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Sept. 15 will mark two years for the Abraham Accords, which normalized Israel's ties with the Emirates, Bahrain, Morocco, and later Sudan. Changing the regional balance of power and alliances, these agreements also opened the doors to relations with other Arab states, at least indirectly.
More so, apart from their strategic significance, from day one, these accords affected the region economically. Recent reports indicate that Israel’s trade relations with Gulf countries are flourishing.
Trade figures have yet to reach the levels of Israel’s major partners in North America, Europe, and the Far East. Nevertheless, they are increasing rapidly.
According to Israel’s Ministry of Economic Affairs, trade between the countries reached $1.4 billion in the last half year alone — without services, which are estimated to add another $200-300 million to the total, or military exports, whose figures are classified. Trade between the countries reached about $1 billion in all of 2021, or $1.2 billion with services. According to Israel’s ambassador to the UAE, Amir Hayek, trade between the two countries will reach $5 billion in just three years.
The head of the Foreign Trade Administration in the Ministry of Economic Affairs, Ohad Cohen, tells Al-Monitor that the rate of growth for Israeli trade with the UAE is much higher than other countries.
Nevertheless, he cautioned, “Many people thought that they would find money trees lining the streets of Abu Dhabi and Dubai. Unprecedented numbers of delegations made pilgrimage to the UAE, but many of the participants had no realistic appreciation of what the UAE had to offer.’’
Marking two years since the signing of the Abraham Accords, United Arab Emirates Foreign Minister Sheikh Abdullah bin Zayed plans to visit Israel next week.
The Emirati Minister of Trade, Thani Al Zeyoudi, told Israeli press that differences of culture, customs, and social norms resulted in some misunderstandings between businesspeople from both countries.
“The Israelis thought that money would flow easily from here, but the fact is that business is business," Zeyoudi said. "In order to receive our investments and cooperation, there needs to be a tangible product that has proved itself.”
Emirati investments do, in fact, seem to be plodding in place. The Mubadala Investment Company invested $1 billion to acquire rights to a part of the petroleum drilling in the Tamar reservoir in the Mediterranean. All other investments by the UAE in venture capital funds operating in Israel amount to $100 million. The two countries also created a new R&D fund with another $100 million. “This fund is expected to invest in the development of new products based on built-in innovations and the potential to have a major impact in those fields that are important to us,” said Zeyoudi.
The most famous fund established as a result of the Abraham Accords, with $10 billion promised by UAE President Mohammed bin Zayed to former Prime Minister Benjamin Netanyahu, was frozen because of political chaos in Israel.
While the freeze was lifted in early 2022, it has not yet begun funding serious investment opportunities in Israel. Ambassador Hayek explains that the Emiratis are less interested in startups, and that the big money will only be invested in major infrastructure projects. So far, it has not succeeded in finding any worthwhile projects. The Emirati port giant DP submitted a tender to operate Haifa port as part of its privatization, but withdrew it.
Hayek calls on Israel to ease up and shorten the bureaucratic processes in order to help the Emiratis invest in the biggest infrastructure projects. “They [Emiratis] would, for example, be happy to build an off-shore airport. They have experience with that. Or they would invest in creating a new off-shore neighborhood for Tel Aviv, similar to Dubai’s Palm Jumeirah neighborhood,’’ he said.
Furthermore, the bridge that the Emirates were expected to serve to other Arab states has barely been exploited to date, while the “Quad” agreement between Israel, the Emirates, the US and India is still waiting for ministerial approval. This agreement, known as I2U2, and officially introduced in July 2022, is intended to cover fields such as clean energy, food tech, a satellite project, advanced medical technology, water treatment and control, etc. Hayek says that the growth in trade and cooperation between its members is a very good reason for Arab states that are watching developments closely to join the agreement.
Zeyoudi, who has already visited Israel, adds that the May 2022 free trade agreement between UAE and Israel was signed in record time and will expedite the growth of trade. Its long-term vision is the most far-reaching, with expectations of trade to reach $10 billion in just five years.
“The results of this agreement are very tangible. We are working to expand this cooperation to other countries, in the Middle East, Africa, and India. The goal of the Abraham Accords is to bring prosperity to all the inhabitants of this region.”
He also cited the tripartite agreement with Jordan to build an enormous solar energy facility there to product electricity, which Israel would then purchase from Jordan, in exchange for the export of clean water from Israel to Jordan. “Once the results of this agreement can be seen by all, other countries will want to mimic its success.”
Tourism is also growing. Almost half a million Israelis visited the UAE over the past two years, most of them as tourists. Even during and after the coronavirus pandemic, the UAE kept its borders open for Israeli tourists.
Also related to tourism, international travel agencies in Europe and the United States have begun marketing package tours of Israel and the United Arab Emirates, which wasn't possible prior to the accords. Tourists landing in Tel Aviv can now spend six days visiting the major sites in Israel before traveling to the UAE, from where they will return home.
Summing it up, Hayek says that the expansion of trade and cooperation provide very good reasons for other countries to join the agreement, including other Arab states.
