UAE-Israel annual trade expected to hit $5bn within two years

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News that bilateral trade between the United Arab Emirates and Israel amounted to more than $1 billion during the first quarter of this year is “no surprise” to a senior Emirati official involved in spearheading relations between the two countries.

As Israel relaxes its pandemic travel restrictions and investment funds begin to enter the market that figure is set to rise to $5 billion annually within two years.

Speaking at the World Economic Forum in Davos this week, Dr Thani Al Zeyoudi, the UAE minister of state for foreign trade, said deals between UAE and Israel had reached $2.5 billion since the two countries, along with Bahrain and the United States, signed the Abraham Accords peace agreement in September 2020.

Al Zeyoudi added that more than 65 deals and preliminary agreements had been signed between Israel and the UAE and their Business Council had reported that more than 1,000 Israeli companies will be operating in the UAE by the end of this year.

He predicted that annual trade is likely to reach $5 billion in the “upcoming few years”.

Seasoned Emirati investor Sabah Al-Binali, executive chairman of OurCrowd Arabia, who was appointed to his role with the world’s largest global venture investing platform just weeks after the signing of the Abraham Accords, said these predictions were possible within two years.

“The expected growth, I don’t think it’s much of a surprise,” Al-Binali said.

“I actually think that the growth will be exponential over the next few years, as the two economies and markets get to know each other better and learn how to work with each other more.”

“I believe that [growth] will happen. It might not be today or tomorrow, but within, let’s say the next two years, I expect that to happen.

“In particular, with Israel closed for a long time with Covid … you’re just going to see more and more trade as people absorb each other’s cultures,” he said.

Israel shut down its borders to foreigners in March 2020 but from March 1 this year it has allowed entry to all tourists, regardless of whether they are vaccinated or not.

OurCrowd, which also has offices in Sydney, Toronto, San Diego and New York, in November became the first Israeli venture capital company to be granted a licence by the Abu Dhabi Global Market (ADGM), the city’s main international financial hub.

Four months later it announced plans to open an artificial intelligence-based research and development centre in the UAE capital by early June, employing about 50 engineers.

Al-Binali said the project was “at the final stages” and details would be announced soon.

In March Al-Binali said that some observers were initially overly optimistic about the level of investment flow that would start straight after the signing of the Abraham Accords, not realising that it takes time for large investment funds to adjust their global strategies.

“No investor who is entering into what is, for them, a new market, is going to immediately just give you money,” Al-Binali said.

“They need to understand the market, especially large professional investors such as wealth funds, they have asset allocation strategies.”

He added it was unrealistic that once the Abraham Accords were signed that “within one year you’re going to see massive amounts”. However, he now believed that this has begun to change.

OurCrowd revealed in March that six companies within its portfolio were looking to set up in Abu Dhabi, including an Israeli medical tech company. Al-Binali said these opportunities had progressed but were still being studied. 

“It’s not just about setting up for investment,” he said. “They see enough value there already for them to now really get down to crunching numbers and seeing how they can make it work, because they understand that [the UAE] is a gateway to massive markets.”

With nearly a quarter of a century of experience in financing, building and exiting companies, Al-Binali’s remit with OurCrowd extends across the entire Arab region and he believes that opportunities for Israeli companies exist in other Gulf states, including those who have not yet signed up to the Abraham Accords, especially Saudi Arabia.

“On the business side, they’re open to the idea,” Al-Binali said. “And in general, I found them open to the idea, open to having sort of initial discussions.

“Now, with the leadership, that’s a policy thing. I have no idea if or when [that will happen].”