For decades, Israeli inventions in desert agriculture, healthcare, communications, and other critical sectors didn’t have a direct pipeline to millions of potential customers in neighboring countries.
Geopolitics forced the flow of innovation to be directed much farther afield, with a few droplets trickling closer to home through a tangle of third-party connections.
In the eight months since Israel began the process of normalizing relations with the United Arab Emirates and Bahrain, and later with Sudan, Morocco, and Bhutan, however, the knots blocking the channels for exchange of goods, information and expertise have been quickly unraveling.
People in Abu Dhabi and Dubai are studying Hebrew. Keffiyehs and kippahs are equally represented in myriad new professional and social forums. Etihad and El Al are crossing the same flight paths. Deals are being signed and investments made.
The next FedTalk sponsored by the Jewish Federation of Northern New Jersey will explore the seismic regional shift set into motion by the Abraham Accords.
The speaker is Ze’ev Lavie, vice president for international relations and business development at the Federation of Israeli Chambers of Commerce, Israel’s biggest and oldest business association.
Mr. Lavie said that when he flew to Bahrain with Israeli and American officials last September, it was the first time he’d ever taken off from Ben-Gurion International Airport and headed east. He marveled at Israelis’ sudden ability to travel over the vast sands of Saudi Arabia in airspace formerly forbidden to them. “I think one of the wonderful things about the Abraham Accords is how it changed the way we look at our region and Arabs in general,” he said.
“Israelis have had a certain type of encounter with Israeli Arabs and Palestinian Arabs, and haven’t had encounters with other Arabs, especially in very modern and developed countries like the UAE, which has an interesting and inspiring vision.”
His FedTalk will focus on the Abraham Accords’ regional economic implications for Israel, with an emphasis on tourism, investment, and trade with the UAE.
“The Emiratis are saying, ‘We have become one of the top 10 developed countries,’” Mr. Lavie said. “‘Now we want to solve the world’s problems — big issues like climate change and food security.’
“And guess what: Israel has been doing that for 70 years out of necessity because we had to be self-sustaining. This brings a lot of synergies to Israel and the UAE.”
Although Israelis face competition from Asian, European, and American companies already doing business in the UAE, “This is a huge event for Israel,” he continued. “We’re talking about a country that is the Singapore of the Middle East. It’s the only advanced and innovative economy in the Gulf region, similar to Israel. All the things they need — agricultural technology, health-tech, mobility solutions — Israel is good at.”
The implications for Israeli business are huge, according to Mr. Lavie, who visited Dubai last October.
“Until now, Israel was never part of its own region,” he pointed out. “Every major trading partner of a country is usually a neighbor, like Canada and Mexico to the United States. But Israel is part of Europe, not the Middle East. This is the first time we are actually connected in our own region.”
The UAE economy is based on its connectivity to the populous nations of the east, Mr. Lavie said. Dubai’s port of Jebel Ali is the largest seaport west of China.
Although Israel has been building business ties with India and China in the past few years, “this is a regional event with wider implications for Israeli companies than can be achieved on a bilateral level,” he continued. “Free trade zones in Dubai give Israeli manufacturers and high-tech companies access to nearly 3 billion people” throughout Asia.
In addition to the opportunities for creating logistic sea, air, and land trade corridors to bring Israeli goods and services to the Gulf region and Asia, opportunities abound for investment in technologies for supporting infrastructure, from water and energy to railways and tourism.
Mr. Lavie said both sides see the budding relationship through a slightly different lens. “In the first month after the Abraham Accords were signed, the Israeli business community took this like a gold rush and ran to buy shovels. We quickly evolved to get more insights into the potential and the limits and how the Emiratis see Israel.
“I would say they are more curious while we’re more excited. They’ve heard of the ‘startup nation’ and it was like a forbidden fruit for so many years. Now they are very happy to do business with us. In Israel, people feel an emotional charge to finally be able to go there.”
Sultan Ahmed bin Sulayem, one of Dubai’s leading businessmen and chairman of Dubai’s Ports, Customs and Free Zone Corporation, said in a government report: “The start of the engagement between UAE and Israel is set to be a turning point in the economic and investment relationship between the two countries with mutual trade expected to grow to AED15 billion in the next few years, generating more than 15,000 jobs.” (One U.S. dollar equals 3.7 Emirati dirham.)
According to Dubai Customs statistics, its trade with Israel from September 2020 to January 2021 reached AED1 billion and a volume of more than 6,000 tons. Imports were valued at AED325 million, exports at AED607million, and transit trade — using Dubai as a hub — at AED98.7million.
Dubai’s main imports from Israel include vegetables and fruits, diamonds and flat screens, high-tech devices, and medical and mechanical devices. Dubai’s exports to Israel include diamonds, smartphones, engine parts, perfumes, and industrial lubricants.
Bahrain is “a whole different ballgame,” Mr. Lavie said. “It’s different from the UAE in many aspects, including the composition of its society.”
Mr. Lavie traveled to Bahrain with a delegation headed by then U.S. Treasury Secretary Steve Mnuchin. Bahrain, he learned, is the only country in the Middle East, other than Israel, that has a free trade agreement with the United States. Its proximity to Saudi Arabia can serve as a gateway for Israeli trade. In addition, he said, “The Bahrainis have a lot of motivation to create verticals like financial industries; they aim to be a global financial hub.” Israel has a strong fintech sector that is certain to figure into this equation.
Bahrain also has water and agriculture issues that Israeli products can solve. Tourism will be another area expected to get a boost in both directions.
Tourism is the biggest area that will be affected by the renewed normalization of Israeli relations with Morocco, Mr. Lavie said.
Many Israelis, perhaps as many as a million, are of Moroccan ancestry. Morocco had the largest Jewish community in North Africa until 1948, when the establishment of Israel triggered riots and started the exodus of about a quarter-million Jews by 1967, the majority coming to Israel.
“This is a country with a long historical background with the Jewish people; we are not starting from zero,” Mr. Lavie said. “If you look at the spectrum of history, Morocco gave more safe harbor and opportunities to Jews than did other western countries.”
Although Israelis have been able to travel to Morocco, until the Abraham Accords it was not possible for them to fly there directly. The trip now will be easier, faster, and cheaper. And Moroccans may start seeing Israel as a vacation destination once the pandemic ends and Israel reopens to foreign visitors.
Business travel in each direction is sure to benefit from a strategic partnership agreement the Federation of Israeli Chambers of Commerce recently signed with largest economic organization in Morocco.
“I spoke with my counterpart there and he said, ‘I’ve never seen so much enthusiasm by businesspeople to go to Israel,’’” Mr. Lavie said. “We see how businesspeople on both sides are super interested. There are a lot of verticals they can work together on, such as energy and agriculture.”
Who: Ze’ev Lavie, vice president for international relations and business development at the Federation of Israeli Chambers of Commerce
What: Will deliver an online FedTalk for the Jewish Federation of Northern New Jersey on “Abraham Accords: The Path to a New Middle East — What’s happening now and what comes next”
When: Sunday, April 25, 10 a.m.