Economic Ramifications of the 'Abraham Accords' - Israeli - UAE/Bahrain Peace Agreements
Updated: Oct 10
The United Arab Emirates (الإمارات العربية المتحدة ) is a federation of seven emirates - the capital Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain. The UAE's population is about 9.6 million, with 1.5 million citizens and 7.8 million expatriates. The UAE's GDP was 414.2 billion USD in 2018. Mohamed Bin Zayed is heir to the throne of the Emirate of Abu Dhabi and the man responsible for economic developments of recent years.
Bahrain (مملكة البحرين), is small archipelago made up of 40 natural islands and 51 artificial islands. Bahrain's population is over 1.2 million, of which around half are non-nationals. Area is 780 square kilometers , capital and largest city is Manama GDP was 38.2 billion USD in 2019.
The economic impact as we see it will come mainly from the following:
1. UAE/Bahrain investment in Israeli business ventures
Large Emirati venture capital firms (VCs) are looking for new places to invest as their local real estate market and economy have suffered recently. Some large funds will be looking for businesses ripe to buy whole.
The UAE's economy is very open to international trade, and is mainly based on exports, which account for almost half of its GDP. Efforts to diversify beyond oil succeeded, and now oil accounts for only one third of the the UAE's GDP. The Arab market for advanced technologies is worth hundreds of billions of dollars annually.
As a recent example and possibly the 'first out of the gate' - UAE-based Mohammed Al Beloushi, CEO of Barker and Booth Commercial Agency LLC, is to invest in Israel's Fintica, who have over 200 patents, (AI enhanced predictive analytics for wealth and asset managers) to fund its activity in the UAE. RutmanIP is currently helping Israeli companies register patents at the UAE.
2. Israel exports to UAE/Bahrain and vice versa
There is significant export potential for Israel in the UAE and Bahrain, and via those to other Arab countries. Conversely, the UAE may benefit from having the first Gulf businesses in the new Israeli market. The UAE is also potentially a new workplace for Israeli professionals such as academics and others hired by UAE entities, as Israel is a small country with many educated professionals and the UAE constituting a destination for foreign talent over the last couple of decades. Israeli businesses may benefit from a nearby market in such areas as the food industry, desalination and water saving technologies, information technology, and advanced agriculture.
3. Israeli tourism in the UAE
In 2017, nearly half of all Israelis traveled abroad. The UAE could be a huge destination for Israelis. India and east Asia are top destinations for Israelis, and if Emirates Airlines begin flights to Tel Aviv, their existing connections to multiple cities in India and other parts of Asia through Dubai and Abu Dhabi could be highly sought by Israeli travelers.
4. Emirati students at Israeli universities
Israeli universities could be a good fit for Emirati students, because already more than 15% of students at Israeli universities are Arab, and the schools have all the religious and cultural amenities Emirati students might expect.
Israel has two universities listed in the world's top 250, four in the top 500, and six in the top 800, more than any other Middle Eastern country. Gulf citizens would integrate easily while working or studying in Israel
5. Oil supply for Israel and sales for the UAE
Currently Israel sources Kurdish oil from Iraq, which travels via Turkey. Oil from the UAE's Adnoc would be an economic and strategic opportunity for Israel and the UAE can obtain a new oil customer consuming 240,000 barrels of oil per day (as of 2015), about $3.5 billion USD worth.