Haaretz : Saudi Arabia is opening a new front against Iran

Saudi Arabia is opening a new front against Iran, and wants Israel to do its dirty work
The Sunni kingdom is trying to shift the battlefield from Syria to Lebanon. This may lead to a chain reaction
By Amos Harel | Nov. 12, 2017 | 11:25 AM
Late last week, in under 24 hours, the Saudi royal house set off a string of shocks within the kingdom and across the Middle East, making a set of moves that escalated the battle with Iran over regional hegemony.
The complete Saudi plan, if it exists, has not been revealed yet. However, the series of developments has raised the level of nervousness in its neighbors’ capitals, provoking much guesswork regarding the Saudis’ next moves.
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First came the announcement that Lebanon’s Prime Minister Saad Hariri was resigning. At first it was explained as deriving from his concerns about an Iranian-inspired Hezbollah plot to assassinate him. As the days passed, the resignation seemed more like a Saudi dictate, stemming from Saudi Arabia’s displeasure at the way Hariri was compelled to cooperate with Hezbollah in Lebanon’s government.
A few hours after the initial announcement, the Saudis announced a wave of arrests of princes and wealthy businessmen, on suspicion of corruption. As the princes were being detained under five-star-hotel conditions at the Ritz Carlton in Riyadh, a strange aerial accident took place in the southern part of the kingdom. The next day it emerged that a prince had tried to escape Saudi Arabia by air, using a helicopter which was shot down by the Saudi air force. The nine passengers and crew on board were killed. In the meantime, Yemen’s Houthi rebels, backed by Iran, fired a missile at Riyadh’s airport. American missiles successfully intercepted the missile. In retaliation, Saudi Arabia imposed a land and naval blockade on Yemen.
These weren’t the only developments related to Saudi Arabia this week. U.S. President Donald Trump tweeted words of support for steps taken by King Salman and by the kingdom’s strongman, Crown Prince Mohammad bin Salman. Trump’s son-in-law Jared Kushner visited Saudi Arabia and Israel several days before the wave of purges took place. In Israel, the Foreign Ministry disseminated a position paper among foreign embassies following Hariri’s resignation, TV Channel 10 reported. This was totally congruent with the official Saudi version of events, which put the blame for the crisis in Lebanon squarely at Iran’s feet. Mahmoud Abbas, head of the Palestinian Authority, embarked on an urgent visit to Egypt and Saudi Arabia. Brussels 1 sur 3 12/11/2017 à 19:23
Haaretz.Com https://www.haaretz.com/misc/article-print-page/1.822032
received a surprising request that a senior Saudi delegation come on a visit next week to discuss methods of combating terror. The Saudis were responding to an invitation which had been issued by the Europeans ten months earlier.
Is there one line connecting these dots, as well as one linking it to the crisis deliberately-generated by Saudi Arabia, the United Arab Emirates and Egypt with regard to fractious Qatar last summer? Is there a link between these issues and the reconciliation between the Palestinian Authority and Hamas, which began to be implemented in Gaza last week, led by Cairo? The conventional wisdom among intelligence officials and academic scholars is that these are steps designed to consolidate the influence of Mohammad bin Salman, ahead of the future transfer of power from his 82-year-old father into his hands.

It’s unclear if the Saudis will necessarily make do with these moves. The royal house is particularly close to the Trump administration and Saudi Arabia was one of the few countries, along with Israel, which enthusiastically welcomed Trump’s election, this time last year. Over the past year there have been a growing number of reports around the world of increasing diplomatic coordination between Riyadh and Jerusalem, accompanied by cooperation in intelligence matters. Israel and the Saudis see Iran as a common enemy, and both are frustrated at the West’s incompetence in dealing with Iran’s growing influence in what is known as the “Shi’ite Crescent” in the region.
The string of events, starting with the Qatari crisis last summer, strengthens the assumption that this is part of a wider Saudi move, an ambitious attempt to reach a new regional order. On the diplomatic front this is linked to the internal Palestinian reconciliation, led by Cairo but which also requires financial backing by the Saudis and the Emirates. This won’t be all, apparently. The defense establishment and political circles in Israel are preparing for the likely possibility that the Trump administration will soon present Israel and the Palestinian Authority with a new document, in an attempt to jumpstart the stalled peace process. Such a move may be pursued in a coordinated way between the United States and the Saudis. Saudi ambitions may have other results as well. An article in Haaretz this week by former U.S. ambassador to Israel Dan Shapiro asked whether the Saudis were pushing Israel into a war with Hezbollah and Iran.
>> Is Saudi Arabia Pushing Israel Into War With Hezbollah and Iran? | Opinion
Shapiro, who was Barack Obama’s adviser on Middle East affairs during Obama’s run for the White House, raises the possibility that the fact that the
2 sur 3 12/11/2017 à 19:23

