Arab youth’s negative stance on Israel challenges trade growth

• 88% of young Arabs described Israel as an enemy
• UAE-Israel economic agreement to advance trade beyond $10bn
• Palestinian-Israeli conflict not resolved by Abraham Accords
• Rapyd is first Israeli company to be regulated in the UAE

Israel is still seen as an enemy by the majority of young Arabs, despite the thaw in relations after the signing of the Abraham Accords in 2020.

The sentiment could impact future business growth projections, experts have said. 

Eighty-eight percent of Arab youth described Israel as an enemy or somewhat of an enemy, according to the findings of the 14th Annual ASDA’A BCW Arab Youth Survey, which interviewed 3,400 young Arabs aged 18 to 24 in 17 states across the Middle East and North Africa (MENA).

Two years after signing the Abraham Accords, the UAE and Israel are on track to see $3 billion worth of bilateral trade this year.

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For decades after Israel’s founding in 1948, Gulf countries, including the UAE shunned the Jewish state in solidarity with the Palestinians expelled to create it.

The signing of the Accords – named after Abraham to emphasise the shared origin of belief among Judaism, Islam and Christianity – between Israel, Bahrain, the UAE, and Morocco, marked the first public normalisation of relations between an Arab country and Israel since that of Jordan in 1994.

Mohammed Sinan Siyech, non-resident associate fellow in the Strategic Studies Programme at the Observer Research Foundation (ORF) in New Delhi, said the negative Arab youth sentiment could bear some impact on future business growth.

“At the end of the day, youth are always idealistic,” he told AGBI.

“That said, when it comes to bread and butter, they then end up going into the mode where they need to do what they need to do to survive and expand.

“There will be some people who will never compromise ideologically. There will be others who will view this as a new avenue to explore.”

He added: “For Israel, any business with Arabs due to the Abraham Accord is good. It’s just that it won’t be able to reach 100 percent of the growth potential, since some Arabs won’t trade with them.”

In May, Israel forged a free trade deal with the UAE, its first with an Arab country, under which customs duties were eliminated on 96 percent of products, such as food, cosmetics, medical equipment and medicine, and includes regulation, customs, services and government procurement.

The UAE-Israel comprehensive economic partnership agreement (CEPA) is expected to advance bilateral trade beyond $10 billion within five years and add $1.9 billion to the UAE’s GDP within the same time period. 

Total UAE exports are expected to increase 0.5 percent by 2030.

“The Accords did not resolve or address what most people in the region see as the elephant in the Arab-Israeli arena and that is the Palestinian-Israeli conflict,” said Merissa Khurma, director – Middle East Program at The Wilson Center in Washington DC. 

“This is the lens through which most Arabs see the issue. People-to-people interactions will help overtime through trade and economic exchanges, to see Israel differently, but if people in the region continue to see how Israel’s continued occupation of Palestinian Territories is impacting Palestinians, these attitudes won’t change much. 

“That’s not to say that the Palestinian-Israeli issue tops their agenda of what is most important to them – in most cases it’s jobs and their economic well-being.

“But when asked about it, the prevailing narrative that reflects the developments on the ground in Israel and Palestine, is what triggers this response.”

On Tuesday, Israel’s Economy Ministry said Israel and Bahrain have also begun negotiating a free trade agreement, although the two nations also normalised diplomatic relations in 2020.

While economic ties with the UAE took off, Israel’s trade with Bahrain has lagged behind.

“Across Arab countries, only minorities support their governments normalising diplomatic relations with Israel,” said US-based Giorgio Cafiero, CEO and founder at Gulf State Analytics. 

“In some Arab countries, the percentage of the population in favour of normalisation under current circumstances is very low.

“The position that the Palestinian issue must be resolved prior to formalising relations with Israel remains extremely popular, which speaks to the point that the Palestinian issue remains important to the Arab public in general.

“This factor is giving the leadership of some Arab states, such as Saudi Arabia, reason to move very carefully and slowly on the normalisation front rather than immediately follow in the UAE, Bahrain, and Morocco’s footsteps.”

Earlier this month, an official delegation from Abu Dhabi arrived in Tel Aviv, featuring representatives from heavyweight names such as Abu Dhabi Global Market (ADGM), Mubadala, ADNOC, Abu Dhabi Investment Office, Abu Dhabi Department of Culture and Tourism, Abu Dhabi Chamber and First Abu Dhabi Bank.

Three milestone memoranda of understanding were signed to explore and enable various business opportunities in the financial world.

Ittai Ben Zeev, the chief executive of the Tel Aviv Stock Exchange (TASE), called for increased investment from Israeli and Emirati investors in each other’s exchanges to boost liquidity.

Rapyd, Israel’s highest-valued unicorn, which reached a $15 billion valuation this year, opened its office in the Dubai International Centre (DIFC) in June, becoming the first Israeli company to be regulated in the UAE.

Rapyd’s office in Dubai is planning to create more than 120 jobs within the next 18 months.

Arik Shtilman, Rapyd’s CEO and co-founder, said the company is also eyeing financial technology acquisitions in the Middle East and North Africa (MENA).

“Our problem is that currently our ability to do acquisitions in the region is limited because the company is Israeli-based, so we can buy in the UAE but in some other countries we are very limited,” Shtilman said. “But we are looking actively.”

The Arab Youth Survey covers five Gulf Cooperation Council states (Bahrain, Kuwait, Oman, Saudi Arabia and the UAE), North Africa (Algeria, Egypt, Libya, Morocco, Sudan and Tunisia), the Levant region (Jordan, Iraq, Lebanon, Palestinian Territories, Syria) and Yemen.

Do you consider (country) an ally or enemy of your country?
(showing percentage among all)