The Economic Benefits of the Israel-Emirati Peace Deal

The peace deal between the UAE and Israel is the first between Israel and an Arab country in 26 years and the first ever with a Gulf country. Whilst this deal carries large political significance, as the Middle East shifts its antagonism toward Iran, and away from Israel, there are also marked economic benefits as a result of the normalisation of ties between the two nations. Firstly, the UAE’s chief export of oil has found a new and avid customer in Israel, the largest non-petro economy in the Middle East. Additionally, both countries have lively tourism industries that could benefit from the injection of travellers from their neighbouring countries. Finally, Israel’s status as the ‘Silicon Valley of the Middle East’ could substantially benefit from a swathe of Emirati investment. The timing of these benefits is advantageous, with both countries experiencing high unemployment and sizeable contractions in their GDP. Thus, the normalisation of ties between these two nations, which have been adversaries in two wars, could be the Good Samaritan story of the 21st century.


The significance of oil in the future of the Emirati-Israeli relationship cannot be underestimated. Ellen Wald of the Atlantic Council’s Global Energy Center observed that “Israel would benefit greatly if it can purchase UAE oil, and the UAE will benefit if it can sell to a hungry customer”. Access to the UAE’s oil supplies is increasingly important to Israel, whose primary oil supply comes from the Kurdish section of Iraq which is becoming fraught with uncertainty due to its shipping route through Turkey, a country progressively taking a more adversarial stance toward Israel. Therefore, normalisation of ties with the UAE offers Israel a significantly more reliable and cheaper supply of oil on which they can base their energy policy for years to come. Emmanuel Navon, at the Jerusalem Institute for Strategy and Security confirmed this when he said “Oil from the Gulf is closer, which lowers the cost of imports” and will ultimately help in the “geopolitical struggle with the Iranians and the Turks”. Conversely, Israeli custom opens up a large market to the UAE. Israeli oil use averages around 250,000 per day, all of which is imported. With oil prices at all-time lows and the UAE competing in an extremely saturated market, the unique prospect of exporting it to Israel among its fellow OPEC gulf nations gives the nation an edge in the market and will bolster the UAE’s flagging economy in the wake of the large contractions caused by COVID-19.


The promise of reciprocal investment between the two nations is another benefit. The most obvious industry in which this would take shape is tourism. The UAE offers the urban opportunities of Dubai whilst in turn Israel offers the sea-side metropolis of Tel Aviv as well as the religiously significant city of Jerusalem which contains the Al-Aqsa mosque compound, Islam’s third holiest site.  Additionally, exposure to the Israeli travel industry could reignite the UAE’s aviation sector which has struggled under the pressure of the COVID-19 pandemic. Furthermore, this could allow the UAE to overcome the monopoly held by Turkish and Jordanian Airlines on Israeli passengers and establish itself as a transit hub to Asia for the Israeli population.


Furthermore, the Israeli Economic Minister estimated that exports to the UAE could equal $300-500 million, a one thousand-fold increase from the pre-normalisation figure of $300,000. UAE investments in Israel were predicted to amount to up to $350 million a year. The main recipients of this investment are said to be medical and high-tech companies. This prediction appeared justified as the Emirati APEX National Investment Company and Israel’s Tera Group, two pharmaceutical companies, recently signed an agreement to cooperate on research and development related to COVID-19, including testing devices. Cinzia Bianco, a research fellow at the European Council on Foreign Relations observed that ‘The Emiratis admire Israeli competitive advantage and know-how in the cyber and hi-tech sectors, and they absolutely want to get access to said know-how, as a very forward-looking leadership’. If this is to be believed, then Israel, the start-up capital of the Middle East, is soon to be provided with fresh impetus by one of the world’s richest economies that has a per capita GDP of $69,000.


Ultimately, there are a plethora of opportunities that await both nations in light of the normalisation of ties. The Israeli-Emirati relationship is a fitting one, with Israel providing a willing customer base for Emirati oil and tourist attractions whilst the latter, as one of the world richest economies per capita, can supercharge the high-tech economy of Israel with investment. This deal is one that could not only bring peace in the Middle East, but with it, prosperity.


By Isaac Price

Senior Editor: Rolake Akinyande

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