Israel signs trade deal with UAE, largest with any Arab country

The flag of Israel is flown alongside the flag of the United Arab Emirates on a roadside in Netanya, Israel, Monday, August 17, 2020.

Kobe Wolf | Bloomberg | Getty Images

DUBAI, United Arab Emirates — Israel and the United Arab Emirates signed a multi-billion-dollar free trade agreement on Tuesday, the latest culmination of a historic 2020 normalization agreement between the two countries, known as the Abraham Accords.

The trade pact’s stated goal is to boost annual bilateral trade to more than $10 billion over the next five years, the largest trade agreement ever between Israel and any Arab country. It covers 96 percent of trade between the two Middle Eastern countries, which reached $885 million last year, according to Israel’s economy minister.

To illustrate the sheer speed and scope of trade between the UAE and Israel since the two countries established formal relations in August 2020, the bilateral figures are more than double the value of Israel-Egypt trade in 2021 ($330 million) – since 1979 Since then, Israel and Egypt have signed a peace agreement.

After months of negotiations, Israeli Minister of Economy and Industry Orna Babiwai and her counterpart Abdullah bin Tuk Al-Mari, UAE Minister of Economy, signed the agreement in Dubai.

UAE Trade Minister Tani Al Zeyoudi tweeted that the signing opens a “new chapter in Middle East history”. “Our agreement will accelerate growth, create jobs, and usher in a new era of peace, stability and prosperity across the region.”

For Jon Medved, CEO of crowdfunding platform OurCrowd and a venture capitalist in the Israeli tech world, trust between the two countries is key to seeing more investment.

“Trust is not something you can build in a month or two, but I think there is tremendous goodwill,” Medved told CNBC’s Dan Murphy before the deal was signed. His company has already invested in the UAE, employed staff in the Gulf region and obtained regulatory status in the UAE Free Zone Abu Dhabi Global Market.

“While I don’t think trust is something that happens right away at your fingertips, I think steps are being taken to build trust at the political level and at the human level, which will lead to extraordinary business opportunities,” Medved said.

The signing of the agreement comes amid renewed violence between Israelis and Palestinians.

Thousands of Israeli nationalists surrounded the Al-Aqsa compound in Jerusalem, Islam’s third holiest site, on Monday, chanting anti-Muslim slurs, some physically attacking Palestinians and others for harassing a Palestinian. Palestinian journalists arrested for spraying tear gas. Demonstrators gathered to commemorate Israel’s occupation of the Old City of Jerusalem in the 1967 Six-Day War.

The UAE foreign ministry condemned the “attack” on the Al-Aqsa compound by “extremist settlers under the protection of the Israeli army” in a statement on Monday. It also held Israeli authorities “responsible for reducing escalation and ending all attacks and practices that keep tensions going.”

Other towns in the West Bank Also saw violence and attacks on houses A group of Israelis in a Palestinian neighbourhood. More than 160 Palestinians were injured, some of them by live ammunition following counter-protests, According to the Palestinian Red Crescent Society.

Israeli Prime Minister Naftali Bennett condemned the extremist act and vowed to arrest anyone involved.

On Monday, media invited to the trade deal signing were told they could no longer participate, noting that no reason was given for the sudden change, Reuters reported.

Al-Aqsa, located in the Arab-majority Old City of East Jerusalem, has been annexed by Israel since 1967 but has not been recognized internationally. Israel’s occupation of Palestinian territories is classified by the United Nations as a violation of international law.

The growing economic relationship between Israel and the UAE, a Muslim state that officially supports Palestinian statehood, has so far been largely unaffected by the two countries’ political differences over the Israeli-Palestinian conflict.