In the past nine months, the Abraham Accords have birthed the beginnings of the peace and prosperity that its authors envisioned when they brought together two complementary countries less than 3,000 kilometers apart.
The economic diplomacy woven into the contract between Israel and the United Arab Emirates has so far proved resilient against a changed US administration and the recent Gaza conflagration.
“I have been working in the Gulf with OurCrowd and prior companies of mine for the last almost a decade and a half,” OurCrowd founder and CEO Jon Medved told the Magazine. “Today, I am able to work in ways I never could. The Abraham Accords are a complete game-changer.”
Now, Israelis can fly to the UAE nonstop in three hours – as opposed to the nearly 12 it used to take. Moreover, in at least some of the country’s seven emirates, Israeli visitors are greeted with eager warmth. In the past, Israelis had to hide their identities.
But despite the headlines of grandiose memorandums of understanding that are being signed, insiders say that it will take more time before “real and consistent” business is being done and the money starts accumulating on both the eastern and western sides of the sand curtain.
In some ways, Israel and the UAE have parallel economies. Both countries have roughly nine million people and GDPs of around $400 billion. But there are differences, too. For example, whereas Israel’s economy is dominated by technology, the UAE’s is still strongly linked to oil, derivatives and real estate property development.
Last week, The Jerusalem Post and Khaleej Times helped highlight these similarities at a Global Investment Forum held in Dubai. The event brought together government officials, business owners, executives, philanthropists and thought-leaders to discuss the roadmap to creating an international economy.
The bigger challenges, however, are that since the signing of the accords, the geopolitics have changed with the ousting of the Trump administration and the entry of US President Joe Biden and his team.
The Abraham Accords was a three-way arrangement between Israel, the UAE and the US, with the Americans agreeing to supply the Emiratis with F-35 fighter jets in exchange for their John Hancock. Now, Biden has been hesitant to supply those planes and part of the triangle is crumbling.
The Gaza escalation was another challenge. Even while signing the normalization agreement, the UAE sought to reassure the Palestinians that ties with Israel would not come at Ramallah’s expense – and certainly not at the expense of their support for a Palestinian capital in east Jerusalem.
A source who travels regularly between Jerusalem and Abu Dhabi explained that each of the seven emirates are independent states ruled by different royal families, with Abu Dhabi being the most prominent and the capital. Not all of the Emiratis bought into the accords, the source said; some 30% of Emiratis really want the relationship but 70% are less excited and more cautious about the new relationship.
UNLESS, OF course, it can really bring prosperity.
“The Emiratis want to do business,” said Rena Krakowski-Riger, a former adviser to Prime Minister Benjamin Netanyahu and a member of the board of advisers of the Abrahamic Business Circle.
So, if Israelis want to survive and thrive in the business world in the UAE, she said, they need to learn how to do business the Emirati way. That means coming “with humility and the ability to adapt to local needs. Then, we can have success.”
She said that many Israelis have come with the attitude of “we have the brains, you have the money; let’s do business. They are insulted by that attitude. They are very smart.”
According to Riger, the Emiratis are less interested in start-ups and more interested in businesses that are developed and working and have a product to sell.
“They want something long-term with a vision,” she said, noting that if a person wants to do business in the UAE, he or she should find a “partner” – a person on the ground who will represent them. She also noted that just as Israelis open offices in the United States to enter the market, they should do the same thing in the UAE.
“We like to do quick and dirty,” Riger said. “This is not going to be quick. We are talking about building long-term relationships.”
Medved agreed. He said that when the accords were signed things started moving very quickly and “we are delighted,” but the fund quickly realized the need to focus on long-term relationships rather than getting deals done.
“We hope over the next several months to be able to make announcements and then things will become clearer,” he said.
THE UAE-ISRAEL BUSINESS COUNCIL, founded shortly before the signing of the Abraham Accords, aims to help accomplish these goals. The group was started by Jerusalem Deputy Mayor Fleur Hassan-Nahoum and businessman Dorian Barak, who had been quietly doing business in the UAE for a decade. When Hassan-Nahoum caught wind through her diplomatic connections that the accords were going to be signed, they decided to set the council up.
“When peace was announced, we set up an online platform in three days and put it out there and within a few weeks we had thousands of members,” she told the Magazine. “There is a real hunger to find entry points to each other.”
The council helps connect professionals who are interested in collaborating in any number of verticals: green energy, cyber, artificial intelligence, tourism and more. It also provides online educational sessions to help explain options for entry, such as use of free zones and urban tech hubs. According to Hassan-Nahoum, an average of 200 people attend each webinar.
Another similar circle is the Abrahamic Business Circle, which Riger helps advise and was founded by His Excellency Dr. Raphael Nagel, a Jewish investor, lobbyist and philanthropist who has lived in the UAE for the past seven years.
