
UN Special Coordinator for Lebanon Jan Kubis, US Assistant Secretary David Schenker, Ambassador John Desrocher and Ambassador Elizabeth Shea pose for a picture after delegations from Israel and Lebano

Lebanon-Israel border talks: 'Hezbollah feels it is losing image battle'


Sunniva Rose
  • English
  • Arabic

The first meeting between Lebanon and Israel to demarcate their hotly contested maritime border has pushed Iran-backed Hezbollah into a communications battle to ensure that it does not look like it is giving in to the demands of its arch-enemy.

Just nine hours before the one-hour meeting in the border town of Naqoura – the base of the UN Interim Force in Lebanon – on Wednesday, Hezbollah and its local ally Amal put out a statement saying they disapproved of the composition of the Lebanese team because two out of four of its members were civilians, not members of the military.

This means negotiations could become more political, and less technical, paving the way to normalising ties with Israel, a deeply unpopular idea among the base support of the two Shiite Muslim parties.

Hezbollah built its popularity during decades of bloody insurgency against Israel, eventually forcing it to retreat from south Lebanon in 2000. The two parties then fought a 33-day war in 2006, although Lebanon and Israel have technically been at war since the 1948 Arab-Israeli conflict.

“Hezbollah is afraid of losing its grip on its own narrative because the event is being covered as the beginning of normalisation of a new Arab state with Israel,” said Karim El Mufti, professor of political science and international law at Universite La Sagesse in Beirut.

“It was devastating for Hezbollah when the Israeli flag was raised a few days ago above the Unifil headquarters, because they stand on Lebanese soil,” he said. “Hezbollah feels that it is losing a bit of the image battle here.”

Hezbollah tried to save face with its last-minute press release, but cannot stop negotiations from going ahead, Prof El Mufti said. They have been widely interpreted in Lebanon as a gesture of goodwill towards the US from the group's main backer, Iran.

“Iran’s agenda is different from Hezbollah’s, which has a local base to maintain. It has a larger overview of the region and wants to reach out to the West before the US elections,” he said.

But at the same time Lebanese leaders have been pushing to improve relations with the US after two politicians close to Hezbollah were hit with sanctions in September, said Laury Haytayan, Mena director at the Natural Resource Governance Institute.

"The Americans were telling the Lebanese that during his last month in office, [US President] Donald Trump would put more pressure and sanctions," she told The National.

Presidential elections in the US are scheduled to take place on November 3.

The fact that the head of the Lebanese delegation, air force Brig Gen Bassam Yassin, is a Shiite Muslim was seemingly not enough to reassure Hezbollah and Amal. The other members of the team are Col Mazen Basbous, who conducted a study on the maritime border issue a decade ago, geologist Wissam Chbat and border expert and cartographer Najib Massihi.

“So there is one member of the military who is symbolically good to appease fears of the Shiite community, one member of the military who understands the technicalities, one geologist, and an expert with a PhD on the border dispute,” Ms Haytayan said.

“We have had a maritime border issue for years. Why did the authorities not set up a team a long time ago, instead of asking if discussions are technical or political today?”

On October 1, Amal leader Nabih Berri announced a framework for the US-mediated maritime border negotiations, saying it had been decided in July. The US has been trying to bring Lebanon and Israel to the negotiating table for nearly a decade.

Lebanon and Israel each claim about 860 square kilometres of the Mediterranean Sea as being within their respective exclusive economic zones. By demarcating the border, they hope to be able to make lucrative oil and gas discoveries. Lebanon is currently suffering from its worst economic crisis.

The Lebanese army said that the next round of talks with Israel is scheduled for October 28. Nobody knows when they will end.

“It’s not starting on a great foot but it’s not dead either,” Prof El Mutfi said. “What we can be sure is that it won’t end quickly.”

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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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