UAE-Israel Partnership for Regional Stability Essay

Introduction

The Middle East must rise to the occasion and assume the burden of safeguarding the world against the escalating problems that threaten global peace and sustainability. The United Arab Emirates and Israel are among the foremost jurisdictions in the Middle East, playing a crucial part in the revival of the once-mighty empires of the region. This article examines the present connections between the United Arab Emirates and Israel, identifying areas of cooperation that might benefit the economies of both nations and, by extension, the whole Middle East. This essay aims to examine the causes of the UAE and Israel’s reconciliation, emphasize the sectors of commercial interaction between the two countries, and evaluate how the two nations have sought to realize the anticipated benefits of economic cooperation.

The globe is now confronted with a formidable array of issues, including the resurgence of the COVID-19 epidemic, the climate emergency, the conflict between democracy and authoritarianism, humanitarian disasters, global migration, and transnational terrorism. Countries like the UAE and Israel must strengthen their connection by investing in the principles that characterize human well-being.

The Growth of the Relationship between UAE and Israel

The partnership between the UAE and Israel was built out of a shared desire to shield their respective populations from the harmful impacts of an increasingly unstable global economy. In August 2020, for instance, the Abraham Accords rapprochement between Israel, the UAE, and Bahrain was proclaimed within our collective epidemic crisis. In retrospect, however, it is easy to situate the change within broader regional patterns. In the future, bilateral trade and investment will likely serve as a foundation for collaboration in other sectors. The UAE-Israel accord recognizes the necessity for agreeable investment, with a growing emphasis on a common ground confrontation of third-country markets and other multilateral economic arrangements to advance shared strategic goals.

The relationship is predicated on the desire for the Middle East to redeem itself and emerge as an alternative to failing European powers, particularly in light of the geopolitical concerns caused by Russia’s invasion of Ukraine. While the immediate impetus for the Abraham Accords was an Emirati proposal that the UAE would repair ties with Israel provided Israel abandoned ambitions to annex substantial areas of the West Bank, other variables were also at play. First, the UAE benefited politically from lengthy covert commercial and business connections, some of which were security-related. Increasing alignment on two fronts, including concern about Iran’s disruptive influence in the area and the impression of a U.S. withdrawal from the Middle East in favor of the Indo-Pacific, was also a factor. These benefits give the UAE a strong negotiating position as a regional economic powerhouse.

By signing the agreements, the Israeli government acknowledges that rebalancing toward Asia would strengthen the United States’ dependence on regional partnerships to address localized difficulties. By adopting a more transactional foreign policy in the Middle East, the Biden Administration is signaling a preference for regional solutions than U.S. intervention. Nonetheless, the UAE and Israel fear that U.S. efforts to rebuff Chinese economic and political intrusions in the area may deprive them of investments and technology. According to Israel’s leadership, as economic relations expand and partners diversify, the Israeli government may be able to utilize new economic blocs inside and outside the Middle East.

The Gradual Process and Dynamics of Relationship Growth

Among the governments seeking normalization with Israel, Israel-UAE economic and commercial relations have gained the most traction. Even before the agreements, it was believed that yearly commerce between Israel and the Gulf nations, including the UAE, totaled $1 billion, primarily via corporations in Europe and abroad. UAE-Israel bilateral commerce exceeded a billion dollars by itself by the end of 2021, excluding tourism and investment. Emirati authorities have projected to surpass $1 trillion over the following decade. The two nations have signed hundreds of memorandums of understanding and begun discussions for a free-trade deal (FTA). The dependence on shared technology, backed mainly by the United States, strengthens the economic ties between the two nations.

Today, Israeli technology is of particular importance to the Gulf States. However, the parties desire to develop cooperation in various fields, including agriculture, environment, health, cyber security, and financial services. In a pact that would strengthen ties between the two nations, the UAE has announced intentions to spend $10 billion on Israeli digital firms and large projects. Similarly, the Israeli and Emirati sovereign wealth funds are negotiating a deep water port at Eilat and a pipeline from the Red Sea port to the Mediterranean. These projects interest the UAE and Israel, reflecting the broader Middle Eastern economy’s desire for expansion.

