Trade between Israel and the United Arab Emirates and Bahrain – the two Muslim nations that signed the Abraham Accords with Israel on Sept. 15, 2020 – has grown and flourished in the past two years.
Although still low compared to Israel's trade with China, the United States or Europe, the volume is trending upwards.
According to Israel's Ministry of Economic Affairs, trade between Israel and the Gulf countries reached $1.4 billion in the last half year alone, not including the service sector – which adds another $200-300 million – or military exports, which are classified.
In 2021, trade between Israel and the Gulf countries reached about $1.2 billion including services.
Israel's Ambassador to the United Arab Emirates Amir Hayek estimates that trade between Israel and the UAE will reach as much as $5 billion three years from now. And the free trade agreement signed in May is expected to catapult trade even further to possibly $10 billion in five years. According to the agreement, tariffs will be removed or reduced on 96% of goods traded between the two countries.
"The results of this agreement are very tangible. We are working to expand this cooperation to other countries, in the Middle East, Africa and India. The goal of the Abraham Accords is to bring prosperity to all the inhabitants of this region," said Emirati Minister of Trade Thani Al Zeyoudi. "Once the results of this agreement can be seen by all, other countries will want to mimic its success."
According to Ohad Cohen, head of the Foreign Trade Administration in Israel's Ministry of Economic Affairs, Israel's trade with the UAE is growing much faster than with other countries.
Nevertheless, unrealistic expectations on the part of Israelis following the Abraham Accords also led to some misunderstandings.
"Many people thought that they would find money trees lining the streets of Abu Dhabi and Dubai," Cohen said. "Unprecedented numbers of delegations made pilgrimage to the UAE, but many of the participants had no realistic appreciation of what the UAE had to offer.''
Zeyoudi explained the initial learning curve.
"The Israelis thought that money would flow easily from here, but the fact is that business is business," Thani Al Zeyoudi, said, referring to the differences in culture and social norms between Israelis and Emiratis. "In order to receive our investments and cooperation, there needs to be a tangible product that has proved itself."
In fact, some of the most significant investments by the UAE – such as a $10 billion investment fund promised by President Mohammed bin Zayed to former Prime Minister Benjamin Netanyahu – came to a halt because of political chaos and bureaucracy in Israel.
Furthermore, Hayek says that Emiratis are not interested in startups, but prefer to invest in large infrastructure projects, something they haven't found in Israel perhaps because China runs so many of them.
"They [Emiratis] would, for example, be happy to build an off-shore airport," Hayek said. "They have experience with that. Or they would invest in creating a new off-shore neighborhood for Tel Aviv, similar to Dubai's Palm Jumeirah neighborhood.''
In addition to trade, tourism between the two countries has grown. Almost half a million Israelis visited the UAE since the inception of the Abraham Accords.
In addition, travel agencies in both Europe and the United States now market package tours that include visits to both Israel and the UAE, contributing to a boost in tourism to both countries.
This article originally appeared on ALL ISRAEL NEWS and is reposted with permission.