Haaretz.Com https://www.haaretz.com/misc/article-print-page/1.822032 Assad regime in Syria survived the civil war there is driving the Saudis to try and move the battlefield with Iran from Syria to Lebanon, trying to get Israel to do Saudi Arabia’s dirty work. This may lead to a chain reaction, which the Saudis hope for, believes Shapiro. Hariri’s resignation will force Hezbollah to contend with the implications of the political and economic crisis in Lebanon, The Shi’ite organization, in turn, may then escalate a military confrontation with Israel in order to unite the Lebanese public around itself. Shapiro warned Israel against being maneuvered by the Saudis into a premature military confrontation.
Shapiro is not the only one to raise the possibility of such a scenario. Dov Zakheim, who filled senior posts at the Pentagon during the Reagan administration, wrote an article this week in Foreign Policy in which he discussed the alliance between the United States and Saudi Arabia, the Emirates and Israel. He noted that Kushner’s visit to Riyadh was the third one since Trump entered the White House. Zakheim says that the combination of Trump, Netanyahu and Mohammad bin Salman leaves open any possibility. Zakheim argues that the three are planning something, and it looks like a plan to put pressure on Iran. Israel, as suggested last week, now has to conduct itself under extremely sensitive circumstances. The success of the Assad regime, the increased Russian presence in Syria and the growing influence of Iran have all created a new and unclear situation. Precisely for this reason, believes the General Staff, there is a need to define rules of the game that will maintain Israel’s freedom of military operation on the northern front. This is apparently the reason for the numerous reports of Israeli aerial attacks in Syria, targeting weapons depots and factories, as well as convoys smuggling ordinance to Hezbollah in Lebanon. These circumstances also dramatically increase the risks of an unplanned deterioration as a result of a local incident gone out of control. If Saudi Arabia is deliberately stoking the flames between the sides, this becomes a tangible danger.
Israel Defense Forces commanders insist that every operation is based on precise intelligence and much thought, before it is brought to political leaders for approval. And yet, it seems that this is a tense period even in comparison to events of recent years, with the frenzy that has gripped the region since the events that shook the Arab world seven years ago this December.

Reuters - Equity Commonwealth approaches Forest City about merging - sources

Equity Commonwealth approaches Forest City about merging - sources

(Reuters) - Equity Commonwealth (EQC.N), a U.S. real estate investment trust (REIT) focused on office space and chaired by property mogul Sam Zell, has approached Forest City Realty Trust Inc (FCEa.N) to discuss a possible merger, people familiar with the matter said.

Combining the two companies would create an office- and apartments-focused REIT worth more than $10 billion, making it one of the biggest mergers in the sector this year.

Forest City Realty is considering the proposal for an all-stock merger with Equity Commonwealth as part of a process it has been running to explore its options, including selling itself, the sources said this week. There is no certainty that any deal will occur, the sources added.

Forest City declined to comment, while Equity Commonwealth did not respond to a request for comment.

Based in Cleveland, Ohio, Forest City is primarily focused on office and apartment buildings in core urban markets, such as New York and San Francisco, as well as mixed-use urban developments. It has market capitalization of $6.6 billion.

Forest City has been reviewing its strategic alternatives in recent months following pressure from activist shareholders Scopia Capital Management and Land & Buildings. It has scrapped its dual-class share structure, shaken up its board and sought to shed some non-core assets.

In recent years, Forest City has also been unwinding what was once a sprawling corporate structure that included hotels, military housing, retail centers, and a stake in the Brooklyn Nets.

Meanwhile, Equity Commonwealth, which has a market capitalization of $3.8 billion, has also transformed itself in response to activist pressure, changing its name, hiring new management, and selling off billions of dollars of properties.

Chicago-based Equity Commonwealth changed its name from Commonwealth REIT in 2014 after activist investors Corvex Management and Related Fund Management LLC shook up the company’s board, adding Zell as chairman, and replaced its management team.

Commonwealth REIT had previously been managed by an outside company, Reit Management & Research, an arrangement that the activists blamed for incentivizing asset growth at the expense of shareholder returns.