However, Emirati authorities have highlighted that they consider normalization with Israel as part of a more extensive realignment of the country’s foreign policy with its economic ambitions. Former UAE Minister of State Anwar Gargash warned at the Abu Dhabi Strategic Dialogue in November that his nation must not take economic growth for granted. The UAE’s GDP fell by 6% in 2020, with reductions in high-contact industries such as tourism and hospitality driving the fall. While the IMF estimates that Gross Domestic Product (GDP) growth will resume in 2022, there are reasons to believe that growth rates might be significantly impacted by predominating global events, such as the geopolitical turmoil in Europe and the difficulties connected with climate change.

There are areas of shared investment between the UAE and Israel, especially in industries that address societal dynamics, such as real estate and technology. Investors value that traditionally strong growth industries in UAE and Saudi Arabia, such as real estate and infrastructure, have matured. As it concentrates on the same domestic sectors, the growth tendency is anticipated to propel regional development over the next decade. Residential property prices in Abu Dhabi increased by 2.2% from June 2022, whereas they increased by 10% in Dubai. Since 2009, transactions have been registered, with statistics showing that in 2022, the hotel sector saw substantial growth. There are now indications of rivalry from global companies operating in the UAE.

Current Relationship Status

In the Middle East, the ease of mobility of people has increased, creating possibilities for both the working majority and investors. For example, Visa and foreign ownership changes planned by the UAE in 2021 are part of a more significant attempt to recruit and retain highly trained employees who may contribute to the Emirates’ goal of constructing a knowledge-based economy. Today, Israeli I.T. businesses are taking advantage of these prospects. Rapyd, a Tel Aviv-based fintech company, is building offices in the United Arab Emirates (UAE) to recruit an international workforce due to domestic labor shortages. Additionally, the Jerusalem-based venture finance company Our Crowd announced that it would establish a presence in the Abu Dhabi Global Market (ADGM). The organization acknowledges that the incentives would enable the firm to seek funding in the UAE and encourage Emirati and regional start-ups. Such investments have led to the growth of the UAE, in cooperation with Israel, as a champion of the Middle East’s revival as a global leader in times of crisis.

Reasons for the Rapprochement between the UAE and Israel

The increasing mutual goal for prosperity and security in the Middle East, supported by both the UAE and Israel, is motivated by the present global instability and the desire to rebrand the Middle East as a leader in ancient religious and scientific teaching. The partnership between the UAE and Israel involves increasing regional and international economic blocs. To safeguard its position as a regional financial and commercial powerhouse, the UAE is seeking a slew of new trade deals, including the Free Trade Agreement (FTA) with Israel, India, Turkey, Indonesia, and Columbia. Combining Israeli technology and creativity with the project management and logistical expertise of Emirati enterprises, the UAE intends to pursue trilateral or even multilateral transactions with Israel in other nations.

In addition to combining relative knowledge, trilateral partnerships provide both parties with protection and assurance that may not exist unilaterally. In November, for instance, the UAE, Israel, and Jordan struck a water-for-energy agreement in which an Emirati firm would construct a solar power plant in Jordan to provide electricity to an Israeli desalination plant, which will then transfer water to Jordan. As part of a separate water arrangement, Israel agreed a month earlier to a roughly threefold increase in Jordanian exports to the West Bank, granting a long-standing desire that might benefit both the Jordanian and Palestinian economies. The energy investment has contributed to the Middle Eastern economies’ chances for technical penetration into global markets.

In fact, alongside the Abraham Accords, there has been a strengthening of economic and political connections with Israel’s older peace partners, Jordan and Egypt, during the last year. In September, Israeli Prime Minister Naftali Bennett paid an Israeli leader’s first state visit to Egypt in a decade. Israel allowed further gas supplies to Egypt through Jordan in February, strengthening regional energy connections. In the future, further regional energy integration will likely provide prospects for developing into larger European markets. Emirati companies have also entered the market. In December, UAE state company Mubadala acquired a $1 billion interest in Israel’s Tamar gas project, marking the most significant commercial transaction between Israel and the UAE since normalization.

