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One of Islam’s most revered holy sites – the tomb of the Prophet Mohamed – could be destroyed and his body removed to an anonymous grave under plans which threaten to spark discord across the Muslim world.

The controversial proposals are part of a consultation document by a leading Saudi academic which has been circulated among the supervisors of al-Masjid al-Nabawi mosque in Medina, where the remains of the Prophet are housed under the Green Dome, visited by millions of pilgrims and venerated as Islam’s second-holiest site. The formal custodian of the mosque is Saudi Arabia’s ageing monarch King Abdullah.

The plans, brought to light by another Saudi academic who has exposed and criticised the destruction of holy places and artefacts in Mecca – the holiest site in the Muslim world – call for the destruction of chambers around the Prophet’s grave which are particularly venerated by Shia Muslims.

The 61-page document also calls for the removal of Mohamed’s remains to the nearby al-Baqi cemetery, where they would be interred anonymously.

There is no suggestion that any decision has been taken to act upon the plans. The Saudi government has in the past insisted that it treats any changes to Islam’s holiest sites with “the utmost seriousness”.

But such is the importance of the mosque to both Sunni and Shia Muslims that Dr Irfan al-Alawi warned that any attempt to carry out the work could spark unrest. It also runs the risk of inflaming sectarian tensions between the two branches of Islam, already running perilously high due to the conflicts in Syria and Iraq.

Hardline Saudi clerics have long preached that the country’s strict Wahhabi interpretation of Islam – an offshoot of the Sunni tradition – prohibits the worship of any object or “saint”, a practice considered “shirq” or idolatrous.

Dr Alawi, director of the Islamic Heritage Research Foundation, told The Independent: “People visit the chambers, which are the rooms where the Prophet’s family lived, and turn towards the burial chamber to pray.

“Now they want to prevent pilgrims from attending and venerating the tomb because they believe this is shirq, or idolatry. But the only way they can stop people visiting the Prophet is to get him out and into the cemetery.”

For centuries Muslim pilgrims have made their way to Mecca in order to visit the Kaaba – a black granite cubed building said to be built by Abraham, around which al-Masjid al-Haram, or the Grand Mosque, is built, and towards which every Muslim faces when they pray.

This pilgrimage, or hajj, is a religious duty that has to be carried out at least once in a lifetime.

Many go on to make their way to the nearby city of Medina to pay their respects at the Prophet’s tomb.

The Prophet is venerated by both branches of Islam, Sunni and Shia. The strict Wahhabi sect is a branch of the Sunni faith, however, and removing the Prophet could further inflame tensions between the two groups .

The current crisis in Iraq has been blamed on the Shia former Prime Minister Nouri al-Maliki’s sectarianism, which alienated the Sunni, leading to the uprising. Isis, also known as Islamic State, which holds swathes of Iraq and Syria, and which murdered the American journalist James Foley, is a Sunni organisation.

Mainstream Sunni Muslims would be just as aghast at any desecration of the tomb as the Shia, Dr Alawi said.

The Independent has previously revealed how the multibillion-pound expansion of the Grand Mosque has, according to the Washington-based Gulf Institute, led to the destruction of up to 95 per cent of Mecca’s millennium-old buildings. They have been replaced with luxury hotels, apartments and shopping malls.

King Abdullah has appointed the prominent Wahhabi cleric and imam of the Grand Mosque, Abdul Rahman al-Sudais, to oversee the expansion project – necessary to cope with the huge number of pilgrims who now visit each year.

Dr Alawi says the consultation document for the al-Nabawi mosque in Medina, by the leading Saudi academic Dr Ali bin Abdulaziz al-Shabal of Imam Muhammad ibn Saud Islamic University in Riyadh, has been circulated to the Committee of the Presidency of the Two Mosques.

Several pages of the consultation document have just been published in the presidency’s journal. They call for the destruction of the rooms surrounding the tomb – used by the Prophet’s wives and daughters, and venerated by the Shia because of their association with his youngest daughter, Fatima.

