The Abraham Accords that Israel signed with the United Arab Emirates and Bahrain on September 15, 2020, and later joined by Sudan and especially Morocco – not only changed the diplomatic perception regarding Jerusalem’s relations with the countries of the Middle East, but mainly the subject of economic relations. In the case of the United Arab Emirates, for example, the volume of trade already crossed the billion dollar mark in 2021.
However, in the opinion of many, the economic potential arising from the Abraham agreements has not yet been fully realized. Therefore, as part of a discussion entitled “Smart Middle East – Creating an economic basis for diplomacy in the Middle East”, which took place at the Globes Israel Business Conference, the best experts gathered to discuss the lessons learned from the two years since the signing of the agreements.
Oren Cohen, head of Bank Hapoalim’s business department, sees the agreements as “much more than a bilateral deal”. He points out that they promoted the entire economy of the region, and even helped the economic warming with Egypt. This warming is reflected, according to him, in the memorandum of understanding concerning the export of Israeli gas to Europe through Egypt, in the expansion of the gas sales agreement to Jordan, in the American involvement in the eastern Mediterranean, and even in the agreement to determine the maritime border with Lebanon.
Trade volumes soared
“Trade volumes jumped mainly with the United Arab Emirates, but Morocco and Bahrain are also making progress,” says Cohen. “55 agreements were signed with the United Arab Emirates, Morocco and Bahrain, and several diplomatic and economic missions were opened. This gives the feeling that it is legitimate and possible to do business with Israel.” Cohen says that at Bank Hapoalim, transactions are being identified in the process of significant magnitudes that are expected to be signed in the coming year. “It’s on the order of billions of shekels.”
In response to a question about not fully realizing the potential, Cohen replies: “It’s all a matter of expectations. How much do you expect and what do you expect? All around us there is a fundamentally different culture than ours, and the business acquaintance between the parties also takes time. From the beginning of 2021 to the end of 2022 there is an increase of Ten in the number and scope of money transfers between Israel and the United Arab Emirates.”
Yael Rabia Zadok, Deputy Director of Economics at the Ministry of Foreign Affairs, explains that the ministry’s role is to provide the diplomatic infrastructure for business relations – and to connect Israeli businessmen with the right parties in the countries of the Abrahamic Agreements. In response to a question about delays in obtaining visas for foreign businessmen, Rabia Zadok says that this is a problem recognized and there is room to optimize the treatment processes.
Despite this problem, the volume of trade with the United Arab Emirates is expected to reach 2.5 billion dollars at the end of 2022 – more than double from 2021, when trade amounted to 1.016 billion dollars. Neely Delo, CEO of the Export Institute, states that the main importance of the United Arab Emirates and Bahrain is in being a bridge to other countries – the most prominent among them being Saudi Arabia. Culturally,” Delo replies regarding the question of the relative disappointment with the volume of trade. “In the end, this is a very professional company at the level of doing business. Very sophisticated and high, and you need to build relationships and mutual trust.”
The more detailed answer regarding the question of failure to fulfill expectations is provided by the business sector. Dr. Nirit Ofir, CEO and founder of the Onational company that deals with the business connection between companies from Israel and the Gulf countries, says that “something is not seeping down from the government sector to the private sector, and part of the matter is the need for the governments to apply regulation that will facilitate business connections.” What exactly? Dr. Ophir explains that in the State of Israel there are barriers and laws that do not allow those connections. It is just as important to reach the right people and the decision makers – and not the middlemen. Not an easy task in the United Arab Emirates.”
And on a more optimistic note, she notes that there are also quite a few successes. “Beautiful things are happening, and little by little we are succeeding. What is the secret? The ability to bridge the gap between the business culture of businessmen from the two countries and in fact from other countries such as India, since many of the managers of the companies in the United Arab Emirates are Indians, and there is a real gap in the business culture.”
Attorney Dana Firon Gross, a partner in the M. Firon & Co. firm specializing in trade relations in Morocco, explains that the Abraham agreements paved a more direct approach to the economy and businesses in Morocco. “Morocco has great resources, manpower and natural resources and land areas with high potential. In the meantime, it is being realized in agriculture, in the fields of defense, export and cooperation, in hotels, and the real estate sector is also starting to grow.”
In which field would you recommend Israelis to integrate?
“The Moroccan government has stated that it wants to reach 80 percent renewable energy. They issue tenders and there is an ability to integrate into this, but there are definitely barriers – including legal barriers.” Attorney Piron’s office is in contact with a French law firm that has branches in Morocco, and there they assist in removing the barriers. One of them is the need for a local representative to participate in tenders. Another barrier is the issue of taxation and the need for a tax treaty between the countries. She explains that the business sector in Morocco Mitzpe for Israelis, and the Bank of Africa even opened a dedicated desk for Israelis in Morocco.
and back to the bay. Despite the lack of diplomatic relations between Israel and Saudi Arabia, Israeli companies are already operating in the kingdom. Eleanor Bakr, Vice President of Business Development at the consulting company Blue Laurel, says that Saudi Arabia is different from the United Arab Emirates in many ways and in recent years – following the 2030 vision of Crown Prince Mohammed bin Salman – its development is exponential.
The Saudis, Bacher says, are not only interested in purchasing products – but mainly in producing them for them. Therefore, they establish more and more factories and branches of international companies. Any international company that wishes to export to Saudi Arabia is obliged to establish a regional headquarters there with local partners.
Great interest in Med-Tech
A prominent field that receives a lot of interest in the Gulf countries is medtech. Galit Peretz, director of the Clinical Research Unit at the Maccabi Community College, mentions the collaboration with the United Arab Emirates in a study on vitamin D deficiency among the diverse Emirati population, following the large number of foreign workers.
“Immediately after the signing of the Abraham Accords, we went to the United Arab Emirates to locate the right parties,” says Peretz. “Health organizations that are similar to us and have the same spark. We have found quite a few partners, they are a partner tailored for us. We have a lot of experience, and we learn a lot from them about the will and the infrastructures.”