Israel's normalization agreement with the United Arab Emirates (UAE) will give Israeli business an official, stable bridge to the entire Arab world, particularly the other Gulf states, with Saudi Arabia, which was in on the secret all along the way, at their head. The opportunities that have been opened up in the Arab markets for Israeli firms are huge, and could dramatically boost Israel's exports, to the UAE, and via them to other Arab countries.
A prominent businessperson, formerly a senior officer in the security forces, told "Globes" that although there were substantial ties with the UAE beforehand, this agreement puts everything above board, and lends legitimacy to buying from Israel for companies and governments throughout the Arab world, through UAE intermediaries. In one way or another, this happened before, but now "the sky is the limit".
A source in Saudi Arabia told "Globes" that the Arab world had a great deal to gain from Israel. This is a breakthrough. The Palestinian issue has not gone away and will continue to be an obstacle to some degree, but the road is open.
Existing ties were mostly beneath the surface, and came to light here and there, such as the collaboration of Rafael Advanced Defense Systems Ltd. and Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) (IAI) with Group 42 in the UAE, medical technology companies working on solutions to the coronavirus pandemic. This agreement was reported two months ago.
The new normalization agreement will bring to light a wide range of economic and technological collaborations that has existed for years. The UAE is a federation of seven states or emirates, of which the largest are Dubai and Abu Dhabi, in which the strongman is Mohamed Bin Zayed, heir to the throne of Abu Dhabi and the man responsible for the economic revolution that has taken place in the UAE in recent years.
Ties between Israel and the UAE began years ago, and mainly concerned deals to do with security. The UAE suffers from the proximity of Iran and the threat from it, and sees Israel as a genuine ally that can be relied on in times of trouble.
Secret relations with Israel began in the last decade, and included sharing of security information and also intelligence technology, to assist the UAE in the face of Iran's growing military strength. In 2015, Israel opened an official diplomatic mission in Abu Dhabi attached to the International Renewable Energy Agency. The opening of the mission was approved following intensive negotiations between Israel and the UAE authorities, including a visit to Abu Dhabi by then Ministry of Foreign Affairs director general Dore Gold in the final week.
The progress of secret relations between Israel and the UAE was set back by the assassination of Mahmoud al-Mabhouh, co-founder of the military wing of Hamas, in Dubai in 2010, but the nuclear agreement between the powers and Iran and the emergence of the ISIS terrorist organization led to its renewal.
Today, the main connection is with certain defense companies, chiefly IAI and Rafael, and also intelligence software companies. The agreement with IAI and Rafael signed in July covered technologies in artificial intelligence, sensors, lasers, and more. The announcement at the time said that the aim was to find new solutions and medical initiatives, and that the joint technologies were intended not just for the populations of the two countries, but to assist in the global battle with coronavirus and health security in the whole region.
The UAE's economy is very open to international trade, and is mainly based on exports, which account for almost half of GDP. The lessons of previous crises led the UAE to invest considerable efforts in diversifying its exports beyond oil. These efforts succeeded, and the proportion of GDP accounted for by oil has fallen to about one third. Correspondingly, international trade has grown by leaps and bounds, and this is where the economic advantage of the new agreement lies.
The Arab market for advanced technologies is worth many hundreds of billions of dollars annually. Because of diplomatic issues, the economic ties between the countries were secret, and what was not secret was very little. Now, with the opening of this bridge, the entire Arab market is in effect opened up to Israeli companies, especially technology companies. On the defense plane there will be limitations, for understandable reasons, mainly to prevent technological know-how from reaching hostile hands. But everything else is open: the food industry; desalination and water saving technologies (a field of special interest to desert Arab countries); information technology; advanced agriculture; and more.
Published by Globes, Israel business news - en.globes.co.il - on August 14, 2020
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