As President Joe Biden reportedly prepares to go the Middle East next month, a positive development for him to build on and turn around his poll numbers, and possibly win a Nobel Peace Prize for totally eliminating the threat of Iran going nuclear, is the signing on May 31, 2022, of a groundbreaking trade agreement between the United Arab Emirates (UAE) and Israel. Pictured: The economy ministers of Israel and the UAE, Orna Barbivai (L) and Abdulla bin Touq al-Marri, at the signing ceremony for the free trade agreement on May 31, 2022 in Dubai, UAE. (Image source: Israeli Ministry of Economy and Industry)
As President Joe Biden reportedly prepares to go the Middle East next month, a positive development for him to build on and turn around his poll numbers, and possibly win a Nobel Peace Prize for totally eliminating the threat of Iran going nuclear, is the signing on May 31, 2022, of a groundbreaking trade agreement between the United Arab Emirates (UAE) and Israel.
The two countries have targeted increasing annual trade to more than $10 billion annually within the next five years. To put this into perspective, from September 2020 until March 2021 there was approximately $2.5 billion in non-oil trade between the two countries. Further highlighting the significance of this trade agreement, current trade between Egypt and Israel, where a peace agreement has been in effect since 1979, is roughly $330 million per year. So, there can be no downplaying the importance and scope of this deal or the potential for greater peace in the region without a nuclear Iran destabilizing the area, followed by installing itself even further in South America, then threatening the United States (for instance here and here) .
The Comprehensive Economic Partnership Agreement (CEPA) makes major changes to business and trade between the countries. It removes tariffs on 96% of goods, including food, agriculture, cosmetics, medical equipment and medicine. It clarifies tax rates and intellectual property issues, making the UAE a more desirable place for Israeli companies to establish business operations. The UAE-Israel Business Council expects up to 1,000 Israeli companies may begin operating in Dubai by the end of the year. This is also a major development.
CEPA is a win-win-win accomplishment. The agreement opens a window of opportunity not just for the US, but also for Israeli companies to do business in the UAE, and more importantly, it will serve as a gateway to other parts of the Middle East and Asia. The use of the UAE as a launching point for Israeli companies matches the strategic direction for Dubai to be a connecting point for companies and markets in these parts of the world. Further, increasing the economic interdependence of these countries in the Middle East will heighten prosperity and stability to the region, making this a win for Israel, the UAE, and the greater Middle East – as well as potentially for President Biden.
The announcement of CEPA pointed the way to three real and potential impacts that Biden could have in the Middle East:
- A blossoming of bilateral initiatives within the private sector and civil society;
- Geopolitical and economic benefits will have spillover effects across the region, and possibly the world; and
- Opening channels of communications between the Arab states of the Gulf and Israel to further peace and prosperity in the region, including the Palestinians.
CEPA is the most significant accomplishment to date demonstrating what happens when there is more people-to-people interaction and a focus on building economic ties to bridge gaps. The CEPA negotiations resulted in a trade agreement faster than any trade deal in Israel's history, proving change and progress can be achieved — and achieved quickly.
May this work — especially, under the far-sighted leadership of Biden, if he eliminates Iran's nuclear threat — continue to bear more fruit.
Peter Hoekstra was US Ambassador to the Netherlands during the Trump administration. He served 18 years in the U.S. House of Representatives representing the second district of Michigan and served as Chairman and Ranking member of the House Intelligence Committee. He is currently Chairman of the Center for Security Policy Board of Advisors.