The goal of the Abrahamic Business Circle is to promote economic diplomacy through business.
“The Abrahamic Business Circle was established to help bridge the gap [between the two peoples] and to help teach people who want to do business in the UAE how to do it,” Nagel told the Magazine.
He said the circle was founded in the aftermath of the accords but is a global network, focused on helping interested parties from around the world enter the UAE marketplace.
“I am a strong believer in economic diplomacy,” Nagel said. “I believe if we connect people from different faiths and cultural backgrounds first through business relations then this will create long-term relations and result even in friendships.”
According to Nagel, when the accords were first signed it was like a new love relationship – replete with butterflies and huge expectations from both sides. Sooner or later, the countries “came back to reality and realized they needed to better understand their counterpart. The biggest thing we have to learn in this relationship is that even with both being from the Middle East and being cousins, we have different backgrounds,” Nagel continued. “The UAE has one way of handling things and Israel has a different way.”
For example, he said, Israeli “chutzpah” can be misunderstood.
More challenging was that many Israelis came over in the beginning with the idea of raising quick money – taking the check and returning home.
“Even if venture capital is not our main industry, we have knowledge about it. We can read a business plan, market research and valuation,” Nagel stressed. “One of the problems was that Israelis came over with their pitchbooks, overvaluing their startups.”
UAE investors, he said, are most used to investing “in things we can touch, tangible investments.”
He said companies have to come to the UAE, locate themselves in the country and work with the people. Joint ventures, Nagel recommended, are the best way to start.
“You don’t meet someone and marry them in one day. Things take time. You have to structure them,” he added. “Don’t underestimate the UAE.”
ONE OF THE ADVANTAGES of opening up businesses in the UAE is its extensive network of free zones.
A free zone is a geographic area within a country that has its own regulations and bylaws to which international companies or foreign investors from all over the world can come and set up their companies and operate. These companies can conduct trade inside the UAE or export to the rest of the world from the zone.
Ramy Jallad, Group CEO of the Ras Al Khaimah Economic Zone, told the Magazine that many companies from multiple industries can take advantage of these free zones to conduct trade more smoothly than if they were outside the country. This includes tech, manufacturing, agriculture and pharmaceutical industries, among others.
Companies that establish themselves in free zones maintain 100% ownership of their companies and repatriation of all profits.
“It’s a one-stop shop, so people like to plug and play,” Jallad said. “A small business or a major manufacturer can get a variety of services that are all in one area. The services provided allow the company to focus on its core business while all of the administration is taken care of by someone else.”
The UAE has been operating free trade zones for a long time and there are dozens through the seven emirates. Some have port access, for example, while others are in the city and look more like business parks. There are general free zones and others that specialize in certain industries and can provide knowledgeable workers.
“Free-trade zones allow investors to start on a small scale,” Jallad said. “We have had companies start like Microsoft or Google, where they begin out of a small business center and then grow to be the largest armored car company in the region. We had companies that started out doing R&D on certain pharmaceuticals and now they are working with the largest pharmaceutical companies in Israel to enhance COVID-19 vaccine efficacy and so forth.”
He said the pandemic accelerated the digital transformation, making international business easier to do than ever. But, he noted, legislation and regulations still have to change to provide utmost accessibility.
FOR ISRAELI COMPANIES, the advantage of working out of the UAE is that it can serve as a bridge to the rest of the Arab and Asian world. Home to people from more than 200 nationalities, the Emirates can be viewed as a stepping stone toward opening doors to many other places in the world with which Israel does not necessarily have relations.
Moreover, the country is only a three-hour flight from one-third of the world’s population.
“Israel has been artificially sort of focused on its Western allies and trading partners because of its sand curtain,” Medved explained. “When talking about business, we are not just talking about building companies and projects between Israel and the UAE, but Israelis and Emiratis going together into Africa, Asia, South Asia and the greater Islamic world. These opportunities are invaluable.”
“Israel has always been a fascination and I thought it fit to start diplomatic relations many years ago,” Paras Shahdadpuri, chairman of the UAE’s Nikai group of companies. He told the Magazine, “Through communication and dialogue you can solve the world’s problems, particularly if there’s a possibility of some mediation between the Arab world and Israel.”
He called the Abraham Accords a “very wise decision. We business people are always looking for an opportunity.”
Medved said he believes that just as thousands of Israelis have flocked to the UAE after the agreement, Emiratis will visit Israel’s shores as well.
“There will be nothing more inspiring to the world to see people like the Emiratis and Israelis working together to solve things like water shortages, energy, world hunger,” he said. “I am certain we are going to see a ton of that. It is going to both encourage people to do more and inspire the rest of the world.”