Since then, Equity Commonwealth has sold nearly $5 billion in assets, streamlining its once sprawling portfolio and sharpening its focus on U.S. office spaces.

Zell, whose net worth is pegged by Forbes at $5 billion, is the founder of Equity International, a private investment firm spanning sectors including homebuilding, warehousing, office, self-storage, senior living and specialty finance sectors.

FT : Saudi Arabia’s explosive rivalry with Shia Iran

Saudi Arabia’s explosive rivalry with Shia Iran
Dragging Lebanon into sectarian power struggles would be unwise

The last thing the Middle East needs is more pyrotechnics. That, unfortunately is what the crown prince and de facto ruler of Saudi Arabia, Mohammed bin Salman, is providing by overreaching in his efforts to counter Iranian influence and by singling out Lebanon as the new theatre for escalating sectarian rivalry.

Shia Iran’s expansionary agenda, and use of proxies including Lebanon’s Hizbollah to pursue it, is highly destabilising. The solution, however, is not for Saudi Arabia to act more like Iran. Nor is it likely that the kingdom would come out on top in a greater regional conflagration.

Riyadh is already struggling to contain the fallout from other proxy wars. Saudi forces are bogged down in a catastrophic conflict in Yemen, where they have yet to defeat a ragtag army of Houthi rebels that Iran and its allies lend support to. Saudi backing for various Syrian rebel groups has been equally ineffectual. Iran has instead emerged in the ascendancy both in Syria and in Iraq, where Shia militias trained by the Revolutionary Guards are steadily sweeping into territory once controlled by Isis.

Meanwhile, the crown prince’s attempt to force the maverick emirate of Qatar into submitting to its political line with a commercial blockade has unsettled the investment climate in the Gulf, but it has not forced a change of behaviour in Doha.

Dragging Lebanon’s mosaic of Christian and Muslim sects into this power struggle is potentially explosive. The bizarre resignation last week in Riyadh of Saad al-Hariri, the Lebanese prime minister, seemingly at the behest of the Saudi government, appears symptomatic of over-reach.

Iranian and Saudi proxies have been uneasily coexisting in Lebanon, sparing the country spillover from the civil war next door in Syria. It is true that Hizbollah, the militant group backed by Iran, has become too powerful. But it is hubristic to assume that it can be eliminated — even with the help of the US and Israel.

For now, the Lebanese appear unusually united in seeing Mr Hariri’s stay in Riyadh as an act of hostage taking and an affront to their sovereignty. If indeed the prime minister is being held in the Saudi capital against his will, they would not be wrong.

Yet it is not in Saudi Arabia’s interest for the stand-off with Iran to escalate into a more direct confrontation that it would be unlikely to win. Nor is it in Tehran’s. The Iranian regime is busy consolidating the influence it has gained across the region as a consequence of its intervention in recent wars. But Tehran has an interest in treading carefully to prevent the 2015 nuclear agreement — agreed with major world powers — from unravelling at the behest of President Donald Trump. It should also be keen to protect the economic gains the country has reaped as a result of the lifting of some international sanctions.

Unfortunately, the US president has encouraged Saudi Arabia to play a more assertive role. Reversing a more even-handed policy adopted by the Obama administration as it sought to agree the nuclear deal with Tehran, Mr Trump has aligned himself squarely with the Sunni Gulf states and announced a more hawkish policy towards Iran. A better friend of the kingdom would instead be counselling caution. Both Saudi Arabia and Iran have interests to protect in the region. Mutual recognition of these through a process of dialogue would help to defuse the current tensions in the wider interest of peace. Too many wars are raging in the Middle East. A new conflict must be prevented.

BArron's : Cover story on growing competition for TSLA in EV market; positive fe

Barrons weekend summary: Cover story on growing competition for TSLA in EV market; positive feature on SNE; cautious on consumer staples 

* Cover story: With electric cars increasingly likely to supplant gas-powered models, major automakers are working on new technologies and initiatives that could benefit customers and shareholders, a sign TSLA will face growing competition. 

* Features: 1) Positive on SNE: Japanese electronics giant is finally thriving, with sales of camera chips for smartphones, videogame systems, and software up, while profits from its TV and music divisions are strong; 2) Cautious on PG, CL, KO, UN: Investors who could once count on consumer staples’ slow and steady earnings growth and high dividends can no longer do so as industry trends drag on stalwarts. 

