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Emirati investors highly interested in Israeli high-tech, agro-tech

According to estimates, $1 billion in investments between Israel and the United Arab Emirates were made in the last two months of 2020.
A member of an Israeli tech delegation uses his phone in a video call during an evening meeting with Emirati counterparts at a hotel in Dubai on October 25, 2020. - Israel and the United Arab Emirates agreed on October 19 to visa-free travel, an unprecedented arrangement between Israel and an Arab state, signed after the first ever official UAE delegation landed in Tel Aviv. (Photo by Karim SAHIB / AFP) (Photo by KARIM SAHIB/AFP via Getty Images)

The thesis that the Abraham Accords are a partial realization of the Trump administration’s “deal of the century” is gaining momentum, as by the close economic ties emerging between Israel, the United Arab Emirates (UAE) and Bahrain, and through them, Saudi Arabia, too.

The first steps were taken by the governments of these countries, which signed agreements allowing for trade. There is good reason that one of the first Israeli delegations to the UAE in September was a senior business delegation. During that visit, the chief economist in Israel’s Finance Ministry signed a series of agreements allowing for investments between the two countries. These involved the kind of banking agreements that opened the financial pipeline, as well as agreements to promote cooperation in finance and investment.

In this context, the parties are now discussing advancing financial service cooperation and the removal of financial barriers to investments between the countries. Furthermore, they will promote joint investments in the market.

In October, the US State Department announced the creation of the Abraham Fund, an economic investment fund encompassing Israel, the UAE and the United States, which will invest as much as $3 billion in various projects. Through this fund, the US Division for Financial Cooperation will provide funding for investments in the private sector and for advancing regional cooperation. The Biden administration has already announced that it will continue to support and promote the Abraham Accords.

Israel attracts considerable foreign investment, particularly in high-tech, due to its reputation as the “start-up nation.” It is considered to be an important incubator for innovation and development in all sorts of fields. Investors from the Gulf want to participate in these investments, too, but in their own way, by investing in those fields that would benefit their own countries. That way, they would also profit from their investments.

The secretary-general of the UAE International Investors Council for Investors Abroad, Jamal Saif Al Jarwan, discussed this during a video conference call with one of the Knesset’s committees. He said that the UAE’s investment funds plan to invest significantly in Israel, and that these funds already began conducting market research in Israel in the months right after the signing of the agreements. He listed his group’s fields of interest as agro-tech, food security, fintech, water treatment and efficiency, cybersecurity and clean energy.

And in fact, on Jan. 19, the Masdar investment fund in Abu Dhabi, which specializes in clean energy, announced the first major UAE investment in renewable energy in Israel. The investment amounts to hundreds of millions of dollars to develop renewable energy projects in Israel. Its partner in Israel is the French energy company EDF Renewables (Israel branch), which currently has 18 solar projects in place in Israel and is planning several dozen more, valued at 5 billion Israeli shekels $1.52 billion.

Masdar is a branch of Mubadala Investments, a strategic investment company based in Abu Dhabi, which focuses on investments in renewable energy. It is one of the biggest independent investment funds in the world (known as wealth funds), managing an estimated $4 trillion. The fund’s income is derived from petroleum profits. It is connected to Sheikh Mohammed bin Zayed bin Sultan Al Nahyan, crown prince of Abu Dhabi, who played a major role in the Abraham Accords signed in Israel last year. The fund is considered to be an active player in the international investment market, with a focus on technological innovation.

The connection with the companies was established as a result of collaboration between Masdar and other subsidiaries of EDF, France’s national electric company, operating in countries around the world. Masdar and EDF Renewables are already partners in a number of projects in the Middle East and North Africa. Having signed the Paris Climate Accords, the Israeli government’s stated target is to produce 30% of energy in Israel from renewables by 2030, 13% more than its previous target. It also plans to stop the use of coal. In order to meet this new target, it will be necessary to produce another 15 gigawatts of energy from clean energy sources by 2030.

Masdar CEO Mohamed Jameel Al Ramahi told the press, “The UAE and Israel are opening a new era of cooperation in renewable energy and advanced technology, which will benefit both peoples and support our targets for clean energy.”

This investment may be one of the first of its kind in this field, but based on the relationships between the two countries, it certainly will not be the last.

Last week, the Abu Dhabi Investment Office (ADIO) announced that one of the eight new offices it is opening around the world will be located in Tel Aviv. This reflects the close relationship emerging between Israel and the UAE in general and Abu Dhabi in particular. The other offices will be opened in New York, San Francisco, Frankfurt, London, Paris, Beijing and Seoul.

ADIO recently joined forces with Group 42 (G42), an artificial intelligence and cloud computing company based in Abu Dhabi, in setting up an office in Tel Aviv. The ADIO-G42 office is further evidence of how Emirati investors are focusing on Israeli high-tech companies.

ADIO Director General Tariq Bin Hendi told Al-Monitor that the launch of a new office in Israel should open the door to Israeli companies, which have yet to win serious attention from investors from the Gulf. He said that ADIO’s investment managers are looking for wise long-term investments that focus on advanced technological solutions to the needs of the UAE, the Gulf states and the Middle East at large. “Emirati investments will be provided to joint initiatives in which we are involved and which show progress to the benefit of both parties.”

Chairman of the Israel Export Institute Adiv Baruch told Al-Monitor that ties with the UAE and the ensuing investments are one of the most important developments to advance the Israeli economy. These countries are centers of international finance and trade, which connect us with regional giants like Saudi Arabia and the enormous business world in the Far East. He went on to warn that too many Israelis seeking investments from the Gulf states fail to recognize these investors’ particular needs. They [the Israelis] lack the necessary etiquette and fail to understand the business culture of the Gulf, and are therefore rejected out of hand. Nevertheless, he also pointed out that the Export Institute’s estimates for the last two months of 2020 alone show $1 billion in investments between Israel and the UAE.

Most of these investments are in fields important to the UAE, such as agro-tech, cybersecurity, artificial intelligence and fintech. One of the biggest investments is by Mubadala Investments and Israeli companies involved in advanced agricultural technologies, such as computerized irrigation for desert environments, computerized oversight of plant growth and diseases, etc. The purpose is to develop and extend these technologies to the vast agricultural lands owned by the UAE in North Africa, Eastern Europe and South Africa.

The link between capital from the Gulf, Israeli technology and their common needs is only natural. Israeli and Gulf leaders are gambling on the economy, in the hope that it will advance other diplomatic interests. This is beginning to seem like the right approach.

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