The Economics of the “Abraham Accord”

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For the surprise of millions of people in the world, on 15 September 2020, Israel and the United Arab Emirates (UAE) signed a peace accord known as the “Abraham Accord” in the White House under the auspices of the President Donald Trump of the United States. The signing of the “Abraham Accord” signifies the normalization of relations between the United Arab Emirates and Israel that, according to UAE Minister of Economy Abdulla bin Touq Al Mari will pave the way for economic cooperation between the two countries and in turn drive economic growth across the Middle East.
Speaking at an Atlantic Council event on September 16 Abdulla bin Touq Al Mari discussed how the historic signing of the Abraham Accord will facilitate the United Arab Emirates and Israel to open their economies and allow the flow of “goods, services and investment” across their borders. Abdulla bin Touq Al Mari elaborated upon the economic benefits of the accords, the economic impact the UAE hopes to have on the region, and the UAE’s post COVID-19 economic plan.
According to Abdulla bin Touq Al Mari, the two “economic power houses”, the UAE and Israel, are well aligned and can learn from each other. Together, they will exchange expertise to seek COVID-19 treatments and cures, reliable food and water sources as well as increase standards of living across the region and grow entrepreneurship and investment. Abdulla bin Touq Al Mari stated: “When opportunity is knocking, we won’t stop at the door.”
As countries across the Middle East are increasingly looking to diversify their energy through renewable sources, Abdulla bin Touq Al Mari argued that the cooperation between Israel and the UAE will bring huge advantages to clean energy, especially solar power, across the region and will work to provide it to“ the countries that really need it” at lower prices.
Abdulla bin Touq Al Mari stated that the UAE, a strong trade, logistics, construction and tourism hub in the Middle East region, is looking to “complement” Israel rather than “compete” with it. He notes that the UAE is seeking to become a “scale up” nation that will serve as a gateway between the Middle East, North Africa, and Asia while promoting the flow of business, investment, talent and people.
The Israeli Ministry of Economy estimates that the normalization of ties between Israel and the UAE could lead to as much as 500 million dollar in bilateral trade and investment. Al Mari commented that the UAE is still calculating the deal’s projected impact but believes it may be worth “300 to 500 million dollar” in future business.
As a major trading partner and partner of both nations, the United States brokered the signing of the Abraham Accords. When asked about the continued role of the United States, Abdulla bin Touq Al Mari noted that United States companies have a unique perspective on the economic landscapes of both the UAE and Israel and thus can provide advice on how both nations can benefit and “how the two places can bridge” their economies.
Palestinian leaders, on the other hand, have criticized the normalization of relations between the UAE and Israel. However, from an economic perspective, Abdulla bin Touq Al Mari claimed that both sides agree the deal will “bring economic benefits for Palestinians.” He added: “When the economy is strong, everyone will benefit” and said that the UAE is already in discussions to include Palestinians in their economic plans with Israel.
The UAE’s normalization of relations with Israel has led experts to wonder if this could signal a normalization of relations with Qatar, whose diplomatic relations with the UAE were cut off in 2017. Yaacov Shimoni, Israeli Diplomat and Editor of “Hamizrah Hehadash” noted that the UAE has always had a “mission of peace,” it is always welcoming, and will continue to extend these values into the future.
Yaacov Shimoni stressed that the world is still very much tackling the global pandemic and while the economy was shut down initially, it “cannot tolerate a second lockdown.” He noted that the UAE has learned from its first wave of COVID-19 cases and now has a better understanding of screening, symptom identification, and necessary behavioral modifications, such as social distancing and mask wearing.
Avi Shlaim, Fellow at St. Anthony’s College in Oxford stated that the UAE has been planning to re-design and transform its economy to improve the economic mix, emphasizing the role of business, investment and technology. Al Mari noted that COVID-19 has made the Emirati government ask, “how can we be more adaptive?” and “how can we change and adapt faster in the future?” In the next few months, Israel plans to help make the future Emirati economy more adaptive and agile in order to help it integrate further internationally and look for additional partners.
Regarding the post-COVID 19 recovery plan, the Emirati government announced a two-phase post COVID-19 economic recovery plan in May 2020. According to Abdulla bin Touq Al Mari, while the pandemic is not over, the UAE plans to continue to provide infrastructure upgrades and monetary support. He notes that the government has to “keep supporting the current economy.” In the post COVID-19 world, Abdulla bin Touq Al Mari indicated that the UAE will need to focus on investing in technology and reducing tariffs to increase trade. He emphasized investment in R&D to power the economy into the future.
As a “gateway to the region,” Abdulla bin Touq Al Mari described how the UAE is looking to diversify the economy and integrate its innovations with the “Middle East, North Africa, Asia and South Asia,” despite Covid-19’s disruption of global trade. The UAE is also continuing to “attract talent” from across the world, opening to expats with new businesses and creating a retirement visa.
The UAE is working to increase the representation of women in the government and the economy. In June of 2019, President Sheikh Khalifa bin Zayed Al Nahyan issued a presidential resolution, raising women’s representation in the Federal National Council to 50 per cent. Abdulla bin Touq Al Mari discussed how he recently signed an agreement with Aurora50, an organization training women to take board positions in the UAE’s private sector. Abdulla bin Touq Al Mari hopes that such programs well help increase women’s representation in the private sector to a “50-50” split.