The treaty’s most immediate and tangible impact is economic in nature, begging the question; do the Accords offer true normalisation or merely a good business opportunity?
From the Israeli perspective, the two are not mutually exclusive. Normalisation has always been Israel’s ultimate strategic objective. Discreet yet rapidly warming relations with Gulf neighbours over the past decade can in large part be attributed to Israel’s strong position in the defence, cybersecurity and technology sectors. It is no secret that the UAE and Israel have long-standing security and economic ties — Israel even opened a diplomatic mission in Abu Dhabi in 2015 — and the general consensus is that those ties extend much further into the Gulf. A shared opposition to Iran has helped reorient the Gulf states towards Israel, incentivising (and likely expediting) a previously untenable public-facing alliance.
The removal of economic barriers has already had an immediate impact on both the public and private sectors in Israel. In October 2020, Israel, the UAE and the US (both a backer and a broker of the Accords) launched the Jerusalem-based Abraham Fund which is expected to deliver more than $3 billion to investment and development initiatives across the region. The Abu Dhabi Investment Authority is set to open a Tel Aviv office and is actively seeking local partners for technology investment opportunities.
Bi- and tri-lateral funding deals are already in the works, with The Financial Times reporting that Israel expects to finalise investments worth up to $500 million in the coming months. In November 2020, Maniv Mobility became the first Israeli venture capital fund to invest in an Emirati company. Flights between Israel, the UAE and Bahrain are now operating and a tourism boom in all three countries is widely anticipated.
Crucially, the economic benefits to the wider Middle East stand to exceed those to just Israel, the UAE and Bahrain. The treaty has already revived serious conversation of a Haifa-Gulf railway and pipeline as an alternative to the Suez Canal. The Red-Med Canal is also being revisited as is the Red-Dead hydroelectric plant. Increases in tourism and trade will likely spill over to the rest of the region. Sudan and Morocco have already moved towards normalisation with Israel and other countries will undoubtedly follow suit.
For those looking to capitalise in the short-term, risks remain. The formal channels for investment and development between Israel and new-found allies, are nascent, largely undefined and untested. It is unclear if the Israeli government will be able to keep up with market demand and consumer interest, especially faced with a lack of a budget and yet another election.
Also of concern are potential inconsistencies in the interpretation and application of the Accords frameworks. In November 2020, the UAE agreed to sell Israeli wine produced in the Golan Heights. Yet the following month Bahrain announced that it would not allow the import of Israeli goods produced in the West Bank and Golan Heights, contradicting earlier statements.
This tension underlines one of the main criticisms of the treaty — that it has failed to address the underlying geopolitical issues. Specifically, most Middle Eastern countries have historically viewed the resolution of the Israel-Palestine conflict as a necessary prelude to the establishment of any formal relations with Israel. Yet the Accords and its exclusion of the Palestinians indicate that the region’s focus has shifted — as does Israel’s developing relationship with Saudi Arabia.
The true breadth and scope of the Israel-Saudi Arabia alliance remains the subject of much speculation. Saudi Arabia, perhaps more than any other Middle Eastern country, stands to benefit the most from a formidable regional ally with unparalleled security, defense and technology capabilities. It is hard to imagine that the UAE and Bahrain did not, at a minimum, seek the tacit approval of Saudi Arabia before agreeing to the Accords. What remains to be seen is if the Accords will ultimately create the space necessary for a wider Israeli-Arab coalition.
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