On Tuesday, the Jewish state and an Arab nation—Israel and the United Arab Emirates—agreed to free trade between the two countries, a ground-breaking, first-of-its-kind deal. The comprehensive free trade agreement was signed in Dubai, as Israel and the UAE continue to build on the foundation laid by the Abraham Accords just two years ago.
This just goes to show that when the UAE shows displeasure with Israel—it means nothing. Last week the UAE “condemned” Israel for “provocative violations” at the Temple Mount. That was literally four days ago. One day later, this agreement was announced. If I had to guess, there is an unwritten agreement that they understand what we are dealing with when it comes to terrorism and Islamic fanaticism, and we understand that they have to pretend to be upset about it. But in truth, the UAE is quickly becoming our strongest ally in the Middle East.
Bilateral trade between Israel and the UAE is currently estimated to be $1 billion annually. Thanks to this pact, it could be 10 times that amount within the next five years. Each country has agreed to exempt customs on 96 percent of traded commerce, some of which will happen immediately. This would cover agricultural products, food, medical equipment, cosmetics, medications, and more.
“The free trade zone agreement which we signed this morning is expected to strengthen bilateral trade, to break down obstacles, and to advance new economic opportunities and partnerships that will serve as a basis for our shared path,” said Israeli Economy Minister Orna Barbivay. Barbivay went to Dubai to sign the historical document with her counterpart, UAE Minister of Economy Abdalla bin Touq Al Marri.
In a tweet on Tuesday, Israeli Prime Minister Naftali Bennett thanked Sheikh Mohamed Bin Zayed, president of the UAE, for making history twice—first with the trade deal and second with the speed of reaching an agreement.
“At the summit in Sharm el-Sheikh about two months ago, Sheikh Muhammad bin Zayed and I agreed with each other that ‘what takes 5 years, can also be done in a few weeks,’ and instructed the teams to work at top speed.”
In all, it took about five months and four rounds of negotiations to hammer out all the details for both sides, according to the Economy Ministry of Israel. But the two countries have been on the path of a growing friendship since the Accords.
“Throughout the last year and a half, we have proven what can be achieved when differences and arguments are put to the side… We have no doubt that this agreement will lay the path to a new era of economic prosperity in our region,” said UAE Minister of State for Foreign Trade Thani Al-Zeyoudi.
The economy of the United Arab Emirates is sizeable—the second largest in the Arab world, ranking just behind Saudi Arabia. They import hundreds of billions of dollars’ worth of goods each year and are particularly interested in technology, one of Israel’s greatest strengths. This deal is expected to pave the way for an increased Israeli business presence in the UAE, with as many as 1,000 Israeli companies opening offices in Dubai or elsewhere in the country before the end of 2022.
Israel’s Arab neighbor to the south, Egypt, has also recently stepped up its trade with Israel. While the two countries have had a peace agreement since 1979, and security ties are strong, economic ties have been weak.
But recently, Israel and Egypt have developed a plan to increase their bilateral trade over the next three years to $700 million annually. There are plans underway to develop a regional logistics center to increase commerce flow (where Israelis and Egyptians would work side-by-side). There is also talk of joint green energy projects and an increase in Israeli imports of food and construction materials, as well as exports of technologies and agricultural concepts (how to increase production when you live in the desert!). And, both countries hope to increase the number of direct flights, which would be good for tourism and business.
Two years ago, Israel embarked on another historic first—exporting natural gas to Egypt from the Leviathan and Tamar fields in the Mediterranean. A 10-year deal was signed for $15 billion.
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