# UAE plans long-term economic ties with Israel despite political strains Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-04-04 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: UAE-Israel Alliance: Overcoming Political Turbulence for Meta Description: Discover how the UAE's economic ties with Israel are weathering political storms, paving the way for strategic partnerships in finance, energy, and more. URL: https://financedigest.com/uae-plans-long-term-economic-ties-with-israel-despite-political-strainshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-04-03t150649z1lynxmpej320mortroptp4israel-emirates-trade-1736814200692-compressed.jpg) By Rachna Uppal and Lisa Barrington DUBAI (Reuters) -The United Arab Emirates’ commitment to a long-term strategic relationship with Israel should survive political turbulence, analysts say, after one of the most right-wing governing coalitions in Israel’s history prompted widespread anger. A series of recent moves and comments by Prime Minister Benjamin Netanyahu’s government has infuriated the public in much of Arab world, and drew condemnation from the UAE, including over Israeli settlement policy in the occupied West Bank. However, [economic and trade cooperation – a key driver](https://www.financedigest.com/the-impact-of-economic-indicators-on-financial-markets-understanding-the-key-drivers.html "The Impact of Economic Indicators on Financial Markets: Understanding the Key Drivers") of the UAE’s 2020 normalisation of relations with Israel which broke with decades of Arab policy towards the Palestinian cause – has deepened. On Saturday a [Comprehensive Economic Partnership Agreement](https://www.financedigest.com/aon-announces-agreement-to-acquire-risk-management-firm-creating-a-comprehensive-cyber-risk-management-advisory-group.html "Aon announces agreement to acquire risk management firm, creating a comprehensive cyber risk management advisory group") (CEPA) between the countries entered into effect, removing or reducing tariffs on more than 96% of products, UAE state news agency WAM said. Signed in May 2022, and deemed a “historic moment” by the UAE ambassador to Israel, it is Israel’s first free [trade agreement](https://www.financedigest.com/santander-signs-a-new-agreement-with-yes-bank-to-boost-uk-india-trade-and-local-business-networking-opportunities.html "Santander Signs A New Agreement With Yes Bank To Boost Uk-India Trade And Local Business Networking Opportunities") with an Arab state. UAE energy giant ADNOC last week announced it was part of a $2 [billion](https://www.financedigest.com/petrofac-hitachi-energy-receive-14-billion-agreement-from-tennet.html "Petrofac, Hitachi Energy receive billion agreement from TenneT") joint bid for half of Israeli offshore natural gas producer NewMed Energy. This would follow the purchase in 2021 by [Abu Dhabi’s](https://www.financedigest.com/first-abu-dhabi-bank-reiterates-not-eyeing-offer-for-standard-chartered.html "First Abu Dhabi Bank reiterates not eyeing offer for Standard Chartered") Mubadala Energy of a 22% stake in Israel’s Tamar gas field for about $1 billion. (The NewMed Energy bid) demonstrates a long-term [investment in Israel’s energy sector](https://www.financedigest.com/invest-in-infrastructure-to-escape-the-starvation-cycle-warns-leading-nonprofit-sector-strategist.html "Invest In Infrastructure To Escape The ‘Starvation Cycle’, Warns Leading Nonprofit Sector Strategist"), which shows how strategic the relationship has become,” Neil Quilliam, associate fellow at Chatham House, and co-author of a new report on Israel–UAE normalisation, told Reuters. And it ties in UAE interests into [European energy](https://www.financedigest.com/european-governments-spend-half-a-trillion-euros-on-energy-crisis-report.html "European governments spend half a trillion euros on energy crisis – report") security, which will act as a ballast against the EU’s strong push on net zero targets,” he added. The UAE was the first Arab state to open diplomatic [relations with Israel in almost](https://www.financedigest.com/aonponemon-report-almost-four-times-more-budget-is-being-spent-on-property-related-risks-vs-cyber-risk.html "Aon/Ponemon report: Almost four times more budget is being spent on property related risks vs. cyber risk") three decades in a U.S.