Thanks to Arab Boycott, Dubai Meltdown Skips Over Israelis

Israeli tycoons have made investment plans in Dubai, but almost none of these joint ventures worked out.

Thanks to the Arab boycott of Israel, which partially included Dubai, few Israelis have been exposed to the country's financial crisis. Few Israelis export to Dubai, and it seems very few have business connections with the government's Dubai World development arm, which has asked for a six-month moratorium on interest payments on its $59 billion in debt.

That does not mean that many Israelis did not try to do business in Dubai. Many made all sorts of connections and investment plans, but almost none of these joint ventures worked out.

Beny Steinmetz and Idan Ofer visited Dubai many times, but they are not worried. Nochi Dankner's only exposure is through his investment in Credit Suisse.

The only real questions among Israeli tycoons involve Yitzhak Tshuva and Lev Leviev. Tshuva is involved in a joint venture in Singapore between his U.S. Elad Group and Dubai World, which along with a Singaporean firm is building a $1.77 billion real estate project. The project includes offices, hotels, luxury apartments, shopping centers and entertainment facilities.

Lev Leviev owns two jewelry stores in Dubai, and apparently helped establish the Dubai diamond exchange.

"Anyone involved in the business world has known for six months that Dubai is tottering," said an Israeli businessman with interests around the globe. "It is no wonder that the world crisis has reached them. They have no oil and they live on international trade and debt. There are insane real estate projects there, including artificial islands and extremely exhibitionistic buildings. Luckily, Israelis did not succeed in creating significant business dealings with Dubai, so the relationship between a few tycoons and the Dubai investment fund will not impact the Israeli economy," he said.

"There were several attempts by Israeli construction companies to participate in their large real estate projects, but it is not clear what came of those contacts," said an Israeli businessman knowledgeable about Israeli activities in Dubai.

Israel exported to Dubai only indirectly via other countries, said Dan Catarivas, the director of the Division of Foreign Trade and International Relations of the Manufacturers Association. He said Israeli companies built small, portable desalinization plants there in cooperation with American firms. In addition, software companies tried to build Internet infrastructure through American and European firms, but had little success, said Catarivas. Israeli farmers also cooperate with Jordanian farmers to export fruits and vegetables to Dubai, he said.

Israelis are allowed into Dubai only with a foreign passport, in general. There is an unofficial Israeli representation in Dubai, which helps Israelis receive the necessary approvals, but each visit requires special approval from the local authorities.

In January 2008, Idan Ofer told TheMarker: "The big money is in the Gulf, and anyone who doesn't understand that will have a difficult time doing business in the future with the West," referring in particular to the huge state investment funds of the oil-producing Arab countries.