Israel and the United Arab Emirates signed a free trade agreement earlier this month, Israel’s first with an Arab nation.
The landmark accord, signed in Jerusalem on April 1, was hailed as a “significant and historic milestone” by the co-signer, Israeli Economy Minister Orna Barbivai.
It emerged after five months of negotiations and nearly two years after Israel and the UAE normalized relations under the Abraham Accords.
Prime Minister Naftali Bennett described it as an “important moment” in Israel’s evolving relations with the UAE. He said he and its crown prince, Sheikh Mohammed bin Zayed al-Nahyan, had agreed last December to accelerate negotiations and bring them to a speedy conclusion.
Co-signed by the UAE’s Minister of State for Foreign Trade, Thani bin Ahmed al-Zeyoudi, the agreement underscores the depth and breadth of Israel’s remarkable relationship with one of its new Arab partners.
Israel is also forging significant commercial ties with Bahrain and Morocco, two of the Arab states that joined the Abraham Accords in 2020. But the sweeping cooperative relations Israel has established with the UAE in so short a time remains unmatched and so far unique.
In a reflection of this momentum, there has been a stunning growth in the volume of trade. In 2021, it was about $900 million. Over the next decade, it is forecast to reach more than $1 trillion, according to UAE Economy Minister Abdullah bin Touq al-Marri.
Currently, Israel’s biggest exports to the UAE are agricultural produce, medical equipment, high-precision instruments and cosmetics infused with Dead Sea minerals.
Significantly enough, the UAE is also a buyer of Israeli arms. Seven percent of Israel’s $11.3 billion worth of defence exports last year were bought by the UAE and Bahrain.
Israel’s imports from the UAE run the gamut from raw materials for the plastics industry and iron in all its forms to sand and gravel.
The agreement covers 95 percent of exports and imports and includes e-commerce, the protection of intellectual property rights, customs, services and government procurement. In the future, it may include products like energy and desalinized water.
Israel’s bilateral relations with the UAE — a major international trade hub of the Gulf region, Central Asia and the Far East — are varied and encompass military cooperation, tourism and athletic exchanges.
The UAE decided to normalize relations with Israel after it suspended a plan to annex the Jordan Valley in the West Bank and following a decision by the United States to sell the UAE the F-35 fighter jet, one of the most sophisticated combat planes in its arsenal.
Although the UAE supports a two-state solution to resolve Israel’s conflict with the Palestinians, the UAE leadership did not view it as a paramount issue like Egypt and Jordan, which signed peace treaties with Israel in 1979 and 1994 respectively.
Since then, neither Jordan nor Egypt have had warm relations with Israel. There is grassroots hostility toward Israel in both countries, particularly in Jordan, where two-thirds of the population is Palestinian. The festering Palestinian problem is equally a source of tension in Egypt, which has fought five wars and numerous skirmishes with Israel.
The cold peace that prevails between Israel and Jordan and Israel and Egypt has adversely affected their respective bilateral relations, notwithstanding a recent thaw.
The UAE has not been affected by these geopolitical dynamics for at least two reasons. The UAE has never fought a war with Israel. Nor is it as sensitive to the Palestinian cause as, say, Syria, Lebanon or Iraq.
Due to this factor, plus the ongoing threat posed by Iran’s regional ambitions, the UAE has adopted an exceedingly pragmatic, non-ideological approach to Israel, which is expressed tangibly in the free trade pact.
Expected to take effect after it is officially ratified by Israel and the UAE, the agreement is comprehensive in scope and a bridge, perhaps, to Arab states, such as Oman, Qatar and Kuwait, that do not as yet recognize Israel.
Ohad Cohen, the director of Israel’s Foreign Trade Administration at the Ministry of Economic Affairs and Trade, said it will enable Israel to reach new markets in the Middle East and allow Israeli companies to create regional offices. If managed properly, he told Al-Monitor recently, these offices will be positioned to sell goods to Arab states through the UAE.
Gone are the days when Israel faced the implacable Arab economic boycott.