On August 13, Israel and the United Arab Emirates (“UAE”) signed an agreement mediated by US President Donald Trump. Under the Israel-UAE peace agreement, Israel and the UAE are to establish full diplomatic relations, with the UAE becoming the third Arab state to recognize Israel. Bahrain has followed suit and is establishing full diplomatic relations with Israel as well.
Symbolically this deal has massive implications, but the most tangible practical result of peace between the countries will be the economic opportunity. This first official step forward provides hope that there will be further agreements between Israel and its other regional neighbors.
While the agreement with Bahrain undoubtedly holds great importance, the bulk of the economic opportunity will likely arise with the UAE. A key focus of these discussions has been the meaningful business synergies the alliance will create. These include:
Israel, who currently relies on imported crude from Iraq will be able to source oil regionally as the Gulf country is close in proximity. The UAE would become the first Arab oil producer to officially supply crude to Israel.
On the flip side, Israeli companies have pioneered green energy technology while the UAE is constantly striving to increase the share of renewable energy in its portfolio, going forward this could be a fruitful area of cooperation as the energy transition gathers pace.
Trade & Investment
The UAE is an international center for both Arab and western corporations. The opportunities that will arise for Israeli firms are huge, and could dramatically boost Israel’s exports, to the UAE, and via them to other countries. The UAE will also reaffirm its position as a global financial hub that now includes greater ties with Israeli companies and banks.
The UAE is a global leader in technology and innovation, taking several strides to be at the forefront of this sector. The partnership with Israel is welcomed as it is a leader in this field, with several high-tech Israeli companies already bringing their expertise to this area. Most prominent in recent months has been the UAE’s interest in supporting and gaining access to Israeli research into a vaccine and treatment for COVID-19.
At present, more than 15% of students at Israeli universities are Arab. Israel can offer Emirati students the chance to enroll in highly esteemed university programs with the option to remain close to home. The strengthened ties between the two nations, will foster the exchange of knowledge, whether it is students or research as well as promote cultural ties and religious tolerance, marked most recently by the new synagogue scheduled to open in 2022 in the UAE.
Citizens of both countries, each mere hours from one another, will get to experience the offerings of some of the Middle East’s most exciting artistic and culinary cultures. Both nations also claim some of the most compelling architectural and archeological wonders of the world.
The opening will give the UAE’s biggest carriers the chance to drive passenger traffic through their airport hubs in Dubai and Abu Dhabi, respectively, connecting to destinations farther east and west.
This bilateral tourism will also facilitate Muslim pilgrimage to Muslim holy sites in Israel.
A promising future
With collaborations in energy, trade, tourism, technology and financial investment, between the UAE and Israel is estimated to reach $4 billion within 3 to 5 years.
In summary, this agreement speaks volumes of the vast opportunities for enhanced and broader international commerce in the Middle East.
The writers are Nexia International contact partners for their respective firms in Israel, the UAE and Canada – Nexia International is a leading, global network of independent accounting and consulting firms.
To learn more about how Israel-UAE peace agreement could provide your business with new opportunities, reach out to one of our team members today.
Managing Partner, Strauss Lazer & Co. (Tel Aviv, Israel)
Managing Partner, Sajjad Haider & Co. Chartered Accountants (Dubai, United Arab Emirates)