A shared growth vision
Both the UAE and Israel have several common traits and a shared vision of a technology-driven future
The breakthrough peace accord the UAE and several other Arab countries had signed with Israel is triggering a tectonic transformation across the political and economic spectrum of the Middle East, igniting profound hopes of lasting peace, security and prosperity in the region.
Indeed, the historic Abraham Accord the UAE and Israel signed on September 15, 2020, has kick-started this game-changing evolution that is set to redefine like never before the region's cross-border trade, tourism, investment and business ecosystems.
While cross-border investments between the UAE and Israel have the potential to reach $10 billion with the private sectors on both sides getting hyper-active, the two-way trade is estimated to reach $6.5 billion within a matter of years.
As part of efforts to promote regional economic development and cooperation, the governments of the UAE, Israel and the US had led the way by setting up a joint $3 billion investment fund headquartered in Jerusalem.
However, the real activity is happening in the private sector as there is a lot of enthusiasm on both sides. According to a venture capitalist, more than $10 billion of bilateral investment action will be happening both ways, according to analysts.
The launch of direct air-connectivity between the two nations has started accelerating cooperation in tourism, security, telecommunications, technology, health, education, financial services and agriculture.
The UAE investors coming into the Israeli tech market are among the most sophisticated in the world, likewise hi-tech Israeli investors going to the Emirates. It will result in building a Middle East tech hub. "It has been a long-standing dream and it is happening now," an analyst said.
Abu Dhabi's state fund Mubadala is also exploring opportunities in Israel as part of its drive to step up investments in the technology sector across Europe, India and the Middle East. Ibrahim Ajami, head of ventures at Mubadala, said the sovereign fund plans to identify potential partners in Israel and find high-growth technology firms in which to co-invest following the normalisation of relations between the two countries in the wake of the historic Abraham Peace Accord.
Ajami said Mubadala, which manages over $230 billion in assets worldwide, is creating the right infrastructure in Abu Dhabi to support Israeli companies' regional growth. "Just as we did in Europe, Asia and the US we will explore and find which the best company to partner with in Israel is."
Just as Khalaf Ahmad Al Habtoor, founding chairman of Al Habtoor Group, has said the UAE-Israel peace accord would present great opportunities for both sides by opening up new doors, and leading to stronger economies, and closer cultural ties between the peoples.
"I have been looking forward to this day for a very long time. I have always believed that Emiratis and Israelis have a lot in common. Both peoples are business-oriented and have relied on human talent and ambition more than their countries' natural resources to build robust, innovative economies," Al Habtoor has said.
Both the UAE and Israel have several common traits and a shared vision of a technology-driven future. Both nations have identical economic and demographic stature.
While the UAE, Arab world's second largest economy has a population of 10 million, Israel is nation of 9.2 million people. The size of the UAE economy, as per the World Bank data for 2019 - the "realistic year" before an abnormal Covid-19 inflicted 2020 - is $421.114 billion while that of Israel is a close $394.65 billion. Even in per capita gross domestic product, both nations share a similar close pattern -the UAE has a GDP per capita of $43,103 and Israel $43,592.
Bilateral trade between the UAE and Israel could realistically reach as high as $6.5 billion in the coming years, which would make the UAE one of Israel's largest trading partners, Samir Chaturvedi, CEO of the Khalifa Industrial Zone Abu Dhabi, has said at the UAE-Israel Peace and Prosperity Roundtable, presented by Khaleej Times and The Jerusalem Post.
"I think that's a realistic goal, not overly optimistic," Chaturvedi said, adding "both of our economies are similar, in terms of size, population and innovation."
David Leffler, director-general of Israel's Economy Ministry, said both economies are export-oriented, and there are many reasons to be optimistic.
"There is a lot to learn from the UAE expertise in infrastructure and planning and their abilities to execute complex projects. The UAE has built smart communities, and while we have the technology related to smart cities, we have not implemented that yet. So the UAE can help us address that gap in the market," said Leffler.
He said it is also important to identify what is the relative advantage on each side. "There is a huge potential to do business together, and we are also looking at Dubai's success with business setups and how we can learn to cut the bureaucracy on our side. The good thing is that people of both countries are practical and business oriented, so we have the same mentality," said Leffler.
The hi-tech future-ready cities of Abu Dhabi, Dubai and Tel Aviv are shining beacons of opportunity for start-ups and 4.0 IR-driven future. Israel, the Start-up Nation, is said to have the most start-ups in the world outside of Silicon Valley, and Emirati society is known to be very innovative. The challenge will be to build infrastructure that will support future collaboration and trust for a long time, according to analysts.
Israel has the second-largest number of startup companies in the world and the third-largest number of Nasdaq-listed companies after the US.
"There will be no better test-bed for Israeli technology than cities in the UAE. The broad partnerships will not stop at tech but also have positive ramifications in education, tourism, energy and security," says Jonathan Medved, a serial entrepreneur and one of Israel's leading high-tech venture capitalists.
While Israel, a highly advanced free-market and primarily a knowledge-based economy, ranks 22 on the latest report of the Human Development Index, the UAE is first in the Arab world in the index issued by the United Nations Development Programme,
advancing by four positions from 2019 and ranking 31st globally out of a total of 189 countries.
Following the accord, several Israeli high-tech delegations started discussions with senior UAE government officials and investment counterparts in Dubai and Abu Dhabi on building collaborations and exploring investment opportunities.
Aboo Kara, a three-time minister and a Knesset member for more than 15 years, has said the peace accord was just the beginning of an era of game-changing advancements for both the UAE and Israel in all sectors, in particular technology, food and cybersecurity, farming, artificial intelligence, and using ICT sector to transform the region.
"It is a win-win scenario for everlasting prosperity through peaceful co-existence. While the UAE will serve as a key springboard for Israel to reach out to the rest of the Arab world, both nations will stand to benefit from the culture of innovation and high-tech ecosystem," said Kara, who is the founder president of Economic Peace Centre, an initiative to foster bilateral economic and business relations between the GCC and Israel.
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