* Tech Trader: The success of FB “has made it easy to forget that social networking remains a challenging business model,” leaving many companies—including SNAP and TWTR—struggling to find footing. 

* Trader: “There are plenty of reasons to worry the Fed will continue to raise interest rates, which would explain the 0.064-percentage-point increase in the 10-year Treasury on Friday”; The yield curve is the big issue for banks right now, but investors may be making too much of it, says Chris Verrone of Strategas Research Partners; Many of the moves in high-yield bonds last week were as much a matter of catching up to stock moves as something dire lurking under the surface, according to Evercore ISI. 

* Profile: Scott Kimball of the BMO TECH Core Plus Bond fund doesn’t hitch the portfolio to sweeping macroeconomic views or use derivatives (top 10 corporates: IBM, ABT, ATVI, GS, HNZ, Coach, EBAY, BDX, Mexichem Sab). 

* Health & Wealth Roundtable: At Barron’s fifth annual gathering, four top advisors—Kathleen Weber of Weber Russo Group, Ann Marie Etergino of RBC Wealth Management, Barbara Archer of High-Tower, and Rob Vinder of The Vinder Group—discuss how to have a healthy and stress-free retirement. 

* Follow-Up: Positive on PYPL: Payments company has had a strong year, with shares up 87%, but despite the surge there’s likely more upside ahead. 

* European Trader: Positive on AMS: Company’s sensor technology helps power the AAPL iPhone X’s face identification feature, and though shares have tripled this year, they still have room to rise.. 

* Asian Trader: Positive on Nintendo: The company’s move to ramp up production of its Switch console and the addition of new games for its devices should help it during the holiday season, and shares could rise by 25%. 

* Emerging Markets: “The dramatic arrests of prominent Saudis by their own government has unnerved some investors and raised questions about the timing and structure” of the Saudi Aramco IPO. 

* Commodities: Oil prices are set to rise during the next few months, even though West Texas Intermediate crude has already reached a two-year high. 

* Streetwise: Reverberations from the palace coup in Saudi Arabia are likely to be felt for a long time, complicating the difficulty investors already face trying to understand the “opaque workings” of the government.

(ZH) Arab League To Hold Urgent Meeting On Iran As Saudis Reportedly Mobilize Fi

Arab League To Hold Urgent Meeting On Iran As Saudis Reportedly Mobilize Fighter Jets

The Arab League is set to hold an emergency meeting on Iran at Saudi Arabia's request, this according to Reuters and various regional sources, at a moment when Saudi fighter jets may be mobilizing for war in an attempted show of force. Egypt-based Ahram Online also reports further that the meeting will discuss "Iranian interference" in the region at League headquarters in Cairo, and other early unconfirmed reports indicate the meeting could come as early as next Sunday.

News of the Arab League extraordinary session comes as tensions are at breaking point as regional powers - especially Saudi Arabia and Israel - talk war against perceived Iranian expansion and domination in the Middle East.

Meanwhile, The Daily Star, citing the Baghdad Post, claims that Saudi Arabia has scrambled its air force for strikes in Lebanon: "Reports now state the Royal Saudi Air Force has placed its warplanes on alert to launch strikes as the region sits on a knife edge." The report accompanies undated footage of Saudi F-15's in aerial maneuvers over what is presumably a Saudi airfield.

FT : Emirates leaves Airbus waiting as it announces Boeing deal

Emirates leaves Airbus waiting as it announces Boeing deal
Deal for 40 787-10 jets comes as talks over order for 36 A380s stall at last minute

Boeing scored a coup over rival Airbus at the Dubai air show on Sunday by clinching a multibillion-dollar aircraft sale to Emirates Airline, while a widely-anticipated deal destined to rescue the European aircraft maker’s struggling superjumbo jet stalled at the last minute. 

Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of the Emirates group, said the airline would buy 40 787-10 widebody aircraft from Boeing in a deal valued at $15bn based on the catalogue price of the jets and related equipment. 

However, Emirates will have paid significantly less than the $12bn list price, which is for the 40 jets alone minus related equipment, with significant discounts regularly offered for large orders.

While the deal marks a victory for the US aircraft maker, which triumphed over Airbus’s rival A350 mid-size jet offer, it also cast a shadow over the European group’s mooted sale of at least 36 A380s to Emirates, also at an estimated value of $15bn. 

Airbus executives had gathered at the show expecting to unveil a deal for the A380, but only the Boeing announcement went ahead. 

