Normalization deals offer growing economic, security, and political ties beyond relations with Israel or even the United States.
In August 2020, the United States announced an agreement that would see Israel and the United Arab Emirates establish formal relations – materializing into the Abraham Accords one month later. The text of the Israel-UAE normalization agreement lays out several areas in which the countries seek to cooperate, including critical sectors such as innovation and trade, health care, science and technology, and tourism.
Israel and the UAE are motivated by a number of shared interests. They face similar threats in the region and relations between the two countries can allow for enhanced security cooperation. However, public statements by Emirati officials have stressed the accords are “not about Iran” but are instead focused on building upon the “foundations of modern human development.”
Although public statements by the involved parties do not necessarily capture the full record of objectives and aspirations behind the agreement, the economic motivations for Israel and the UAE have clearly been a key focus. Both countries view cooperation as a way to support their domestic industries in the short term and achieve long-term sustainability.
The accords will be judged by the ability of Israel and the UAE to sustain economic cooperation. But, given the complementarity of long-term economic interests between the two countries and the ties already taking root, relations appear well positioned for continued growth.
With a robust startup ecosystem, Israel has a large number of companies seeking to grow and market their products. As such, the extent to which relations with the UAE produce opportunities for Israeli companies will be a factor on the Israeli side in determining the momentum and depth of economic ties.
While the opening of relations with the UAE allows Israeli companies to sell their goods to Emirati buyers, it also presents the opportunity to tap into a large investment pool. There has been significant movement regarding investments, with the Abu Dhabi Investment Office establishing a branch in Tel Aviv and the UAE recently announcing a $10 billion fund to invest in, and alongside, Israel across various sectors.
Israeli companies can also benefit from access to the UAE’s robust transshipping infrastructure, opening up markets in the Middle East, North Africa, and Asia. Afshin Molavi, an expert on Middle Eastern geoeconomics, in an interview, said that the UAE’s geographic positioning and level of trade with Asian markets provide vast opportunities for Israel. The UAE accounts for approximately 1.5% of global trade and 2.4% of global tanker trade. Molavi suggested that the UAE could help Israeli companies market their goods to countries that do not have formal relations with Israel. At the same time, Israel can take advantage of the UAE’s transshipping infrastructure to streamline and strengthen its existing trade ties with Asian countries. This includes India, which is a significant importer of Israeli and Emirati goods. According to some estimates, trilateral trade could expand to $110 billion by 2030.
The diamond industry makes up a particularly large portion of both Israeli and Emirati exports. According to Observatory of Economic Complexity statistics, Israel exported $11.2 billion worth of diamonds and the UAE exported $9 billion in 2019. A major destination of those exports for both countries is India, with one-quarter of its diamonds imported from the two countries in 2019. Recognizing the potential for partnership, Israel and the UAE signed an agreement to work together in the diamond industry, and in September 2020, trilateral diamond trade with India was highlighted as an “opportunity” by the head of the Dubai Multi Commodities Centre, an Emirati free trade zone. Such cooperation can be emulated in other complementary industries to expand international trade for both countries.
Israel is also looking to privatize its ports. The UAE’s experience developing ports and infrastructure networks could bolster this initiative, although it remains to be seen the extent to which Dubai’s experience developing its port system from the ground up will transfer usefully to a privatization context. Dubai-based DP World – one of the world’s largest sea terminal operators – already submitted a joint bid with Israel Shipyards in October 2020 to privatize the Port of Haifa.
At the same time, the UAE has sought to promote entrepreneurship and cultivate small and medium-sized enterprises. This was clear in the UAE’s creation of the position of Minister of State for Entrepreneurship and SMEs in 2020. Israel can lend support here given its strong startup ecosystem and share best practices with its new Gulf partner. For example, in October 2020, OurCrowd, an Israeli venture capital firm, signed a partnership agreement with Phoenix, an Emirati business development company. The agreement seeks to connect Israeli companies with Emirati investors while also giving Emirati companies and entrepreneurs a platform to meet Israeli entrepreneurs and investors.
The UAE is also seeking to become more self-sustainable and diversify its economy, with a particular focus on technology acquisition and knowledge transfer. UAE Vision 2021 focuses on health care, education, and environmental infrastructure. Given Israel’s strength in water, agriculture, and renewable energy technology, there is significant opportunity for collaboration in these key challenge areas identified by the UAE.
