Palestinian supporters of President Mahmoud Abbas hold his portrait during a protest against Al Jazeera TV after Friday prayers in the West Bank town of Ramallah.
Palestinian supporters of President Mahmoud Abbas hold his portrait during a protest against Al Jazeera TV after Friday prayers in the West Bank town of Ramallah.

Palestinian Authority's back to wall after Al Jazeera revelations



NAZARETH // Is the Palestinian Authority finished and, with it, 18 years of the Middle East peace process?

That is the question increasingly being asked by Palestinians in the wake of a week of damaging revelations that Palestinian negotiators secretly made major concessions to Israel in talks on Jerusalem, refugees and borders.

The PA - the Palestinians' government-in-the-making, led by Mahmoud Abbas - was already in crisis before the disclosure of official Palestinian documents by Al Jazeera television last week.

Now, said George Giacaman, the head of the Ramallah-based research centre Muwatin, which advocates greater Palestinian democracy, the PA's "back is to the wall".

The question of the PA's survival, and the future direction of Palestinian politics, has gained added urgency as the wider Middle East is rocked by unrest, from Tunisia to Yemen.

Mahdi Abdul Hadi, the director of the Jerusalem think-tank Passia, said the Palestinians were "at a crossroads". Although the streets had remained largely quiet until now, he said it was only a matter of time before Palestinians started to make clear their revulsion at their leadership.

"It is now much clearer to Palestinians that they are living in a prison and that the PA leaders are there only to negotiate the terms of our imprisonment," he said.

He, like many other Palestinian analysts, pronounced the negotiations for a two-state solution over.

That sentiment appears to be shared by a majority of Palestinians. A survey in December, before the leak of 1,600 official documents, by the Palestinian Centre for Policy and Survey Research showed that only 27 per cent of Palestinians believed they would have a state within five years. The figures are likely to be substantially lower now.

In a sign of the mounting panic in Ramallah, Palestinian leaders frantically launched a rearguard action last week. Initially, they claimed the documents were fabricated, and suggested that Al Jazeera was siding with Mr Abbas's political rivals, the Islamic party Hamas, to bring down the PA.

But several officials have confirmed the papers' authenticity, and the PA has redirected its main attention to discovering who was behind the leak.

Mr Abdul Hadi said Palestinians would increasingly draw the conclusion that their intended future was living in "one binational state under an apartheid regime" administered by Israel.

"At the moment Abbas has his followers out on the streets but the Palestinian people are awakening to the reality of their situation," he said.

Samir Awad, a politics professor at Birzeit University, near Ramallah, agreed that Israel was imposing a de facto one-state solution. "The fight for national independence is over and, if it is to survive, the PA must quickly reinvent its role. Palestinians are now in for the long haul: a struggle for their civil and political rights in a single state," he said.

Asad Ghanem, a politics professor at Haifa University in Israel and an expert on Palestinian politics, warned, however, that, as the PA faltered, Israel and the US would intensify their efforts to strengthen the authority's security forces and its repressive role.

With politics stifled inside the occupied territories, said Mr Ghanem, it was crucial that outside Palestinian leaders step in to redefine the Palestinian national movement, including Palestinians such as himself who live inside Israel and groups in the diaspora.

Mr Giacaman said the PA had long ago outlived its official purpose.

It was created by the Oslo accords as a temporary administration in the transition to Palestinian statehood, proposed as a five-year period during which Israel was supposed to withdraw from the West Bank and Gaza in stages.

Since the Camp David negotiations ended in deadlock in 2000, the PA has clung to power, with limited control over less than 40 per cent of the West Bank as Israel has continued to build settlements in the area under its rule.

Mr Abbas has threatened on several occasions to dissolve the PA, most recently in December, when he warned: "I cannot accept to remain the president of an authority that doesn't exist."

But Mr Giacaman said such threats were hollow, designed to put pressure on Israel to return to negotiations out of fear that it would otherwise have to take on the heavy financial burden of direct military reoccupation.

The PA, however, was in much deeper trouble after the leaking of the documents, Mr Giacaman said. "Without a peace process, it needs to justify its continuing existence."

The most likely immediate focus, he said, was intensifying international action through the United Nations, by pushing for a resolution at the Security Council against the settlements.

He also thought the PA would consider changing its position and actively championing the Goldstone Report, the findings of a UN commission that suggest Israel committed war crimes during its attack on Gaza in late 2008 and early 2009.

One of the leaked papers revealed that Mr Abbas had agreed under US pressure to shelve the report rather than take it to the UN General Assembly.

"The problem for the PA is that it needs to generate diplomatic crises to get the international community to intervene. But this will put it in confrontation with Israel and the United States. Israel can always threaten to cut the US$60 million (Dh220m) taxes it transfers every month to the PA," Mr Giacaman said. The PA's threat to unilaterally declare statehood and then seek recognition at the UN, he added, would not change the reality on the ground. "Even if most countries recognise the state, it will still be a state under occupation," Mr Giacaman said.

In the meantime, the diplomatic vacuum was likely to be filled by Israel. It could promote a plan similar to the one being advanced by Avigdor Lieberman, the foreign minister, to recognise a Palestinian state in temporary borders. Or it could continue its separation policies, withdrawing from more of the West Bank and encouraging the Palestinians to take over what was left behind.

Mr Awad said the collapse of the PA held out many dangers for the Palestinians. One was the possibility of a convulsive civil war between the Fatah party of Mr Abbas and Hamas. Another, he said, was the "Aghanistanisation" of the occupied territories, as tribal warlords took limited control of the territorial enclaves Israel was not interested in.

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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.”