-brokered deal, which also included Bahrain, known as the Abraham Accords. The pact was driven by [shared concerns](https://www.financedigest.com/shares-rise-but-concern-mounts-over-inflation-flare-up.html "Shares rise, but concern mounts over inflation flare-up") about Iran and is part of a broader regional realignment of alliances. But political [developments have tested](https://www.financedigest.com/the-arbovirus-testing-market-gloat-over-organic-development.html "The Arbovirus Testing Market Gloat Over Organic Development") the diplomatic relationship. In addition to Israel’s settlements decision, which the UAE condemned, Israeli Finance [Minister Bezalel Smotrich saying](https://www.financedigest.com/british-doctors-strikes-risk-patient-safety-minister-says.html "British doctors’ strikes risk patient safety, minister says") there was no such thing as a Palestinian people prompted anger across the Arab world. This comes against the backdrop of huge domestic strife in Israel over judicial reforms, and [Prime Minister](https://www.financedigest.com/britains-queen-elizabeth-will-appoint-new-prime-minister-at-balmoral.html "Britain’s Queen Elizabeth will appoint new prime minister at Balmoral") Netanyahu, who headed the previous government when the Abraham Accords were signed, has yet to visit the UAE. The UAE Ministry of Foreign Affairs and International Cooperation did not respond to a request for comment on [political strains](https://www.financedigest.com/australia-covid-numbers-hit-a-peak-as-omicron-outbreak-strains-domestic-politics.html "Australia COVID numbers hit a peak as Omicron outbreak strains domestic politics") on the relationship. Israeli government [officials said the bilateral relationship was “growing stronger” and referenced the recent trade deal](https://www.financedigest.com/eu-us-working-on-deal-to-make-ev-minerals-eligible-for-tax-credits-eu-official.html "EU, US working on deal to make EV minerals eligible for tax credits -EU official"), when asked why Netanyahu had not yet visited. COMMERCIAL PUSH Israel, largely [cut off economically](https://www.financedigest.com/dollar-skids-after-soft-u-s-economic-data-impact-of-opec-cuts-fades.html "Dollar skids after soft U.S. economic data; impact of OPEC+ cuts fades") and politically from its Middle East neighbours, sees the relationship as a way to access new commercial opportunities in the Gulf and beyond. The UAE is advancing cooperation with Israel in the finance, energy, security, technology, and water [security sectors](https://www.financedigest.com/what-does-good-look-like-for-legal-sector-it-security.html "What does ‘good’ look like for legal sector IT security?"). Recent [moves to push ahead on trade and investment](https://www.financedigest.com/investment-advice-moving-towards-a-new-model.html "Investment advice – moving towards a new model") signal to businesses on both sides that political strains should not dampen appetite for economic ties. Bilateral non-oil trade volumes between the two countries [reached over $2.5 billion](https://www.financedigest.com/td-other-banks-reach-1-35-billion-settlements-to-end-stanford-litigation.html "TD, other banks reach .35 billion settlements to end Stanford litigation") in 2022 and the UAE hopes to grow this to $10 billion by 2030. “Israeli politics are definitely difficult and there are a lot of ups and downs. But the Abraham Accord is a strategic decision, it will continue despite whatever goes on in Israel,” Abdulkhaleq Abdulla, a political commentator in the UAE, said. Dubai International Chamber, which opened a Tel Aviv office in December, [says there are already about 1,000 Israeli businesses operating](https://www.financedigest.com/britain-sets-5g-goal-says-no-magic-number-of-operators.html "Britain sets 5G goal, says no ‘magic number’ of operators") in the UAE. On Thursday, Israel also [announced an additional](https://www.financedigest.com/atlas-residential-and-rockspring-announce-completion-of-additional-102-homes-at-bow-square.html "Atlas Residential and Rockspring announce completion of additional 102 homes at Bow Square") seven weekly flights between the two countries on top of the dozens already operating. The Israeli CEPA is part of a wider UAE strategy towards [global partnerships to bolster](https://www.financedigest.com/sp-global-acquires-firm-to-bolster-capability-to-track-commodity-shipments.html "S&P Global acquires firm to bolster capability to track commodity shipments") and diversify its economy. A meeting of the [strategic I2U2 grouping](https://www.financedigest.com/incentive-fm-group-announces-latest-strategic-me-acquisition.html "INCENTIVE FM GROUP ANNOUNCES LATEST STRATEGIC M&E ACQUISITION") of India, Israel, the UAE, and the U.S., an economic cooperation [group created last year](https://www.financedigest.com/scottys-little-soldiers-become-incentive-fm-groups-chosen-charity-in-three-year-partnership.html "Scotty’s Little Soldiers Become Incentive FM Group’s Chosen Charity In Three Year Partnership") – still went ahead in February in the UAE. “There are going to be stresses and strains in the relationship and even cause to question its durability,” Chatham House’s Quilliam said. No matter how bad things get though, the [economic dimension of the partnership](https://www.financedigest.com/why-a-liberated-cfo-and-fintech-solution-are-a-dream-partnership-for-navigating-economic-uncertainty.html "Why a liberated CFO and fintech solution are a dream partnership for navigating economic uncertainty") will sustain it through rough patches. (Reporting by Rachna Uppal and Lisa Barrington; Editing by Toby Chopra) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---