People with knowledge of the A380 discussions said Emirates appeared to have presented new demands on Sunday after an all-night negotiating session. However, they were still hopeful a deal could be struck as the two sides continued talking.

If the Emirates order materialises, it would keep the world’s largest passenger jet in production for a further decade. Without it, there will be questions over the future of the programme.

The A380 has not won a new customer for close to two years and Airbus has slashed production from 15 jets this year to eight a year by 2019 in an attempt to keep it alive until new orders can be won.

Making matters worse, some of the earliest A380s are beginning to be handed back to leasing companies, which are also struggling to find customers.

Although the superjumbo is popular with passengers, many airlines are concerned they will struggle to fill an aircraft capable of carrying more than 600 passengers. They have also been deterred by suggestions that Airbus could be forced to halt production.

Emirates, which has 100 A380s in its fleet and another 42 on order, is the world’s biggest operator of the aircraft and accounts for more than half of the 319 orders placed so far. 

The future of the superjumbo is as important to the Gulf airline, which has based its business model on carrying large volumes of passengers through its Dubai hub. 

However, the decision to acquire a new batch is taking longer than expected with Emirates president Sir Tim Clark pushing for substantial improvements to an aircraft originally designed in the 1990s. 

Emirates’ decision to shun Airbus’s A350 in favour of the largest variant in Boeing’s Dreamliner family was seen by some in the industry as Emirates’ attempt to put pressure on the European aircraft group to be more responsive. “They wanted to punish Airbus a little,” said one person close to the Gulf carrier.

It is also seen as a sign that the carrier remains confident about growth despite recent turmoil in the region and a sharp downturn in traffic last year sparked by low oil prices and a US ban on electronic devices.

Emirates reported in May its first decline in annual profits for five years, although earlier this month it showed signs of a recovery with the number of passengers up 4 per cent.

Sheikh Al Maktoum said the acquisition of the 787-10 “speaks to our confidence in the future of aviation in the UAE and the region”.

FT : Private equity fights back on US tax reforms

Private equity fights back on US tax reforms
Industry hardest hit by plans to curtail deductibility of interest payments

Private equity firms are preparing to unleash a “lobbying bonanza” in Washington in an attempt to push back against the parts of proposed US tax reforms that are expected to cause severe disruption for the buyout industry. 

The sweeping Republican tax reform package first floated two weeks ago has panicked private equity executives who claim the changes will make buying and selling US companies harder and deter some companies from investing in the country. 

The reforms are part of a broader package that would lower the corporate tax rate to 20 per cent from 35 per cent and allow companies to immediately deduct the costs of new investments in equipment for a period of five years. 

Among the provisions is a proposed cap on the tax deductibility of interest payments exceeding 30 per cent of income, which will hurt buyout firms that primarily use debt to finance acquisitions, and those holding heavily indebted companies. 

James Maloney, vice-president of public affairs at the American Investment Council, an association representing private equity firms, said: "The proposed limitation to full interest deductibility . . . impacts not only the private equity industry, but every industry — from agriculture to telecommunications — that utilises debt financing in order to make new investments and manage day-to-day operations." 

"There is no particular logic to the reforms. This is really frightening," said one London-based private equity manager with international holdings, including in the US.

Another British industry source said: "On the basis of the proposed tax reforms alone, the US private equity landscape looks less attractive."

James Wickett, a partner at Hogan Lovells, the law firm, said he expected a “lobbying bonanza” to hit Washington in response to the tax plans. “[Private equity] associations and just about every Fortune 500 company will have someone in Washington representing their needs,” he said.

Additional changes put forward by Republican lawmaker Kevin Brady last week, and a senate version of the bill published on Thursday, have further troubled the private equity industry. 

Mr Brady’s proposal would prevent private equity managers from enjoying a tax advantage known as “carried interest” if they hold a company for less than three years. At present, profits generated by private equity and hedge fund managers are taxed at the lower capital gains rate of 23.8 per cent on investments that are held for at least a year, rather than the income rate of 39.6 per cent.

Critics of the Republican reforms say, however, that they fall far short of the tough crackdown on carried interest that Donald Trump promised during his presidential campaign. They argue the overall tax package is heavily skewed to big business and the richest in US society. Analysis by the Tax Policy Center has showed that nearly half of the fruits of the House tax reforms would go to the richest 1 per cent of Americans.

