Israeli Glee on Business Prospects Greeted by Emirati Caution

Send in e-mailSend in e-mail
Send in e-mailSend in e-mail
Sunlight reflects off the Burj Khalifa, the world's tallest building, during a rain shower in Dubai, United Arab Emirates, November 26, 2018.
Sunlight reflects off the Burj Khalifa, the world's tallest building, during a rain shower in Dubai, United Arab Emirates, November 26, 2018.Credit: Jon Gambrell,AP

From a proposed rail link to the Gulf from the Israeli port of Haifa, to quick-hop direct flights from Tel Aviv, the prospect of formal relations with the United Arab Emirates is stirring excitement in Israel since the two countries announced on Thursday they would normalize relations

In the UAE, which Israeli business executives with foreign passports have visited for years, companies that are likely candidates for above-board deal-making with Israel are taking a more cautious line, apparently awaiting government guidance on future policy.

PODCAST: Inside Israel's no-change, no-cost peace deal with the UAE

-- : --

Israeli officials have been quick to play up the economic benefits of the accord, which once formalized would also include agreements on tourism, technology, energy, health care and security, among other areas. Some Israeli and Emirati businesses have already signed deals since Thursday, and several small-scale medical and defense collaborations were announced in the weeks preceding the normalization agreement.

Israel’s Pluristem said on Monday it would partner with Abu Dhabi Stem Cells Center to develop therapies for diseases including COVID-19 and the day before that Emirati APEX National Investment company signed a “strategic commercial agreement” with Israel’s Tera Group

But Emirati state entities and private businesses have been circumspect in discussing investment opportunities before ties are official, with many declining to comment.

Conglomerate Al Habtoor Group, which has several hotels in Dubai, is in talks to partner with Israeli carrier Israir, a spokeswoman said, declining to provide further details. It was too early to discuss expanding the group’s business into Israel, she said.

But Israel’s Aviation Links said Tuesday it would start selling vacation packages to Rixos hotels in the United Arab Emirates.

Aviation, which operates as the Kishrey Teufa travel agency in Israel, said the packages to four Rixos hotels would be available for the Sukkot holiday in mid-October, using flights on Turkish Airlines. Nir Mazor, chief marketing officer of Aviation, said the packages would initially be available to Israelis with UAE entry permits and later to all citizens once the deal is completed.

Abu Dhabi state fund Mubadala declined to comment about potential business opportunities emerging from the deal, and some government departments deferred requests for comment to the foreign ministry.

Israeli Finance Minister Yisrael Katz said official ties with the UAE “could be a basis for a very significant upgrade of Israel’s economy, alongside, of course, the things they need from us – in water technology, agriculture, hi-tech.”

On Israel’s Kan public radio, Katz highlighted the potential for grand, regional transportation projects – “a rail connection between Gulf countries and Haifa Port” – that he said would make Israel the UAE’s “gateway to the Mediterranean.”

Israeli Finance Minister Yisrael Katz speaks while Prime Minister Benjamin Netanyahu looks on, during a factory visit in Beit Shemesh, Israel, August 12, 2020.Credit: Amit Shabi/Pool

Such a railway would have to cross Saudi Arabia, which has no relations with Israel and has so far been silent on its deal with the UAE.

An Israeli delegation is expected to travel to the UAE within weeks to work out the modalities of normalization, a historic shift that could reshape Middle East politics from the Palestinian issue to the fight against Iran.

But there are sensitivities for businesses in openly welcoming Israeli investment in the Arab world’s second-largest economy when public opinion in the Middle East is largely pro-Palestinian. Some in the UAE have called for boycotting Israel over its treatment of Palestinians in occupied territories.

Robert Mogielnicki of the Arab Gulf States Institute in Washington said UAE businesses would carefully gauge regional reactions to the deal to avoid tensions in existing relationships.

“Established UAE companies and family-owned businesses are not going to bet their shirts just to enter Israeli markets,” he said.

Israeli and UAE flag fly on the Peace Bridge, in the seaside city of Netanya, Israel, August 2020.Credit: NIR ELIAS/REUTERS

Israeli investors acknowledge that new trade agreements would likely take time to materialize, but say Israel’s booming high-tech scene and innovations in agriculture would be tough for the UAE to pass up.

Jon Medved, CEO of Israeli crowdfunding firm OurCrowd, said “co-investment talks are ongoing [with Israelis] throughout the Arab world, not just with the UAE,” alluding to Israeli expectations that Bahrain and Oman would follow in normalizing ties.

Tourism could also stand to benefit, some analysts say, though it would take time to kick off given the coronavirus pandemic’s impact on global travel. Prime Minister Benjamin Netanyahu said Monday Israel is preparing for direct flights, over Saudi Arabia, to the United Arab Emirates, but gave no time frame for their start.