Good morning, wonderful people. We’re kicking off the final workweek of the year with a rather slow news day.

Abu Dhabi’s inflation decelerated slightly in November, supported by transport prices — the second-largest component of the consumer basket — dropping during the month.

AND- We look at the year that has been in the UAE’s banking sector, from the impact of a global monetary easing cycle to the continued push for financial inclusion and digitization. Look for more of our Year in Review stories over the next several days.

Israel became the first UN member state to formallyrecognizeSomaliland’s independence on Friday, a move that could alter the security architecture of the Red Sea and give Addis Ababa the legal cover it needs to proceed with its contested 50-year port lease at Berbera. Israeli leader Benjamin Netanyahu framed the recognition as an expansion of the Abraham Accords, with Somaliland’s leader, Abdirahman Mohamed Abdullahi, saying his enclave would join the framework.

The UAE, Arab League, and African Union all condemned Israel’s actions, with the UAE’s permanent representative to the Arab League Hamad Obaid Al Zaabi calling the move “an assault on [Somalia’s] sovereignty and territorial unity.”

The diplomatic fallout moves to New York today. That’s when the UN Security Council will convene for an emergency session at Somalia’s request.

Will Donald Trump be the spoiler? While Prime Minister Benjamin Netanyahu framed the move as being in the “spirit of the Abraham Accords,” US President Donald Trump appeared to pour cold water on the idea. In an interview yesterday, Trump dismissed the prospect of immediate US recognition and downplayed Somaliland’s strategic offers, calling its bid to host a US military port “no big deal.”

BACKGROUND- Landlocked Ethiopia signed a memorandum of understanding with Somaliland in early 2024 seeking 20 km of coastline for a naval base and commercial port in exchange for future recognition.

The strategic context: Israel’s recognition places it at the center of a scramble for the Red Sea, with the UAE, Turkey, and Ethiopia all vying for control of strategic ports like Berbera.

Watch this space

INVESTMENT — Pakistan tests equity exit ramp with the UAE: Pakistan is exploring an equity-linked transaction to settle a USD 1 bn liability to the UAE, potentially using Fauji Group as the vehicle, Pakistan Today cites Pakistan’s Deputy Prime Minister Ishaq Dar as saying. While details of the liability weren’t disclosed, we previously reported that UAE banks extended a USD 1 bn Islamic financing facility to Pakistan in July. The proposal landed as President Mohamed bin Zayed Al Nahyan was in Pakistan for talks on trade and investment.

How it’s being set up: The debt-for-equity swap would see the UAE take a stake in FaujiGroup — one of Pakistan’s largest conglomerates — instead of an allcash repayment. Fauji is anchored in fertilizers with operations spanning cement, energy, food, and financial services.

What to watch: Pakistan has been working to stabilize its balance sheet by shifting bilateral liabilities into investment-linked arrangements and easing pressure on FX reserves. If it goes through, the agreement could become a template for how Pakistan restructures external liabilities, and how Gulf capital prices sovereign risk beyond straight lending.

Still leaning on rollovers: Dar added that a separate USD 2 bn UAE loan could also be rolled over. As we previously reported, the UAE has already rolled over USD 2 bn in repayments multiple times as Pakistan works to stay aligned with its USD 7 bn IMF program.

The big story abroad

With a holiday-shortened business week yet to begin in the west, the global business press is once again going long on geopolitics, offering deep dives into inconclusive talks yesterday between US President Donald Trump and Ukraine’s Volodymyr Zelenskyy. Trump called the talks to end the war in Ukraine “excellent” and said they had made “a lot of progress.” Zelensky was less enthusiastic.

We’ll see as the day wears on whether the Santa rally in equities continues… Asian markets opened mixed this morning.

…but commodities are doing well: Silver rallied to a record high north of USD 80 per ounce, gold edged higher, and Brent crude poked above USD 61. You can thank geopolitical tensions, a weaker USD, and Beijing making all the right noises about supporting domestic growth in 2026.

With news sparse, there’s lots of stocktaking about 2025 — and looking ahead to 2026 and beyond — if you’re in the mood:

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