The controversy played out on Sunday on the weekly political talk shows. Both the White House and Republican leaders have said the planned corporate tax rate cut would help middle-class Americans by leading to further economic growth, even though it may lead to a higher individual tax bill for some of them.

Steven Mnuchin, Treasury secretary, said he believed fewer middle-class Americans would see a tax rise once the diverging House and Senate tax reform bills were actually brought together. “We’ll have a conference and we’ll fine tune this,” Mr Mnuchin told CNN.

Tim Wach, managing director at Taxand, an international network of tax advisers, said the corporate tax changes “will likely make investments into the US less attractive”. He said: “[These rules] will give rise to lots of challenges when trying to structure cross-border investments from a private equity perspective.” 

The Senate version of the bill has intensified these fears as it implied a bigger change to the deductibility of interest against corporate tax bills than the earlier reforms put forward in the House, according to analysts. The two chambers need to harmonise their approach for tax reform to proceed. 

The Senate version appears to use a different definition of business earnings in its cap on the ability of companies to deduct their net interest expense. Alec Phillips, an analyst at Goldman Sachs, said this suggests “corporate interest deductibility would be restricted more than under the House version”. 

The result is that the Senate measure would raise more money than the House one. A score of the proposals from the Joint Committee on Taxation, a Congressional watchdog, showed that the Senate proposal on business interest would raise $308bn over 10 years, compared with $172bn in the House.

(Haaretz) Saudi Arabia has no Lebanon endgame in sight and it’s bound to backfir

Saudi Arabia has no Lebanon endgame in sight and it’s bound to backfire 
The dish that Saudi Crown Prince Mohammed bin Salman is preparing in Lebanon with the Hariri brothers may wind up overcooked

Lebanon’s Hariri family is on a wild roller coaster ride whose end is nowhere in sight. The head of the family, Saad Hariri, quit – or maybe was fired – his post as prime minister of Lebanon and is now under luxurious house arrest in Riyadh, Saudi Arabia’s capital.

The numerous media reports from the end of last week speak about the intentions of Saudi Crown Prince Mohammed bin Salman to hand the reigns to Saad’s oldest brother, Bahaa El-Din Hariri, in his place. Relatives and senior members of Saad’s Future Movement (Al-Mustaqbal) party have been ordered to come to Riyadh and swear loyalty to Bahaa.
The plan is to send Saad Hariri back to Beirut to submit his official resignation letter, from where he will go to a European capital – most likely Paris – and then leave politics, wrote the Beirut-based Al Akhbar daily newspaper, which is considered to be close to Hezbollah.

The Hariri family never expected such a move and is in no rush to respond to the Saudi invitation. Former Lebanese Prime Minister Rafik Hariri – Saad and Bahaa’s father, who was assassinated in 2005 – was the one who chose Saad to carry on his political legacy over his older brother. Saad was supported by Nazik, Rafik’s second wife (who is not the mother of either Saad or Bahaa). It seems he cannot refuse the Saudi demand because his freedom depends on the success of these moves. And not only his freedom: Alongside the diplomatic manipulations planned by Salman, Saad Hariri seems to have taken in over $9 billion in payment for projects carried out by his familyowned construction company, Saudi Oger.

The Saudis say the money was paid to the company illegally by Khalid alTuwaijri, who was chief of the Royal Court of Saudi Arabia under the previous monarch, King Abdullah bin Abdulaziz Al Saud, and was the highest ranking Saudi official who was not a prince. Tuwaijri was quickly removed from the post when King Salman bin Abdul-Aziz Al Saud Salman took the throne in 2015, and is now under arrest along with a very long list of Saudi princes and ministers.

Saad Hariri turned out to be an unsuccessful company manager and this failure reached its peak in July, when Saudi Oger went bankrupt and closed down, firing all its employees. The Hariri family has no doubts that Mohammed bin Salman hastened the collapse of the company, since Saudi Arabia could have provided funds to the firm and enabled it to continue operating, as it has done in many other cases of well-connected Saudi businessmen running into financial troubles.
We don’t need to worry about Saad Hariri making a living. He still has a few billion dollars left in bank accounts all over the world, which will make his retirement a rather comfortable one. Bahaa, too, cannot be considered deprived. The older Hariri is estimated to be worth $2.5 billion. He owns a real estate company that operates in Jordan along with another flourishing real estate company in Lebanon.

