OPINION: Abraham Accords will have profound impact on both our economies

The Abraham Accords, which normalized the diplomatic relationship between Israeli and the UAE, will have a profound impact on both economies.

The first area is trade, where the flow between Israel and the UAE, based on the advantages that each country enjoys, is a two-way street. We are already seeing the first deals. Israeli medical technology firm Sight Diagnostics signed a distribution partnership with the UAE’s Phoenix Capital in December, a classic trade agreement where Israeli technology will gain access to Gulf markets through a local partner.

The UAE’s DP World, which operates Dubai Ports, a global shipping hub, announced a partnership in September with Israel’s DoverTower and plans to collaborate with Israel Shipyards to bid on the privatization of Haifa Port. DP World is much more than a port operator. It is a global leader in providing end-to-end supply chain and logistics, from maritime ports and mainland terminals to marine services and industrial parks, as well as technology-driven customer solutions. DP World runs a global network of 127 business units in 51 countries across six continents. Bilateral trade flourishes when it is reciprocal.

The second main impact on both economies will be investment flows. Both nations are rich and, more importantly, already plugged into the global investment networks. The value of the relationship is not in the financial capital but in the comparative expertise in deploying that capital.

Israel is known as the Startup Nation. This is not just due to Israel’s apparently endless supply of entrepreneurs but also due to the financial risk-taking culture of its investors. The UAE has made great strides in supporting entrepreneurs and its open work borders have allowed it to attract entrepreneurs from all over the world. A new investment channel into the UAE, with a source in Israel which is geographically close, and the willingness and experience to deploy that capital into multiple rounds of a broad spectrum of startups, will be key to unlocking the UAE’s entrepreneurial ecosystem.

The UAE also has experience in infrastructure investing. Much of the UAE’s investment comes from sovereign wealth funds and part of their mandate is to act as an endowment for future generations of Emiratis. This means that long-term investments, with a relatively low risk / low return profile are a natural fit for sovereign wealth fund portfolios. Mubadala Infrastructure Partners, for example, invests in emerging markets. The Abraham Accords makes Israel a potential investment destination for such funds.

But by far the greatest potential lies in Israeli and Emirati investors and businesses collaborating to scale domestic business globally. Neither nations are strangers to global trade, but Israel’s comparative advantage in the US and Western European markets and the UAE’s comparative advantage in East Asia mean that Israel-Emirati joint ventures will form the foundation for domestic businesses to scale globally. This requires a shift in mindset from seeing the two countries as destination markets to realizing that they are gateways to the Western and Eastern hemispheres. A simple example is tourism. Both countries have made their mark in terms of global tourism, each with different strengths. Imagine if Israel and the UAE were presented as a single destination package. Add to that the strength of Israel’s technological innovation and couple that with the strength of the UAE’s travel and hospitality sectors and my bet is that the post-covid world of tourism will be led by an Israeli-UAE joint venture with Israel and the UAE as the core destination.

Success will come when Emirati and Israeli investors and businesses work co-operatively to connect, understand, and finally synthesize a working business model, building on the best that each partner brings to the table.

• Sabah al-Binali, a veteran investor and entrepreneur based in Abu Dhabi, is UAE Venture Partner and Head of Gulf Operations for Israel’s OurCrowd venture investment platform.