Trade

Trade flourishes between Israel and Arab states

July 2, 2024, 8:56 AM

Traders shaking hands at the Israel Diamond Exchange. Diamonds are among the items that have not been greatly affected by the conflict in Gaza

Gaza conflict has little apparent impact
Bilateral dealings with Egypt up 166%
Trade with Bahrain up almost 1,000%

Israel’s trade with Middle Eastern countries including Egypt, Morocco and Bahrain grew in the year to the end of May despite regional tensions and the Gaza war, a think tank report has revealed.

The figures, compiled by the Abraham Accords Peace Institute (AAPI), rely on data from Israel’s Central Bureau of Statistics.

Israel’s trade with Bahrain rose to $54 million in the first five months of 2024, a 933 percent increase from the same period in 2023.

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Bahrain’s parliament, which has no authority over foreign policy, issued a statement last November saying the ambassadors of Israel and Bahrain had departed the countries to which they were accredited and economic ties had been cut, Reuters reported.

Trade with Morocco also jumped, rising 124 percent in May over May 2023 and 64 percent for the five months, reaching $53 million.

The Israeli drone manufacturer BlueBird said in April it had established a production site for unmanned aerial systems in Morocco.

The two states also signed a $500 million agreement last year for the supply of missile systems from Israel Aerospace Industries.

In May, US tech company Oracle said it wanted to establish a branch of Oracle Labs, its advanced research division, in Casablanca, citing the Abraham Accords as a factor in the decision.

Trade between Israel and the UAE fell in May 2024, however. It was down 4 percent year on year to $284 million.

Egypt remained a major partner. Trade was up 166 percent in May and up 59 percent over the first five months of the year. Israel is a major supplier of gas to Egypt.

Trade with Jordan showed mixed results, with a small increase in May but a 17 percent decline for the first five months.

Fleur Hassan-Nahoum, co-founder of the UAE-Israel Business Council and Israel’s special envoy for innovation, told AGBI: “Bilateral economic ties remain strong and enduring, and we expect a continuation of the impressive bilateral trade of the past several years, despite a slight downturn over the past couple of months due to regional developments.

“Israelis continue to see the UAE as the indispensable market of the region, offering unparalleled trade, transport and logistics ties to the greater Middle East, the subcontinent, South Asia and beyond.”

Hassan-Nahoum said the main exports from Israel, such as diamonds, telephone parts and TV monitors, had not been greatly affected. Imports, including diamonds, oilseeds, mobile phones, cereals, organic chemicals and perfumes, also continued as usual.

Some sectors have been affected, however.

“The sectors which have been negatively impacted include tourism, as well as energy companies, logistics firms and retailers hit by delays due to disruptions to shipping lanes related to the war,” Hassan-Nahoum said.

Israel agreed last week to double its natural gas exports from the Leviathan reservoir, but experts warn that tensions with Hezbollah and a potential escalation in Lebanon may undermine expansion plans.

'Win-win economic co-operation'

The AAPI policy team told AGBI that despite the monthly dip, the 8 percent growth in trade between the UAE and Israel between January and May reflected the “stability of the Abraham Accords and the continued importance of win-win economic co-operation for both countries and for the region”.

The Abraham Accords were initiated in 2020 by the US. Under them, Israel established diplomatic relations with the UAE, Bahrain, Sudan, Kosovo, Mauritania and Morocco.