The two brothers don’t seem to have great love for each other. Bahaa has not forgotten the humiliation he suffered when his father chose his younger brother over him, and he has never spared Saad from his harsh criticism over his political and economic actions. The Hariris can now comfort themselves with the thought that at least Saudi Arabia has not completely renounced the family and still sees them as a steadfast base to continue with their influence in Lebanon.
But the dish that Mohammed bin Salman is preparing may just wind up burned and overcooked. The young prince must not only convince the Hariri family but also Hariri’s Future Movement bloc that they need to adopt this U-turn – and not everyone in the party is willing to bow down to the Saudis.

Lebanese Interior Minister Nohad Machnouk, a senior member of the Future Movement party, responded to the reports on the intention of appointing Bahaa as prime minister by saying, “We are not a flock of sheep whose ownership can be transferred from one person to another.” But Machnouk, who was a senior adviser to Rafik Hariri, knows that challenging the Saudi decision could cost Lebanon dearly.

Saudi Arabia imposed economic sanctions on Lebanon a year and a half ago, froze its $3 billion in aid for the Lebanese armed forces and halted business deals between the two countries. Today, Saudi Arabia can impose even more painful punishments on Lebanon. Over 400,000 Lebanese citizens work in the Gulf states and they transfer some $2.5 billion a year back to their homeland. If the kingdom decides to enlist its neighbors in the Gulf to join these sanctions, it could be a deathblow for the Lebanese economy.
But solely economic pressure may not be enough to force a change in government. According to the Lebanese constitution, the appointment of a prime minister is in the hands of the president, and current President Michel Aoun is an ally of Hezbollah. Tradition has always dictated that the prime minister's appointment requires consultation with and agreement between all the sides. So even if the Hariri family and the Future Movement agree to bow to the Saudi pressure, Hezbollah and its allies in the government and the parliament can still stymie the appointment of Bahaa Hariri and trap Lebanon in a political and economic dead end.
It is not clear what Saudi Arabia would gain from such a stalemate, particularly when Lebanese public opinion has begun to turn to outrage over the crude and unprecedented intervention in the country’s internal affairs. It is possible the kingdom is betting that the economic pressure will force Hezbollah to give up its political strongholds, damaging Iranian interests in the process, but at the same time Iran can replace Saudi Arabia as Lebanon’s economic sponsor and compensate for the economic damage caused by the Saudis.
Saudi hints at a military option against Lebanon – hints that Hezbollah leader Sheikh Hassan Nasrallah has already used to declare that a military alliance exists between Israel and Saudi Arabia, and Israel will be the one who attacks Lebanon – cannot really impress anyone. The opening of another front in Lebanon, in addition to the failed war Saudi Arabia is running in Yemen, is a nightmare for the international community, too.
Does Saudi Arabia have any endgame in mind for the process it has started in Lebanon? If it does, it has hidden it quite well.