There have been rumors of cooperative ventures between Turkey, the United Arab Emirates, and Israel, which might involve an energy component. During the November visit of Emirati Crown Prince Muhammad bin Zayed, the UAE launched a $10 billion fund for investments in Turkey. In recent years, Turkey and the UAE have taken opposite sides in several regional disputes, from Libya to the Qatar dispute. The visit signified a reconciliation between the two countries. Turkey has recently tried to restore relations with Israel, with whom ties have been strained for over a decade, as well as Egypt and perhaps Saudi Arabia, amidst internal economic chaos, including soaring inflation and the depreciation of the Turkish Lira plus. The stability of Middle Eastern currencies and economies has emerged as a bulwark against the economic misery that affects most global economies.

Beyond the Middle East, the formation of a U.S., India, UAE, and Israeli foreign working group has enhanced the Middle-worldwide East’s supremacy and rebranding as a contributor to global economic stability. Even though some have referred to the group as the “new Quad,” unlike the strategic security discussion involving the U.S., India, Japan, and Australia, its first emphasis will be primarily economic. The UAE and Israel have established strong connections with India, which India is eager to deepen. The UAE and India signed a Comprehensive Economic Partnership Agreement. Greater regional economic integration and establishing supra-regional economic blocs in the Middle East may increase competitiveness in regional markets, as shown by the trends.

Areas of Trade Exchange between UAE and Israel

Over the last decade, the sectors of commercial interaction between the UAE and Israel have increased gradually. Technology and human resources investments have increased over time in the Middle East. In April 2021, for instance, the Israeli business Delek Drilling announced intentions to sell its 22 percent direct ownership in the Tamar gas field to investors headed by Abu Dhabi-based Mubadala Petroleum for $1.1 billion. The Tamar field in the project is anticipated to have reserves of 297 billion cubic meters. The project is Israel and the UAE’s most significant commercial transaction to date. Mubadala Petroleum is a wholly-owned subsidiary of Mubadala Investment Company, the state investor of Abu Dhabi. The UAE and Israeli governments support the intervention plans to enter the upstream gas business in Israel.

Similarly, Israel and the United Arab Emirates have contributed to developing energy and Information and Communication Technology (ICT) in the Middle East. The UAE announced in March 2021 the creation of a $10 billion fund to invest in energy and other essential areas of the Israeli economy. According to the official release, the UAE would invest in energy, manufacturing, water, space, healthcare, agrotech, and other Israeli industries. The investment fund promotes regional economic cooperation between the two nations. The money comes from public and commercial entities, and the Delek agreement is a system component. By the provisions of the non-binding agreement of intent, the $1.1 billion purchase includes Delek’s 22 percent ownership in the tiny, underdeveloped Dalit gas field. The oil industry’s expansion has facilitated the emergence of the Middle East as an emerging human resource sector.

The partnership between the United Arab Emirates and Israel has substantially helped the peace in the more significant Middle Eastern areas. Since August 2020, when Israel and the UAE decided to establish diplomatic ties, trade relationships between the two nations have increased rapidly. The arrangement is best demonstrated in the energy sector, where international corporations were hesitant to cooperate with Israel for many years out of concern about losing access to important Middle Eastern oil markets. In October 2020, an agreement was announced between the Europe-Asia Pipeline Company (EAPC) and the newly founded UAE-Israeli Med-Red Land Bridge (MRLB). The joint venture planned to utilize the EAPC midstream infrastructure to transport crude oil and petroleum products between the Red Sea and the Mediterranean.

The objective is to utilize the land bridge to save time, fuel expenses, and Suez Canal fees. The transaction might be worth $700-$800 million in a few years yearly, and operations could begin in 2021. However, environmentalists have expressed fear that the oil pipeline agreement might damage the unique coral reefs of the Red Sea and cause an ecological catastrophe. Currently, Israel’s government has proposed several interventions. The renewables arm of Mubadala, Masdar, established strategic cooperation with renewable groups to promote renewable energy in Israel. Israel aims to issue its second East Mediterranean Gas upstream round of bids shortly, providing Mubadala with further potential prospects.

The UAE administration knows that even if the Abu Dhabi state business does not participate, its desire to join Israel’s upstream sector should substantially alleviate whatever political worries the other foreign oil corporations may have over-bidding. Delek’s sale of its Tamar holding satisfies its commitment to divest the stake by December 2021, under an agreement with the Israeli antitrust authorities that allowed it and its partner Noble Energy to maintain their majority stakes in the Leviathan field. However, the Abraham Accords untied some of the geopolitical knots that hindered the exploitation of East Mediterranean gas sources. Existing tensions remain between Hamas in Gaza and Israel, although the Israeli energy ministry has taken measures to alleviate the problems.

