UAE-Israel Official Relations Established

UAE-Israel Official Relations Established

As the UAE and Israel established official relations for the first time in history, mixed reactions have come from several nations. The recent decision also adds a new chapter to the strained relationship between Israel and the Arab world.

Crux of the Matter

Recent Agreement
On 13th August 2020, the US President Donald Trump tweeted about a “breakthrough” agreement between Israel and the UAE.

Israel and the UAE would now have an official diplomatic relationship for the first time in their history, with the move being supported by the US. Israel also agreed to “commit” to drop off plans to annex the ‘West Bank’.

In doing so, the UAE became the 3rd Arab country to recognize Israel and have diplomatic relationships with it, following Egypt and Jordan, which did the same in 1979 and 1994 respectively.

Impact

  • Official telephone calls now possible between the UAE and Israel.
  • Both countries would establish official embassies in each other’s nations.
  • Israeli citizens now expected to be allowed entry into the UAE, and direct flights between the 2 countries now expected to start. Earlier, no Israeli nationals were allowed in the country and no direct flights existed between the 2 nations.
  • Bilateral deals in business, technology, medical science, tourism etc now possible.
  • Israel and the UAE jointly declared that the “development of Covid-19” vaccine together would be the top priority currently.

Reaction

  • Jordan, Egypt, the UK, Spain, France, Germany, the UN, etc supported the move. Joe Biden, the Democrat candidate for the 2020 US elections, also supported the decision.
  • Palestine labeled the agreement a “betrayal of Jerusalem, Al-Aqsa and the Palestinian cause”.
  • Iran declared the move a “huge mistake” and a “betrayal of the Palestinian cause”
  • Turkey called UAE “hypocrite” and said it will “will not forget and never forgive [the] behaviour of the UAE”. It is also considering withdrawing its embassy from the UAE after the move. Ironically, Turkey was the first Islamic nation to establish official ties with Israel in 1949.
Curiopedia
  • The Suez Canal is an artificial sea-level waterway in Egypt. It is often considered to define the border between Africa and Asia.
  • The AFC Asian Cup is the second oldest continental football championship in the world after Copa América. The winning team became the champion of Asia and until 2015 qualified for the FIFA Confederations Cup.
  • “Hatikvah” is a 19th-century Jewish poem and the national anthem of Israel. The theme of the romantic composition reflects the Jews’ 2,000-year-old hope of returning to the Land of Israel, restoring it, and reclaiming it as a free and sovereign nation.

Nuclear Plant In Arab World & Contentions

The first nuclear power plant in the Arab region was initiated recently in the UAE, with mixed reactions coming amidst the recent tension in the Middle East.

Crux of the Matter

Recent Nuclear Initiation
The United Arab Emirates (UAE) recently announced the operation of the first nuclear power plant in the Arabian nations by initiating the first 4 reactors of the Barakah nuclear power station. Located in the Al Dhafrah region of Abu Dhabi, the plant was first announced in 2009 and was expected to open in 2017. The delay occurred by several natural as well as ‘human’ reasons.

UAE Going Green
The Barakah plant is expected to provide “up to 25% of the UAE’s electricity needs once it is fully operational”. The UAE has also increased dependency on solar and wind energy in recent years, with the recent nuclear development aiming to further reduce the country’s dependency on oil for energy.

The recent nuclear development came 2 weeks after the UAE launched its first Mars mission named “Hope Probe”.

Conflict In The Region
Israel and Iran in the Middle East region are already in the possession of nuclear power. Israel, which operates a nuclear reactor, has an undisclosed nuclear arsenal, while Iran claims that it has only a “uranium enrichment program” for civil development. Several attempts have been made to thwart the nuclear progress of the UAE, with the most recent coming in 2017 when the Houthi rebel group of Yemen fired missiles at the Barakah plant.

Israel-UAE Relations
The UAE does not recognize Israel as a state and has banned the entry of Israeli citizens in the country. The relations between the two have been improving since the 2019 AFC Asian Cup hosted in Dubai, which was telecasted officially in Israel for the first time. Israel was also invited to the Dubai Expo 2020 fair.

Iran-UAE Relations
The UAE does not recognize Israel as a state and supports Palestine in the Israel-Palestine conflict. However, both sides are reportedly on the same side against Iran, with the UAE claiming that Iran supports Shi’ites rebels in the region.

