Written by Emily Rose and Alexander Cornwell
JERUSALEM/DUBAI (Reuters) – The war in Gaza has chilled business activity between Israel and the United Arab Emirates, with the once-celebrated relationship now in public turmoil amid anger in the Arab world over the conflict. kept away from surveillance.
In 2020, the UAE became the most prominent Arab state in three decades to establish formal relations with Israel under a US-brokered agreement known as the Abraham Accords. The two countries have maintained relations through Israel’s war in Gaza for more than six months.
Following the agreement, Israeli entrepreneurs began flocking to the Gulf country with direct flights from Tel Aviv, establishing new business relationships and expanding existing ones that were once secret. Deals announced before the war included investments in cybersecurity, fintech, energy and agritech.
Ten Israeli officials, executives and entrepreneurs told Reuters that business ties with the influential Gulf state remained intact, but that recent developments showed how the conflict was dampening enthusiasm. He said he declined to discuss the deal.
“It’s still happening. It’s happening less and less, and it’s happening less and less in front of our eyes,” said the UAE resident and head of a private business group that promotes business relations between Israel and Gulf Arab states. said German-Jewish entrepreneur Raphael Nagel.
Six UAE bankers and lawyers also said business ties between Israeli and Emirati companies had withstood the war, but few new deals had taken place.
The UAE government is said to have been cautious in promoting relations with Israel. Meanwhile, many companies in Israel have called up their employees for military service, which is having an impact on their operations.
UAE officials did not directly respond to Reuters’ questions about how economic ties with Israel were affected by the war. However, the official said diplomatic and political dialogue between the UAE and Israel had facilitated humanitarian efforts to support Gaza residents.
The United Arab Emirates is the only Arab country that still hosts Israeli ambassadors. Tel Aviv has recalled diplomats from other Arab countries involved following the Oct. 7 attack by Hamas that triggered the invasion of Gaza.
Israel’s Foreign Ministry did not respond to requests for comment.
After establishing formal diplomatic relations in 2020, Israel and the UAE quickly forged a close economic partnership, unlike decades of peace agreements with Egypt and Jordan, which failed to establish significant business ties. The trade agreement was signed in 2022.
According to data from Israel’s Central Bureau of Statistics, trade volume increased by 17% last year to $2.95 billion. According to the bureau, despite the post-war cooling, trade in the first quarter of 2024 maintained a 7% year-on-year increase.
But while Israeli tourists, who have become more frequent visitors to the UAE, no longer fill Dubai’s hotels, restaurants and bars, Israelis and Jews continue to feel safe in Dubai. claims.
Unlike other Arab countries, there are no public demonstrations in support of Palestinians or against Israel in the UAE. However, symbols associated with Palestinian nationalism, such as black and white keffiyeh headdresses, can be seen being worn by people on the streets of Dubai.
“Things are becoming more cautious and Oct. 7 has a lot to do with that,” said Bruce Garfein, a Jewish American and entrepreneur who first immigrated to the UAE in the late 1990s.
Hamas militants killed more than 1,000 Israelis and took more than 250 hostages in a cross-border attack from Gaza into Israel on October 7. In response, Israel launched an invasion of the Gaza Strip with the aim of destroying Hamas and freeing the hostages. According to Palestinian officials, more than 34,000 people have been killed.
International efforts to broker a ceasefire continue.
“Cooling” effect
Several Israelis who were already doing business in the UAE before the war said their personal and commercial relationships with other Arabs in the Emirates and the UAE remained unaffected. However, it also said that both parties are required not to publicly disclose their business relationship.
“I think ridiculing is the right word,” said Ellie Wortman, co-founder of Israeli venture capital firm PICO Venture Partners. “But on the other hand…it’s business as usual.”
Waldmann believes the close ties forged immediately after normalization have helped maintain business ties with the UAE, a sentiment echoed by Israeli officials and other executives Reuters spoke to. .
Israeli executives from UAE-IL Zone, an Israel-based non-governmental platform aimed at developing business relations between the UAE and Israel, have assured that Emirati officials will not stop investing in Israel because of the war. However, he requested the following from the Israeli side. Refrain from making any announcements regarding transactions.
The executive requested anonymity because he was not authorized to speak to the media. UAE officials did not comment.
Michael Mirirashvili, CEO of Watergen, an Israeli company that has developed a machine that can produce drinking water from air, will join the Abu Dhabi company Baynuna and Tel Aviv University in June 2021 to further research in water technology. signed a trilateral water research partnership agreement with .
Mirilashvili said the partnership with the Emirati side remains warm and he has not noticed any change in relations since October 7.
“We will continue to work together,” he said. “We have very strong bonds with the people we work with there.”
Tel Aviv University and Baynuna did not respond to requests for comment.
Robert Mogielnicki, an academic at the Arab Gulf States Institute in Washington, said the war in Gaza was a “major disincentive” for the UAE to pursue new major economic initiatives.
He pointed to growing anger and concern over the war among UAE nationals, a minority of about 1 million people in the Gulf state of about 10 million people.
Abu Dhabi state oil company Adnoc and BP have put plans to acquire a $2 billion stake in Israeli gas producer NuMed on hold, citing regional uncertainty, the Israeli company announced in March.
Four sources familiar with Adnoc’s position said the war in Gaza influenced the decision to suspend negotiations, citing the perspective on pursuing such a large deal.
Didier Toubia, CEO of alternative meat startup Aleph Farms, which received investment from the Abu Dhabi National Fund during a 2021 funding round, told Reuters that it currently does business with Emirati companies in Israel. He said there is a growing sense of caution towards companies.
He predicted that business activity would accelerate once the war ended.
Prime Minister Netanyahu’s dissatisfaction
UAE officials have maintained that strengthening ties with Israel was a strategic decision and they have no intention of backing down. However, some of them have privately expressed dissatisfaction with Israel’s conduct of the war and the high civilian death toll.
Israel strongly denies intentionally targeting civilians.
The war has caused a rift in relations between the UAE and Israeli Prime Minister Benjamin Netanyahu, four sources familiar with the matter said.
They said the UAE rarely speaks directly to Prime Minister Netanyahu and that President Isaac Herzog is the key interlocutor in Israel-UAE relations.
The UAE is increasing engagement with former prime ministers Yair Lapid and Nafatali Bennett as Emirates dissatisfaction with Prime Minister Benjamin Netanyahu grows, officials said.
Prime Minister Netanyahu’s office had no comment. Herzog’s office and spokespeople for Rapid and Bennett declined to comment.
UAE officials did not directly answer questions about their relationship with Netanyahu’s government, but called for stepped-up efforts to achieve an “inclusive and just peace” based on a two-state solution.
Israeli opposition leader Lapid met with Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan in Abu Dhabi on May 2.
(Reporting by Emily Rose and Alexander Cornwell; Additional reporting by Maha El Dahan; Editing by Daniel Flynn)