Mutual Intervention in Harnessing Expected Benefits from Economic Cooperation

Israeli-UAE ties have expanded outside the gas industry to include cultural and technical exchanges. In the five months between September 2020 and January 2021, Dubai provided official data indicating that the Emirates exported $164 million of products to Israel. Primarily, they were lubricants, fragrances, engine replacement parts, smartphones, and diamonds. It primarily imported mechanical, electrical, and computer equipment, diamonds, and fresh fruits and vegetables. Israel’s goods trade with the UAE grew significantly between the first quarter of 2020 and the first quarter of 2021. In the first three months of 2020, Israel shipped items to the UAE for $13.7 million, whereas in the same period of 2021, the value of these exports increased to $33.2 million. The value of imports increased from $15.8 million to $103 million. While the increase in product commerce has been substantial, the increase in services has been more significant.

Israel’s most significant growing industry is high-tech services, which include computer services, fintech, biotech, healthcare water-tech, and agricultural product development. The UAE is interested in these industries as it attempts to diversify its economy and adapt to climate change. Studies have shown that the concept has grown over the last thirty years and is based on the concept of disclosed comparative advantage. RCA indicates that international commerce is regulated by the relative variations in production between nations. Such productivity disparities are difficult to perceive, but they may be “revealed” using trade data to generate an RCA metric. While it may offer a primary indication of an initial estimate of a country’s competitive export strengths, it should be emphasized that national policies that impact competitiveness, such as tariffs, non-tariff measures, and subsidies, are not accounted for in the computation of the RCA.

With the rise of distance-insensitive high-tech services in recent years, the potential for commerce between Israel and the Gulf has increased. Examining which major product categories the UAE’s and Israel’s imports and exports complement each other is a straightforward technique to uncover prospects for bilateral commerce. When a product appears on both the top export list of the exporting nation and the top import list of the possible trading partner, the trade potential is high. Trends indicate that much international commerce happens between nations that produce comparable items. The UAE and Israel import and export substantial quantities of non-oil product categories, including telecommunications equipment, automated data processing devices, airplanes and related equipment, and diamonds. Even though they are prospective rivals in these sectors, commerce still has chances to match product demand and supply within particular parts of these broad product categories or, in the case of the UAE, for reexport.

The UAE and Israel are natural trading partners for various product areas. The UAE is a significant buyer of medical technology, electrical machinery, and equipment, measuring, analyzing, and control equipment, and food, all of which are major exports for Israel. Israel imports automobiles and ships, which the UAE then re-exports. The revealed comparative advantage (RCA) compares a country’s product export share with the same product’s worldwide export share. An RCA larger than 1 shows a comparative advantage over other nations for a specific product category. The UAE has an RCA larger than one in terms of perfumes, plastics, aluminum, cement, and other building products. The UAE offers infrastructure development benefits. The UAE is also a significant ceramics supplier, which falls under the building materials category. In the areas of weaponry and ammunition, medical electro-diagnostic gadgets, chemical goods, and high-tech services, Israel enjoys a significant competitive edge.

According to an analysis of the UAE’s commercial ties, the competitive advantages are dynamic. The interventions evolve through time, and foreign commerce and investment are a source of development. This is particularly true for high technology since Israel is widely recognized as one of the world’s leading high-technology manufacturers. When exports based on natural resources are eliminated, high-tech exports rise to about 50 percent. The UAE’s technological deficit is a potential source of collaboration. While the UAE exports primarily low- and medium-tech and resource-based manufactured goods, it is increasingly acquiring more high-tech products from throughout the globe.

The UAE and Israel leadership recognize the impact of technology in driving growth and impact in contemporary economies. In the last decade, its proportion of high-tech imports has climbed from less than 15 percent to about 20 percent. The intervention aligns with the United Arab Emirates’ efforts to diversify its economy. FinTech start-ups, for instance, are welcome in the UAE’s free zones, and the country is spending extensively on its space program. The United Arab Emirates might benefit from Israeli knowledge in healthcare and agritech via trade or investment with Israeli enterprises.

