The new administration is expected to continue to build on Israel's normalization agreements with the Gulf countries.
By ZEV STUBL-R) Yifat Alon Perel, Minister of Economic and Trade Affairs at the Israeli Embassy, Washington, DC, and Prof. Leo Leiderman, Tel-Aviv University professor and Chief Economic Advisor of Bank Hapoalim (photo credit: GIDEON SHARON / COURTESY)
There is a sense of optimism about the economic opportunities presented by the incoming administration of President Joe Biden, diplomatic officials and analysts said.The new administration is expected to continue to build on Israel’s normalization agreements with Gulf countries, and planned infrastructure projects in the United States present opportunities for Israeli companies providing environmental technologies.“So far, all we know about Joe Biden’s plans, besides his record as vice president under Barack Obama, is based on statements he made during his campaign,” noted Yifat Alon Perel, economic and trade affairs minister at the Israeli Embassy in Washington, DC. “Biden didn’t detail much about his plans for trade but he did speak about a lot of issues that will affect trade, and among those, there are some we are positive about, and some we are worried about.”“Biden spoke a lot about working with America’s allies, and we know that Israel is a major ally on security and economics. There is an emphasis on large infrastructure plans that will help the United States tackle the huge issue of unemployment from the coronavirus crisis,” Perel said. “However, we also know that many of the large projects come with preexisting agreements that allow congress to limit them to US-based contractors only. With the president touting his ‘Buy America’ policy, it is possible that Israeli companies could get shut out of many major projects.”“That wouldn’t represent a position against Israel or any other country, but a pro-America stance,” she clarified.Prof. Leo Leiderman, from the schools of economics and management at Tel Aviv University and chief economic adviser of Bank Hapoalim, was less concerned about this policy. “A key priority set by the new administration is to stimulate economic activity and job creation via various budgetary measures,” he said. “Biden plans to launch a broad plan of investment in infrastructures which, by itself, can have a strong “multiplier effect” on the state of jobs and the economy.”“At the economics department of Bank Hapoalim, we are not particularly concerned about the impact of a ‘Buy American’ campaign on our exports,” Leiderman continued. Treasury Secretary Janet Yellen is fully aware of the benefits of free international trade. Thus, any ‘Buy American’ attitudes should be more moderate in the coming years than those of the Trump administration. Israel is a start-up nation that has a comparative advantage in innovation and new technologies. If anything, these could contribute to the creation of more jobs in the US economy, and not the opposite.”“The same holds true for some of the environmental projects to be launched by President Biden. Over the years, Israel has developed various innovations related to wind, solar, and more generally, green technologies. Our know-how could be combined in successful joint projects with counterparties in the US.”Meanwhile, Perel noted, Congress has earmarked funds for desalination projects with a clause that provides for special consideration for companies from countries like Israel that have vast experience with such technologies. “We hope Israeli companies will seize these opportunities,” Perel said.Perel also called attention to a bill passed last month that allocates $12 million for R&D and health projects to BIRD, the Israel-United States Binational Industrial Research and Development Foundation. This program, which has existed since 1977, is just one example of cooperation that provides great value to both sides. “We see that for every $1 given by BIRD, $10 in market value comes back,” Perel said.On the diplomatic side, “it is very clear that the US wishes to foster and encourage the normalization agreements signed under the Abraham Accords. There is wall to wall agreement on this,” Perel said.Leiderman agreed, but pointed out that one area in which there is considerable uncertainty is the outlook for the US-China relations. “No doubt, Mr. Biden will have a more sympathetic approach to China than Trump’s trade war approach,” he said. “Yet, the exact form of the new relations is still unknown. The issue is of great importance in particular for our hi-tech sector. Leaders of this sector have been concerned about the escalation in the US-China relations in recent years, precisely at a time that it would be good to have intensive trade simultaneously with both the US and China. Israel’s hi-tech companies need both the US and the Chinese markets, and it would be good to see a normalization of relations also there.”Perel mentioned that her office, as part of the Ministry of Economy, is dedicated to helping Israeli companies enter the US market. "We have held hundreds of online events in the past year alone connecting Israeli and American companies," she said.Perel stressed that the Israel-US economic relationship is strong and well-established. “America understands the technology and security asset that it has in its relationship with Israel,” Perel said. “These are known and here to stay.”
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