Israel-UAE Trade Expected to Hit $2 Billion in 2022, But Might the Honeymoon Be Disrupted?

The main areas of cooperation have been agricultural, aerospace, and defence projects as well as the diamond industry, renewable energy, and tourism.

In 2021, just one year into the Abraham Accords that saw Israel and the United Arab Emirates normalise ties, bilateral trade exceeded half a billion dollars.

Trade to Flourish

But Fleur Hassan-Nahoum, a co-founder of the UAE-Israel Business Council, says trade is only expected to jump in 2022.

According to estimates by the Business Council, a body that brings together more than 6,000 Emirati and Israeli businesspeople, 2022 will see a 50 percent increase in trade and is forecast to reach $2 billion.

"The numbers are quite large and it is exciting. And what is more exciting is the enthusiasm and the excitement of people to be doing trade with each other".

That trade and cooperation encompass a wide range of areas. In terms of renewable energy, the two nations signed a major deal, according to which the UAE will set up a plant in Jordan that will supply Israel with electricity. In exchange, the Jewish state will provide the Hashemite kingdom with desalinated water.

In this 26 November 2020 file photo, an Israeli passenger from a flyDubai flight from Tel Aviv, Israel, waves her Israeli passport on arrival at Dubai International Airport's Terminal 3 in Dubai, United Arab Emirates.

© AP Photo / Jon Gambrell

The diamond industry has also seen a major boost, as did aerospace, defence cooperation, agriculture, and tourism. Last October, it was reported that more than 250,000 Israelis had visited the UAE since the historic agreement was signed. Right now, the exchange of tourists is bogged down by the raging coronavirus pandemic. The UAE is regarded as a red-zone country in Israel, meaning travelling to and from the nation is forbidden. But Hassan-Nahoum is hopeful that once the situation calms down a quarter of a million Emiratis will visit Israel too.

"Those tourists will go to Jerusalem to pray at Al Haram Al Sherif [the Temple Mount holy for both Muslims and Jews - ed.]. Muslim pilgrims are a whole new avenue for us, and to me this is exciting".

Challenges on the Horizon?

Yet, at times that excitement has been overshadowed by challenges. Hassan-Nahoum says that one of those has to do with the "cultural differences" between the nations. Another is the Israel-UAE pipeline project that doesn't seem to be getting off the ground.

The aforementioned deal stipulated that the UAE would be able to unload its oil tankers in the southern Israeli city of Eilat on the shores of the Red Sea. From there, the crude would be transported to Europe via an existing pipeline.

Israel's Environmental Protection Ministry has long objected to the project, arguing that oil spills could damage the environment and cause irreversible damage to the area's coral reef.

An oil tanker approaches a new jetty during the launch of the new $650 million oil facility in Fujairah, United Arab Emirates

© AP Photo / Kamran Jebreili

That statement has reportedly caused concern in the UAE, and the Israeli press has gone as far as to suggest that the cancellation of the deal would put the Abraham Accords to a test.

Hassan-Nahoum, however, is certain that bilateral ties are much stronger than any deal.

"Relations are not based on whether one deal will go through. We are talking about a long-term partnership here, and I am sure, [the cancellation of the deal - ed.] will not end the honeymoon".

Even without the pipeline deal, bilateral trade turnover is set to hit $2 billion in 2022 but the Business Council is hopeful that the new year will exceed their expectations. But for that to happen, Hassan-Nahoum says they need "more investment funds, more incentives, and more support from their governments".