Gem of a deal: how Accords unified UAE and Israel

Reuters/Anuj Taylor

• Trade expected to rise to $3bn by end of 2023
• Food, agtech, medical devices and comms biggest growth industries
• Diamond trade soared to $1.75bn, up 163% from 2021

It is almost three years since the Abraham Accords brought together the UAE and Israel in a partnership in which trade was always central to the proposition.

Amir Hayek, a former president of Israel’s hotel association, was appointed Israel’s ambassador to the UAE in a nod to the importance of economic diplomacy. A free trade agreement was signed after just six months, the quickest in Israel’s history.

Sectors from tourism to tech, agriculture to diamonds have benefited from the partnership.

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Hayek has made it his business to deliver weekly reports to the Foreign Ministry in Jerusalem, detailing the progress of his key performance indicators (KPIs). 

“For us as an embassy, good relations mean tangible numbers and KPIs we can measure,” he said. “We’re treating it as a business.”

Trade, investment and tourism initiatives are logged. Last year private trade reached $2.56 billion, excluding software, putting the UAE at number 16 out of Israel’s 126 trading partners.

In the first four months of 2023 trade reached $990 million. The expectation is that this will rise to around $3 billion by the end of the year.

Such numbers are ahead of projections, said Hayek. He predicts that within two to three years the UAE will be among Israel’s top 10 trade partners. 

The biggest growth industries so far are fresh food, agtech, medical devices and communications.

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In total, investments worth around $3 billion have been signed off since the accords. These include state-owned Mubadala buying a 22 percent stake in Israel’s Tamar offshore gas field in a $1.1 billion deal.

There are government investments too, such as the $10 billion fund announced in 2021 aimed at strategic sectors in Israel including energy, manufacturing, water, space, healthcare and agtech –  the use of technology in agriculture, to improve yield, efficiency and profitability.

Encouraging manufacturing investment in joint ventures with UAE companies is now at the top of the ambassador’s to-do list.

“It’s much easier to hire labour, find better priced raw materials and access new markets,” Hayek said.

“It also creates jobs and there’s a spillover of knowledge, education, creativity, innovation and entrepreneurship, and that creates huge value for both sides.”

Diamond sector unites the nations

Ahmed Bin Sulayem, CEO at Dubai Multi Commodities Centre (DMCC), has played a central role in building ties. Almost 100 companies from Israel have registered with DMCC across sectors from energy and food to financial services, shipping and logistics. 

Diamonds are DMCC’s largest sector of bilateral trade – unsurprising given that the UAE and Israel are both major players in the gemstone industry.

Companies in the precious metals and stones sector represent nearly a third of the Israeli businesses registered in DMCC.

“Trade is soaring in the UAE and Israel has played a significant role in this,” said Bin Sulayem.

“When we look at the diamond sector, the UAE witnessed impressive growth over the past three years, with the rough diamond trade rising 72 percent and polished by 50 percent.”

Diamond trading between the UAE and Israel reached $805.6 million last year, representing a 21 percent increase from 2021. Trade has benefited from the elimination of tariffs on diamonds and precious stones in the free trade agreement.

There has also been collaboration in healthcare, food and security. In 2021 Israel’s Aviv Clinics opened in DMCC.

DMCC

Tourism needs to move both ways

Tourism between the two countries has expanded since the post-pandemic reopening, with around 1 million Israelis visiting the UAE.

“Unfortunately the numbers to Israel are still much lower and we will work to correct this number as well,” Hayek told AGBI.

“Tourism is one of the most important tools to bring people together. Tourism, culture, people to people, is the base for everything.”

Alex Supinski, owner of Salam Dubai Travel, was one of the first Israelis to set up shop in Dubai, even before direct flights began in late 2020. Supinski now has 20 freelance guides and drivers and five full-time staff to manage a monthly average of 2,000 Israelis taking trips from desert safaris to city tours. 

“Israelis love the UAE, they love the five-star hotels,” he said. “They love the hospitality, the food, restaurants and shopping.

“They do desert buggy and yacht tours, and when they’re here they spend a lot of money.”

Long-term goals

The US-brokered accords were led by the UAE and followed by Bahrain and Morocco, but the two latter countries have not yet achieved the same numbers as the Emirates. 

The long-term goal of the free trade agreement is to add $1.9 billion to the UAE’s GDP by 2030, and advance bilateral trade by more than $10 billion within five years. 

Both parties benefit from lower or eliminated tariffs, access to export markets and investment.

Industries such as energy can grow, said the DMCC’s Bin Sulayem, as can sectors such as hospitality, financial services, digital trade, distribution and construction.

“The link between Dubai and Israel brings about efficiencies, cost savings and investments,” he said.

“We’ve seen an uptick not only in the diamond sector, but also in crypto, tea, gold and more.”