>>> What to look at this Week End - 11th & 12th of November 2017

Weekly Update
Dow -0.50% S&P -0.21% Nasdaq -0.20% Russell -1,31% Brazil -2.37% Mexico -1.04% EuroStoxx -2.61% FTSE -1.68% CAC -2.49% Dax -2.61% Ibex -2.56% MIB -1.97% OMX -2.56% SMI -2.02% Nikkei +0.63% Hang Seng +1.81% CSI +2.99% Shanghai +1.81%
Stocks got off to a good start this week, hitting new record highs on Monday and Wednesday, but retraced their gains in the latter half--a move that was nominally attributed to the release of the Senate's tax reform bill. More likely, however, this week's loss was the result of some profit taking following a largely uninterrupted two-month rally.
The financial sector paced this week's retreat, which is fitting considering the group played a leadership role in the market's most recent bullish run; the financial sector jumped 11.4% from September 8 to November 3, while the benchmark S&P 500 added 5.1%. Dow components JPMorgan Chase (JPM) and Goldman Sachs (GS) lost 3.9% and 1.7% this week, respectively.
Industrial shares also struggled, with transports showing particular weakness; the Dow Jones Transportation Average dropped 2.6%.
Meanwhile, the energy sector outperformed, finishing with a gain of 1.1%. The group benefited from an increase in the price of crude oil, which touched its highest level in more than two years; WTI crude futures finished higher by 2.0% at $56.75/bbl. Heightened tensions in the Middle East, which could potentially disrupt crude production in the region, were largely credited for the move.
Saudi Arabia's Crown Prince Mohammad bin Salman ordered the arrests of some of the country's most prominent political and business figures on allegations of corruption. In addition, Saudi Arabia ordered its citizens to leave Lebanon after accusing the country of declaring war, citing the presence of Iranian-backed Hezbollah members within the Lebanon government.
Back in the U.S., earnings season continued this week--albeit with fewer notable companies on the docket--but headlines were focused on M&A developments. Sprint (S) and T-Mobile US (TMUS) lost 7.2% and 3.6%, respectively, after announcing over the weekend that they could not reach a merger agreement.
Meanwhile, chipmaker Broadcom (AVGO) slipped 3.2% after bidding $70 per share (in cash and stock) for Qualcomm (QCOM), which, conversely, ended the week higher by 4.5%. There were also reports that the Department of Justice would require the sale of CNN before it would approve AT&T's(T) acquisition of Time Warner (TWX), but later reports said that claim was false.
Also of note, Walt Disney (DIS) and 21st Century Fox (FOXA) were reportedly in discussions regarding a sale of assets to Disney from Fox in recent weeks.
On the political front, the Senate on Thursday released its version of a tax reform bill, which called for delaying a cut in the corporate tax rate to 20% from 35% by one year and differed from the version that the House unveiled last week in several other key areas--including deductions related to state and local property taxes.
The two chambers will have to hammer out those differences in order to put the bill on the president's desk for approval, and uncertainty surrounding Congress' ability to do just that were cited by some as the main catalyst for Wall Street's weakness in the latter half of the week.
Following this week's events, investors still strongly believe that the Fed will raise rates next month, with the CME FedWatch Tool placing the chances of a December rate hike at 100.0%.

Macro :
- Mnuchin: ‘Minor Differences’ Between House and Senate Tax Bills
- Aramco Still Discussing Where to List Shares in IPO: CEO
- Saudi King Will Not Relinquish Throne, Senior Official Says

Keep an eye on :
- AF FP : Air France, Deutsche Bank in Derivatives Contract on Amadeus
- AIR FP : Airbus Suffers Early Dubai Blow as Boeing Wins Surprise 787 Deal
- AIR FP : Airbus Hopes to Agree on Sale A380s Shortly, Bregier Tells SZ
- BABA US : Alibaba’s Singles Day registers $25bn haul
- AMS SM : Air France, Deutsche Bank in Derivatives Contract on Amadeus
- AMS SW : Face ID Specialist AMS Is Still Looking Good, Stock of the iPhone X supplier, which has tripled so far this year, may have even more room to run - Barron's
- AUTN SW : Autoneum CEO Hirzel Says 2020 Sales Target is ‘Ambitious’: FuW
- CON GY : Continental Mulls Investment in Car Batteries: Automobilwoche
- ACA FP : Agricole Doesn’t See Return of Large European Mergers: Investir
- CSGN SW : Credit Suisse Activist in Contact With Qatar Investor: SamW
- DBK GY : Deutsche Bank Appoints Ephraimson Global Head of FX Sales in NY
- DPW GY : Deutsche Post Targets Sale of 100,000 Electric Vans: Stuttgarter
- DIS US : ‘Thor’ Outdraws ‘Daddy’s Home’, ‘Orient Express,’ to Stay No. 1
- HSBA LN : HSBC eager for acquisitions; Synchrony Financial, US credit card companies could be targets
- LEO IM : Italy, France May Consider Leonardo, Thales Alliance: Repubblica
- LSE LN : LSE Non-Exec Directors Are Said to Back Chairman Brydon: Sky
- LHA GY : Lufthansa Seeking Additional Acquisitions, CFO Svensson Tells BZ
- MC FP : LVMH shake-up marks generational shift in power, Observers suggest further changes are to come as Bernard Arnault fosters renewal - FT
- MAT US : Mattel Shares Rise 14% as WSJ Reports Renewed Hasbro Approach
- NOVN VX : Novartis’ Narasimhan Sees Great Potential in CAR T-cell: NZZamS
- UG FP : Groupe PSA Creates JV With Algerian Partners for Car Production
- ORA FP : Orange CEO Richard Says He Would Like to Stay on in Job
- SGO FP : Saint-Gobain CEO Sees Recovery in French Construction, JDD Says
- GLE FP : Societe Generale Affirmed by S&P, Outlook Stable
- HO FP : Italy, France May Consider Leonardo, Thales Alliance: Repubblica
- UNA NA : Unilever Faces Worker Demands Over Spreads Business: Telegraph