Recommendations for Future Growth

The UAE Confronting a Multipolar World

To further the expansion of ties between the UAE and Israel, there is a reason for investing in connection with the United States. Current trends indicate that the United States and the United Arab Emirates have a special connection based on decades of partnership in several fields, including counterterrorism, investment, diplomacy, technology, education, and culture. The UAE, along with its five sister GCC countries, has functioned under the U.S. security umbrella since the early 1990s, and there is no indication that this is about to change. In comparison to the previous three decades, this bilateral relationship has been much more balanced and equitable in recent years.

In a world that is becoming more multipolar, the UAE leadership must develop a hedging foreign policy strategy. The intervention works to diversify Abu Dhabi’s network of allies, partners, and friends, therefore preventing the Gulf nation from being too reliant on any one major. By investing extensively in better alliances with China and Russia, the UAE has more power in its relationship with the United States. India has had a minor influence on the UAE’s capacity to achieve more independence from the West. As the Middle East adapts to a new geopolitical order in which global influence is more evenly distributed, the UAE and other GCC countries have spent the last decade bolstering their ties with India. Against the background of many voices in Washington arguing for a U.S. withdrawal from the Middle East or at least a considerable reduction in its responsibilities to the area, the Abu Dhabi-New Delhi cooperation must place a heavy emphasis on commerce, energy security, and the military.

In this period of diminishing American influence in the Middle East/North Africa (MENA), Chinese, Russian, and Indian might be expanding. Washington officials must accept their diminished influence over the Gulf Cooperation Council (GCC) nations. As seen by the conditions in southern Yemen, eastern Libya, and Syria, Abu Dhabi looks far closer to Russian foreign policy objectives in the MENA area. The findings demonstrate that, regarding the embargo of Qatar, the Emiratis are not aligned with any significant global power but instead follow their interests, which in the context of the GCC conflict include numerous ideological components.

Advancing Coexistence Working Relationships and Interfaith and Intercultural Dialogue

The United Arab Emirates, the United States, and the leadership of Israel have undertaken an ambitious agenda to encourage religious and intercultural understanding to advance continuous progress and security in the greater Middle East. During the first meeting of the Trilateral Religious Coexistence Working Group in Dubai, the forum stressed the need to confront religious intolerance and bigotry. As a direct result of the historic Abraham Accords, the group was announced in October of last year at the first trilateral meeting of the foreign ministers of all three nations. It builds upon the recently ended Negev Summit. The meeting guaranteed that the crucial role of the Middle East in an ever-changing global geopolitical and economic climate was addressed.

The Abraham Accords signed to establish ties between the UAE and Israel legally impacted the Middle East’s policies and political climate. Today, the diplomatic breakthrough continues to open doors to a more peaceful and affluent Middle East. The working group anticipates expanding its membership to include other Abraham Accords signatories and governments interested in establishing diplomatic ties with Israel. Working with dedicated governments, organizations, philanthropies, and creative regional leaders, the working group will support various projects in fields like education, youth programming, and religious cooperation. Some of these actions assure collaboration with the global sustainability agenda. These interventions are necessary to deal with the growing worries about the global recession, which must be managed out of the chaos, increasing the chances of global hunger and insecurity.

Conclusion

Global economic and security concerns have compelled expanding the connection between the UAE and Israel. The United Arab Emirates and the State of Israel have established diplomatic ties with the United States under the historic Abraham Accords Peace Agreement. In essence, the Abraham Accords reflect the beginning of a new, realizable vision for the Middle East’s future. Trends show that the Arab people, and Arab youth, in particular, want affluent, stable, and functional support. The UAE-Israel cooperation has encouraged the growth of a multicultural, tolerant, and future-focused society that is a global center for innovation, culture, and commerce.

Today, Arab youth have immense capacities and potential to deliver prosperity to the greater Middle East. The UAE views the Accords as the first crucial step towards a period of peace and security. The UAE government recognizes that the diplomatic, scientific, cultural, and economic potential of the connection with Israel on regional concerns is substantial. These industries include logistics, air transport, tourism, cultural exchange, education, medicine, scientific research, and telecommunications. The coordination of efforts ensures regional stability, which is becoming more important given the global geopolitical and economic dynamics.

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