The document also calls for the Green Dome, which covers the tomb and these living quarters, to be removed, and the ultimate removal of the Prophet’s body to a nearby cemetery.

The al-Baqi cemetery already contains the bodies of many of the Prophet’s family, including his father who was removed there in the 1970s, Dr Alawi said. In 1924 all the grave markers were removed, so pilgrims would not know who was buried there, and so be unable to pray to them.

“The Prophet would be anonymous,” Dr Alawi added. “Everything around the Prophet’s mosque has already been destroyed. It is surrounded by bulldozers. Once they’ve removed everything they can move towards the mosque. The imam is likely to say there is a need to expand the mosque and do it that way, while the world’s eyes are on Iraq and Syria. The Prophet Mohamed’s grave is venerated by the mainstream Sunni, who would never do it. It is just as important for the Shia too, who venerate the Prophet’s daughter, Fatima.

“I’m sure there will be shock across the Muslim world at these revelations. It will cause outrage.”

The Independent was unable to contact the Saudi Arabian embassy, but it said in a statement last year: “The development of the Holy Mosque of Makkah al-Mukarramah [Mecca] is an extremely important subject and one which the Kingdom of Saudi Arabia, in its capacity as custodian of the two holy mosques, takes with the utmost seriousness. This role is at the heart of the principles upon which Saudi Arabia is founded.”

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The two French companies, which have locked horns and traded barbs and lawsuits over LVMH's creeping 23.1 percent stake in Hermès, said they agreed to a conciliation brokered by the Commercial Court of Paris.

The news sent Hermès shares down 6.1 percent in mid-morning trading on the Paris Bourse, while LVMH gained 3.3 percent.

LVMH said the two parties signed an agreement that will see LVMH "distribute all its Hermès shares to its shareholders, on the understanding that LVMH's largest shareholder, Christian Dior will in turn distribute the Hermès shares it receives to its own shareholders."

Further, LVMH, Dior and Groupe Arnault — companies controlled by luxury titan Bernard Arnault — have agreed not to acquire any shares in Hermès for the next five years.

According to a statement, the distribution of Hermès shares, subject to board approval at LVMH and Dior, is to be completed no later than Dec. 20. At that time, Groupe Arnault will own around 8.5 percent of the capital of Hermès International.

The truce also puts to an end to "all related actions" between the two companies, alluding to a series of defamation claims and charges by Hermès that LVMH's stake building was illegal.

The statement said Hermès chief executive Axel Dumas and Mr. Bernard Arnault "both express their satisfaction that relations between the two groups, representatives of France's savoir-faire, have now been restored."

In 2013, France’s stock market regular AMF slapped LVMH with sanctions over the way the luxury conglomerate amassed its initial 17.1 percent stake in Hermes. AMF had ordered LVMH to pay 8 million euros, or $10.6 million at current exchange, the largest fine it has ever imposed.

But signaling a possible denouement in a long festering battle, LVMH said a year ago it would not appeal the AMF sanctions, even if it felt it would be justified in appealing the decision, arguing it never breached regulations regarding ownership thresholds or engaged in insider trading or market manipulation.

Hermès executives had repeatedly urged LVMH to reduce its shareholding, and constructed defenses against a full takeover of the family-controlled firm.

LVMH surprised markets in October 2010, revealing it had amassed a large stake in Hermès via cash-settled equity swaps that allowed it to circumvent the usual regulations requiring firms to declare share purchases.

LVMH and rival Hermès have struck a deal to bring to an end one of the longest and fiercest wars in the luxury industry.

In a joint statement Wednesday, the two Paris-based groups said that they had agreed a mechanism to distribute LVMH’s 23.2 per cent share holding in Hermès to its own shareholders.

The deal will see investors in LVMH receive one Hermès share for every 21 LVMH shares they currently hold. The group’s main investors include Christian Dior, which holds 42 per cent of LVMH, and the Arnault group, which holds 5 per cent.

The operation, which the two groups said would take place before December 20, will leave Bernard Arnault’s personal holding in Hermès at around 8.5 per cent.

