Great expectations

Relations with the UAE seem set to feature the kind of commercial bustle that Israel’s previous peace deals never produced


“A day will come when Gaza will be the Middle East’s Singapore,” Shimon Peres said back in the 1990s, as he prophesied the emergence of a New Middle East.
A generation later, Gaza has yet to transform from a fundamentalist slum to a financial mecca, but a Middle Eastern Singapore indeed has emerged, albeit elsewhere, and it now seems ready to spark the New Middle East that Israel’s ninth president worked so hard to produce, but did not live to see.
The Singaporean model – a combination of financial wealth, limited land, urban modernity, cultural tolerance and authoritarian rule – sprouted steadily in the United Arab Emirates since its independence 50 years ago next year.
Peres believed that pragmatism like the UAE’s, and the impact of the West’s victory in the Cold War, would convince Arab leaders to accept Israel and seek prosperity. The Jewish state, for its part, after engaging with the Palestinians as it did in the Oslo Accords, would join the effort to modernize the Middle East.
Modeled on Europe’s transition last century from wholesale war to economic integration, the Middle East would also be crisscrossed with fast trains and super highways where people, credit and goods will cross borders as effortlessly as birds.
Israeli business leaders were already planning to spread hotel chains to neighboring countries, to ship fresh vegetables and dairy products to surrounding capitals, to build binational power stations and airports, to stretch a Red Sea riviera from Saudi Arabia to Egypt through Jordan and Israel and to create a Middle East development bank modeled on the European Bank for Reconstruction and Development.
The vision soon proved naïve, on both its assumptions: Anti-Israel hostility persisted and Arab governments rejected integration, and plans for regional ventures were shelved soon after Peres’s electoral defeat by Netanyahu in spring 1996.
Talking to business editors that summer, Benjamin Netanyahu said his economic model was not Peres’s New Middle East, but that of Hong Kong, which prospered under China’s shadow despite its hostility. Ironically, a quarter-of-a-century later Netanyahu is heralding Peres’s New Middle East.
THE , a federation of seven sheikhdoms whose oil has been pumped since the early 1960s, used its petrodollars more prudently than any other Arab oil producer.
Led for the past decade by the powerful Crown Prince Mohammed bin Zayed – due to his brother, President Khalifa bin Zayed’s illness – the UAE’s per-capita product, $70,000, is 30% higher than Saudi Arabia’s, and the 10th highest in the world. Its sovereign funds’ total worth exceeds $1 trillion.
Politically, the country is a benign aristocracy, whose seven principalities enjoy considerable administrative freedom. Citizens are free to attend weekly gatherings headed by the crown prince himself, in which anyone can raise any problem and voice any grievance.
Religiously, the 59-year-old, British-educated bin Zayed – better known by his English acronym MBZ – became a staunch opponent of Islamist fundamentalism in the wake of the September 11 attacks, whose perpetrators included two Emirati citizens.
MBZ’s pro-Western outlook was further consolidated by his perception of Iran – which looms a mere 140 km. beyond the water from Dubai – as his country’s biggest strategic threat, and the Middle East’s main destabilizer.
These are the circumstances that brought MBZ close to Israel, whose relationship with the UAE preceded his rise to power, and became open already in 2003 when an Israeli delegation, including then-Bank of Israel governor David Klein, attended an International Monetary Fund convention in Dubai.
The Emirates’ habitual hosting of such international events is the happier side of a cosmopolitanism whose downside is that some one million citizens host more than eight million foreign workers. This social vulnerability notwithstanding, all agree the UAE has built a metropolitan oasis that replaced war-torn Lebanon as the Middle East’s banking center.
Moreover, the UAE created the kind of diversified economy that other oil powers, most notably Saudi Arabia, have yet to match. Dubai, a cosmopolitan forestation of ultramodern skyscrapers dominated by the world’s tallest building, the 828 m. Burj Khalifa, inhabits some 3.4 million people and, much like Singapore, has become a global transportation hub for both passengers and cargo.
Fittingly, the UAE’s national carrier, Emirates, is considered one of the best airlines in the world in terms of service quality, and also one of the largest, deploying 250 jets. The country’s second-largest airline, Etihad, has one of the world’s best business classes.
Coupled with the capital Abu Dhabi, 140 km. south of Dubai, and a sandy hinterland suitable for motorized treks, the UAE has become a touristic magnet attracting 16 million visitors and $30 billion annually.
