Israel last week signed its first free trade agreement with an Arab state. The deal with the United Arab Emirates – with which Israel established diplomatic relations under the Abraham Accords in 2020 – plans to eliminate or cut almost all tariffs and could boost bilateral trade to more than $10bn over the next five years.
The Emirati trade minister, Thani Al Zeyoudi, hailed the agreement as “a new chapter in the history of the Middle East”.
It came as Israel unveiled plans to renew offshore natural gas exploration and boost exports to Europe in response to the war in Ukraine.
The UAE deal will remove or slash tariffs on 96 percent of goods – including food, medicine, diamonds, jewelry and chemicals – traded between the two states. The Emiratis have projected that the Comprehensive Economic Partnership Agreement will have a dramatic impact on bilateral trade, pushing it from $1.2bn in 2021 to over $10bn within five years.
Israel is also hoping to reach an export agreement to sell natural gas to Europe. Energy minister Karine Elharrar announced last week that she had instructed her officials to prepare for a new round of tenders for gas exploration off Israel’s Mediterranean coast (pictured). She cited the war in Ukraine and Europe’s need to find sources of energy as it ends its reliance on Russia.
Although a long-term Eastmed pipeline connecting Israeli gas fields directly to Europe remains under discussion, the current plan would see supplies sent to Egypt for liquefication. The gas would then be shipped to Europe.
However, officials caution that significant gas exports to Europe may take two years to come on tap.