  • Iran’s control over the Lesser Tunb and the Greater Tunb islands in the Persian Gulf has been disputed by the UAE, with the conflict arising due to British control in the region and the transfer of power after independence.
  • The 2 sides have also been engaged in conflict over Abu Musa island in the Persian Gulf, with the island being under the control of Iran till 1908 before annexation by Britain. In the 1960s, Britain transferred the control of Abu Musa to the Sharjah sheikhdom, one of the 7 sheikhdoms to coalesce into the UAE. In 1971, Iran and the UAE signed an MoU for the joint administration of the island. However, the pact has been reportedly violated by Iran in its attempts to take over the islands since the 1990s, with the Oil-richness of the islands being a major source of conflict.
  • The UAE allowed France to open its first permanent base in the Persian Gulf region in 2009, which drew strong criticism from Iran.
  • Saudi Arabia and Iran have been engaged in conflict over Sunni and Shi’ite branches of Islam.
  • After the execution of Shi’ite cleric Nimr al-Nimr in Saudi Arabia in 2016, the Saudi embassy in Iran was attacked by civilians. Consequently, both the countries withdrew embassies and have no formal relations since. The UAE reportedly backs Saudi Arabia in its conflict with Iran, marking a decisive step in its relation with Iran.
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  • Emirates is the state-owned airline and flag carrier of the UAE. It was conceived in March 1985 with backing from Dubai’s royal family.
  • Expo 2020 is a World Expo to be hosted by Dubai in the United Arab Emirates. The whole event is postponed by a year and will be held in October of 2021 now. This is the first time that the World Exposition has been postponed.
  • The 2016 attack on the Saudi diplomatic missions in Iran was a mob action on 2 January 2016 by protesters against the execution of a prominent Saudi Arabian Shi’a cleric. Mobs stormed the embassy in Tehran and the Saudi consulate in Mashhad and ransacked them. The embassy building was set on fire with Molotov cocktails and petrol bombs. The attacks were later condemned by the Supreme Leader of Iran, Ali Khamenei.

B.R Shetty's NMC Healthcare lands in troublesome Muddy Waters Report

Carson Block’s investment firm, Muddy Waters issued a report criticising NMC Healthcare’s accounts and disclosed a short position of Indian origin billionaire businessman Bavaguthu Raghuram Shetty who is the founder of NMC Healthcare and Finablr.

Crux of the Matter

B.R Shetty, once a typical jet-setting, cash-blowing billionaire with private jets, vintage cars and condos in Burj Khalifa, resigned as NMC’s chairman on February 16. On December 10, his stocks were valued at $2.4bn but only a week later Carson Block came along with the damning report. Muddy Waters’ report brought forward the firms’ complex share arrangements which cast doubts on Shetty’s net worth.

BRS Ventures Investment which holds most of Shetty’s assets does not report consolidated financials, preventing a complete analysis of his net worth. Shetty’s holdings in Finablr and NMC are worth $885mn, but it now might be reduced to just a fraction of that depending on his borrowings.

Muddy Waters report hints at potential overpayment for assets, inflated cash balances and understated debt. On Shetty’s request, the law firm Herbert Smith Freehills launched a review of Shetty’s holdings.

According to Shetty’s filings of this month revealed that he had pledged a quarter of his NMC stake against loans with First Abu Dhabi Bank and Zurich-based Falcon Private Bank. Also, two other shareholders may own half his stake. Another lender Al Salam Bank Bahrain already sold some of the shares to enforce security over a loan and on February 18 NMC said that First Abu Dhabi Bank sold another chunk earlier this month.

Complicating the matter, Shetty pledged a batch of NMC stock in 2018 as part of an equity collar arrangement with Goldman Sachs that uses options to limit the effect from share moves. In January 2020 he also pledged most of his stake in Finablr to refinance a loan from the company’s takeover of foreign-exchange firm Travelex for about $1.2bn.

I didn’t anticipate NMC’s shareholding drama. I wouldn’t have been able to predict that we’d get these bizarre disclosures about unclear share ownership coming out of the company.

– Carson Block

NMC disputing claims made by Muddy Waters, have hired former FBI director Louis Freeh to conduct an independent review of the short-sellers allegations. Shetty’s other assets which include a catering company, a waste-management firm and pharmaceutical business Neopharma were in the early stages of planning for an initial public offering (IPO).

Curiopedia

Bavaguthu Raghuram Shetty is an Indian-born billionaire businessman and the founder of a number of companies like Finablr and BRS Ventures based in the United Arab Emirates. He is founder and chairman of Abu Dhabi-based NMC Healthcare, and chairman of UAE Exchange. He immigrated to the UAE in 1973. After working as the country’s first medical representative, he founded New Medical Centre Health (NMC) in 1975 to fill the need for personalized, cost-effective healthcare accessible to all. NMC is now the largest private healthcare provider in the UAE with over four million patients annually across 45 facilities spread over 12 cities and 8 countries. More Info

Carson Block is a short-seller and the founder of Muddy Waters Research. Block is known for documenting and alleging fraudulent accounting practices in publicly traded Chinese companies. He holds a law degree from Chicago-Kent College of Law. In 2011, he was ranked as a 50 Most Influential Thinker by Bloomberg Markets. More Info

Muddy Waters Research LLC is a privately held due diligence based investment firm that conducts investigative research on public companies while also taking investment positions that reflect their research. The firm has exposed accounting problems and fraud at several companies, primarily in China but also in other countries in Asia, Europe and North America. The firm is best known for spotting fraud at Sino-Forest Corp, a Canadian-listed Chinese company whose stock fell 74% before it eventually filed for bankruptcy protection in March 2012. In January 2015, the firm raised an initial $100 million for its investment strategy. More Info