The peace agreement, as Netanyahu announced, will include direct flights between Tel Aviv and Dubai. Overflying Saudi Arabia and lasting a mere three hours, these flights are expected to appeal to a large Israeli clientele lured by Emirati hotels’ unique combination of opulence and affordability.
For Israel’s middle-income tourists, the UAE’s storied tourist attractions are a perfect fit.
Beside some of the world’s biggest, cheapest and best-stocked shopping malls, visitors flock to see Dubai’s archipelago of artificial islands; the city’s jewelry market, where an estimated 10 tons of gold is on offer every day and the Dubai Creek, a 20 km.-long waterway that arches around the city’s nucleus, creating a Venetian atmosphere adorned by bridges, marinas, and the elegant Deira Corniche.
With summer temperatures routinely crossing 40°, and at times also 50°, Israelis will likely prefer to visit in the winter, despite the UAE’s ubiquitous air conditioning, along with Dubai’s handsome beaches and also the Wild Wadi Waterpark’s artificial surfing machines and the Mall of the Emirates’ five-slope, artificial-snow ski resort.
Despite this climatic hurdle, the UAE is clearly set to attract an Israeli tourist invasion, which the country seems eager to absorb. This alone will be a novelty in the history of Israel-Arab economic relations, which have thus far not included the family-vacation industry.
While tourism is likely to connect the Israeli middle class to the UAE, the country’s financial sector, defense establishment, and free trade zones are expected to attract Israeli big business.
ISRAEL’S PEACE deals with Egypt and Jordan resulted so far in large-scale gas-supply deals, as well as small-scale tourism to Sinai and Petra and some migration of low-tech factories. The Israeli economy’s big locomotives – hi-tech, biomed, agritech, and defense – chugged elsewhere, vindicating Netanyahu’s analogy to Hong Kong’s prosperity when it was disconnected from Mao’s China.
The UAE will be different. Its economy can, and its leaders want to, accommodate varied and large-scale business with the Jewish state.
A hint of this future was offered August 16, three days after US President Donald Trump’s announcement of the Israeli-Emirati peace deal, when Emirati investment company Apex and Israeli industrial research and development firm Tera Group signed in Abu Dhabi a deal to jointly develop a coronavirus testing device. The deal reflects the existence in the UAE of vast capital in search of opportunities of the sort that Israel has been producing in recent decades while attracting investors from anywhere in the financial globe – America, Europe and the Far East – except the Gulf. Now the Gulf will join this commotion.
The most pressing Emirati needs are in the realm of defense, on which its annual spending of $23 billion is some 13% higher than Israel’s.
Reportedly, major Israeli defense producers, including Israel Aerospace Industries and Rafael, have already been doing business with the UAE in recent years, including sales of politically sensitive products, like assault drones, and tasks, like upgrading fighter-jet avionics.
The peace deal, according to Yediot Aharonot’s Nahum Barnea, will include an Israeli nod to UAE purchase of the F-35, an advanced combat aircraft, whose sale to Arab air forces Israel has prevented with the help of its supporters in the US Congress. Netanyahu quickly denied the report.
Whatever this particular problem’s future, Israeli sales to the UAE of sensitive military technologies have been underway for some time, including ones related to high-end intelligence and cyber warfare.
In the same way, albeit in a very non-military context, an Israeli civic-engagement software firm called Insights provides the program with which the Emirate of Dubai dialogues with its residents, according to business daily The Marker.
Ironically, Israeli manufacturers expect formalized relations to result in the Iron Dome system’s sale to the UAE as well as its neighbors, all of which fear Iranian missile attacks of the sort the Israeli system has successfully intercepted.
The irony lies in the peace deal’s Palestinian aspect.
Seen by some as an achievement and by others as a fig leaf, MBZ demanded, and obtained, Netanyahu’s retreat from his West Bank annexation plans. The Palestinian Authority was unimpressed, and responded to the peace deal by condemning the UAE’s “betrayal” of the Palestinian cause.
Considering that Iron Dome would not have been born if not for Gaza’s missile attacks, the system’s prospective deployment along 700 km. of Emirati coastline would mean that the Palestinians are, after all, part of the deal.
Gaza’s future as an Arab Singapore may remain elusive, but an invention that its belligerency spawned is on its way to the Middle East’s real Singapore, the one that did make peace with the Jewish state.