The UAE is also hyperfocused on developing local know-how by increasing educational opportunities and building its domestic research and development sector. Collaboration with leading Israeli companies and educational institutions supports this effort. For example, the Abu Dhabi-based Mohamed bin Zayed University of Artificial Intelligence and Israel’s Weizmann Institute of Science have established the Joint Program for Artificial Intelligence Research.
Over the last eight months, Israel and the UAE also have been working to ensure that, beyond normalized state-to-state relations and robust economic ties, there will be opportunity for tourism, cultural exchanges, and other people-to-people efforts. Government officials in Israel and the UAE have stated that they wish to establish a “warm peace.” Now, Israelis are able to travel to Abu Dhabi and Dubai, and Emiratis are able to visit Jerusalem and Tel Aviv. Approximately 130,000 Israeli tourists have already traveled to the UAE. While Israel has imposed strict coronavirus-related restrictions on foreign travelers, it is considering a quarantine-free travel corridor with the UAE for those who have been vaccinated. In 2021,the Israel Tourism Ministry is expecting 100,000 tourists from the UAE, depending on the status of the health crisis. Personal ties forged through tourism and cultural exchanges can ensure Israelis and Emiratis experience the benefits of normalized relations.
Sustained Economic Partnership
Based on their strategic objectives and respective strengths, the UAE and Israel seem particularly suited for sustained economic collaboration. These synergies are already providing ample opportunities for the countries, which is apparent in the number of agreements and partnerships already established between them and the accelerated pace of implementation. From travel and tourism to planned investment and joint participation in multilateral business forums, these tangible developments support the diplomatic opening by showing that relations can bring immediate, visible economic and social benefits.
Since Israel and the UAE agreed to normalize relations, private companies have taken advantage of having access to new markets. Between September 2020 and the end of January, there was at least $272 million in trade between Israel and Dubai. The value of Dubai’s imports from Israeli companies were estimated at $88.5 million and exports were around $165.2 million. On top of that, there was approximately $26.9 million in transit trade.
The accords established the framework that has allowed the two countries to sign approximately 86 bilateral agreements or partnerships. These include around 20 government agreements, approximately 53 private sector agreements, and seven deals with universities and think tanks. These agreements have spanned critical sectors such as agricultural technology, green energy, and finance. They also include miscellaneous agreements, such as between news organizations or the exchange of police representatives. The majority of the deals have focused on innovation and trade, which reflects how each government aims to collaborate to develop and expand access to novel technologies.
Normalization of ties between Israel and the UAE offers robust economic opportunities for both countries. However, it is important for them to be cognizant of potential discord and navigate avenues to confront differences without causing harm to the strength of relations. A recent example of tensions is the UAE’s disapproving reaction to Prime Minister Benjamin Netanyahu’s use of the accords to bolster his electoral campaign. Relations between the two countries are not impervious to disagreements caused by domestic political dynamics.
Since the announcement of the normalization agreement between Israel and the UAE, the countries have taken numerous steps to facilitate economic cooperation and development to lay the groundwork for deeper economic relations between their countries. In September 2020, Eli Cohen, the Israeli intelligence minister, estimated that trade between Israel and the UAE could reach approximately $4 billion a year in the next three to five years. The extensive partnerships and joint investments into various sectors are indicators of the ways – if not the guarantee – that Israel and the UAE can achieve this ambitious level of trade in such a compressed period and be poised to meet their short-term and long-term goals. As Israel and the UAE begin to recover from the pandemic, their developing relationship will almost certainly offer further opportunities for cooperation as they seek to revitalize their economies for a sustainable and prosperous future.
This publication is based on research conducted for a George Washington University capstone project on the implementation of the Abraham Accords.
is a second year graduate student at the George Washington University’s Elliott School of International Affairs with a focus on transnational security and geopolitics of the Middle East.
is a second year graduate student at the George Washington University’s Elliott School of International Affairs studying U.S. foreign policy with a focus on South Asia.
is a second year graduate student at the George Washington University’s Elliott School of International Affairs studying security policy with a focus on transnational security.
New talks reflect a broad range of regional and international developments in recent years.
Robert Mogielnicki discusses the centralization of economic policymaking and the consolidation of power amid the fast pace of new initiatives in the kingdom since the launch of Vision 2030.
Through its careful examination of the forces shaping the evolution of Gulf societies and the new generation of emerging leaders, AGSIW facilitates a richer understanding of the role the countries in this key geostrategic region can be expected to play in the 21st century.Learn More