Shares in the family-controlled Hermès fell 9.8 per cent to €236.5 on Wednesday morning following the announcement, erasing €2.8bn off its market value.

Nevertheless, the operation will help Hermès allow one of the biggest names in the luxury industry, famed for its Birkin and Kelly leather bags, to break free from its Paris rival.

For LVMH and its shareholders, the investment reaped a share price gain of some 130 per cent. People close to the deal said that for all Hermès’ prospects in the coming years, it was unlikely that the shares would continue to gain at the same momentum.

Executives and family members of Hermès, which prides itself on its cottage-industry approach and insists that it is not a luxury group, were outraged when they discovered in October 2010 that LVMH had bought more than 17 per cent of their company.

That operation, which subsequently attracted the attention of France’s stock market regulator together with a €8m find, led to a bitter and very public stand-off between the two groups.

Tensions only increased when LVMH continued to build up its investment in Hermès in the following months to the 23.2 per cent today.

LVMH said at the time of the original investment that it had bought shares as a purely financial investment. Mr Arnault praised Hermès as a “magnificent company” for which he had only “good intentions” and no plan to take control.

But in an extraordinary public address in 2011, Patrick Thomas, then Hermès chief executive, said: “If you want to seduce a beautiful woman, you don’t start by raping her from behind.

Axel Dumas, who last year took over from Mr Thomas, vowed to take the fight against LVMH into the next generation, saying the larger group’s shareholding in Hermès was “neither desired nor desirable”. It will be “the battle of our generation”, said Mr Dumas.

Luca Solca, luxury analyst at Exane BNP Paribas, said: “The resolution of the conflict between the two parties has a direct consequence a reduction in the speculative appeal of Hermes – which goes back to being a normal publicly traded company.”

“One should expect the multiple to reduce – although more free float [shares that can be freely traded] could also mean more shareholder interest down the road.”

Switzerland has retained its crown as the world’s most competitive economy for the sixth year in a row, according to a ranking by a leading think-tank.

Western economies continue to dominate the annual list of the most competitive economies drafted by the World Economic Forum, with six European countries ranked inside the top 10.

But rankings within the eurozone remain very uneven, with the WEF arguing that “while the divide between a highly competitive north and a lagging south and east persists, a new outlook on the European competitiveness divide between countries implementing reforms and those that are not can now also be observed.”

The WEF defines competitiveness as “the set of institutions, policies and factors that determine the level of productivity of a country” and the rankings are based on a variety of factors such as higher education, infrastructure and innovation.

Portugal jumps up 15 places in the rankings to 36th, with the WEF arguing that the “ambitious reform program the country has adopted seems to have started paying off . . . most notably in areas related to the functioning of the goods market.” By contrast, France and Italy barely move in the rankings, at 23rd and 49th respectively, and face criticism for “not having fully engaged” in reform.

The UK has moved up one place to ninth, thanks to its deficit-reduction programme and labour market improvements, but the WEF warns that access to loans – where the UK is ranked 82nd out of 144 economies – is the “most problematic factor for doing business in the country. “

Lending to non-financial businesses in the UK has decreased sharply since the financial crisis, with small- and medium-sized businesses particularly hard hit despite a succession of policies to encourage banks to lend more.

George Osborne, UK chancellor, said the WEF report was further evidence that the government’s policies were delivering a more competitive economy, adding “the direct link the WEF draw been our credible fiscal policy and our country’s ability to attract business and create jobs is compelling.”

Klaus Schwab, founder and executive chairman of the WEF, said policy makers should not take for granted the health of the global economic recovery.

“The strained global geopolitical situation, the rise of income inequality, and the potential tightening of the financial conditions could put the still-tentative recovery at risk and call for structural reforms to ensure more sustainable and inclusive growth,” he said.

Many of the world’s largest emerging market countries, including South Africa, Brazil, India and Mexico, fell in the rankings. China, despite being set to overtake the US this year as the world’s largest economy, only makes the list in 28th place. The WEF criticised its technological readiness and the relative fragility of its banking industry.