Israel – United Arab Emirates (UAE) Agreement

In News

• Recently, Israel and the United Arab Emirates (UAE) signed a historic trade agreement with an aim to do trade worth more than $10 billion annually. 

Key Points

• The UAE is now the first country in the Arab world to have a free trade agreement with Israel.
• The deal comes two years after the then US President Donald Trump first brokered the process of normalisation of ties between Israel and the UAE, Bahrain through the Abraham Accords in 2020.

• Tariffs: After the deal, tariffs will be removed or reduced on 96% of goods traded between the two countries. 
• Trade boost: The UAE predicted the Comprehensive Economic Partnership Agreement would boost annual bilateral trade to more than $10 billion within five years. Trade was already at $1.2 billion in 2021, according to the Israeli data.
• Benefits of the agreement: 
  • It will accelerate growth, 
  • create jobs and 
  • lead to a new era of peace, stability, and prosperity across the region
• UAE Preparing for similar deals with other countries: The UAE has of late engaged in talks for similar accords with Indonesia and South Korea. It signed an agreement with India in February that eliminated duties on goods which account for 90% of India’s exports to the UAE by value.

Deal vis a vis Gulf Region

• Geopolitical factors: The relations among countries in the region, particularly the Gulf, are shaped by multiple, complex factors – geopolitics over the control of oil and other valuable resources, rivalry between Sunni-majority Saudi Arabia and Shia-majority Iran, and the Israel-Palestine conflict.
• Israel-Palestine conflict: The conflict has always cast a shadow on how nations in the region deal with Israel. However, there have been attempts at establishing peace. 
  • The 1993 Oslo Accord, signed by the leaders of Palestine and Israel in the US with the cooperation of Norway, was a landmark moment. 
  • Though it did not achieve success in ending the conflict, it led to a kind of thaw in relations between Israel and MENA (Middle East and North African) countries in both official and unofficial ways. 
  • Jordan signed its peace deal with Israel in 1994.

Sustainability of the Ties

• Trade and cooperation has been growing, even as the UAE has simultaneously been critical of Israel’s actions towards Palestinians. 
• In the summer of 2021, shortly after violence erupted in the Gaza Strip, Israel’s Foreign Minister visited the UAE in June to inaugurate the country’s embassy despite the UAE condemning the eviction of Palestinians by Israeli authorities in the lead-up to the violence.
• Al-aqsa Mosque has been a flashpoint often, with violence breaking out this year as well. 

Significance for India

• India has deep stakes in terms of energy supplies and expatriate populations in the Middle east .
• The deal opens up new opportunities for India to play a much larger role in the regional security and stability in the Gulf.
• India should use this unexpected opportunity to give itself a bigger role in a region which is its strategic backyard.
• Israel is already a very close defence partner. But India should restart joint exercises with the UAE, and even Saudi Arabia. 

Way Ahead

• The trade deal points towards the changing priorities of Arab nations, and their willingness to engage with Israel despite the outstanding issues.
• The first step for India should be to ramp up defence and security relations with the UAE. 

• India will also need to watch ties with Iran, which has slammed the agreement and will see Arab-Israeli tie-ups as a direct threat to its security.

Source: TH