OPINION: New UAE-Israel trade deal can last the sands of time

The Sand Curtain between Israel and the United Arab Emirates (UAE) has come down – and there is no better proof than the free trade agreement the two nations signed last month, the first of its kind between Israel and an Arab country.

Never has a free trade deal been concluded so quickly. Negotiations were wrapped up in less than half a year, a fraction of the norm. Such pacts are also usually reserved for allies of long standing. So its swift completion, less than two years after the sides normalised ties by signing the Abraham Accords is testament to both nations’ commitment to building on that momentum.

One thing is clear: this free trade agreement will not only influence the economies of two Middle Eastern countries. It has implications for the entire region, if not the entire world. Over time, other countries will join the Abraham Accords, which have also been signed by Bahrain, Sudan and Morocco.

Other countries will also enter into free trade agreements with Israel. Once you’ve brought down the Sand Curtain, it doesn’t go back up.

This year, bilateral trade between Israel and the UAE is expected to reach $4 billion (£3.2bn) – with the first quarter already booked with $1 billion. These are incredible sums for two markets that until recently had been largely closed to each other.

The UAE’s minister of economy, Abdulla bin Touq, has said he aspires to $1 trillion in bilateral trade within the decade. That’s far, far more than either of us ever imagined when the normalisation pacts were signed in September 2020.

Yet the amount of activity that’s going on is measured not only in dollars, but also in the kinds of deals that are taking shape.

What’s happening increasingly is that Israel and the UAE are developing products together, and not just investing in each other’s markets. Cybersecurity, medical technology, food technology and energy are just some of the sectors where co-operation can yield fantastic results.

Our challenge is to work together to jointly build businesses that can be leaders on the global stage, and not just regionally. We
will hit our full potential when we have companies that have both Israeli and Emirati shareholders.

Right now, Israeli businesses are working to tap the UAE’s vaunted planning and logistical expertise to scale up their own storied entrepreneurship, taking advantage of the Gulf nation’s position as a trade hub to penetrate the wider region and south-east Asia more quickly.

Israeli businesses are working to tap the UAE’s vaunted planning and logistical expertise to scale up their own storied entrepreneurship.

Within a six-hour flight from the UAE, businesses can reach four billion people. Close to a dozen Israeli companies in our portfolio alone are already studying prospects for expanding operations in the UAE to access other markets.

In recent days, there have been indications that normalisation efforts are widening, with media reports about Israeli businesspeople exploring potential opportunities in Saudi Arabia. That is completely natural and to be expected. It’s a force of nature. Business ties between the Emirates and Saudi Arabia are close, and we can expect Saudi businesspeople will watch, learn and try to position themselves for if and when relations with Israel open up.

At times, Israel and the UAE may find themselves at odds on various political issues, but that won’t change the trajectory. Something as big as the Abraham Accords was years in the making.

It was also stress-tested last year by the conflict between the Gaza Strip and Israel. But we need a long-term perspective when talking about historic changes in our region. The policy shift was deeply thought out, and we believe we will see a lot of resilience.

This free trade agreement – a step toward creating the right infrastructure between the two markets – has created a momentum that’s inexorable. There’s no going back.