Supply Lines: Maiden Israel-UAE voyage

Supply Lines

Just a few weeks ago, President Donald Trump tweeted that the United Arab Emirates and Israel would begin a historic process of normalizing relations. The lack of any formal agreement hasn't stopped Israeli businesspeople from rushing in search of new opportunities.

For years Israel and the UAE have worked covertly in various fields, brought together by a mutual distrust of Iran and shared interests in technology around areas like cyber-security and agriculture. Still, official ties between the sides would open new lanes of business and allow trade and investment to flourish between two of the leading economies in the Middle East.

Negotiations will get more serious this week, when the first-ever commercial flight departs Tel Aviv Monday for Abu Dhabi, carrying an Israeli delegation and senior American officials like White House adviser and Trump's son-in-law, Jared Kushner.

Once in Abu Dhabi, talks will focus on tourism, trade, energy, health and security, Israeli Prime Minister Benjamin Netanyahu said. Just before the delegation was to depart, the UAE on Saturday formally legalized trade and business transactions with Israeli entities.

There is hope the relationship will lead to a business boom. "On the Israeli side, people are ready to sell tomorrow," said Ayal Shenhav, head of the high-tech and venture capital practice at Israeli law firm GKH.

At the moment, Israel exports goods worth just $300,000 a year to the UAE, a figure that probably underestimates the true value of the deals given much business is hidden or routed through other countries. Once Israel establishes an embassy in the UAE, officials want to open a commercial mission, with the Finance Ministry estimating total trade could eventually reach up to $6.5 billion.

Adiv Baruch, who chairs the Israel Export Institute, thinks the real potential lies in the ability for the UAE to serve as a gateway to the broader Arab Gulf states. His organization has been deluged with calls since the announcement, many from Israeli companies trying to figure out their best path into the market.

High tech is viewed in Israel as the key commercial opportunity because the UAE shares similar needs around food and water, and is interested in cyber, health and financial innovation developed in Israel. Investors on both sides hope to tap into each other's capital pools, while officials are looking for a tourism uptick.

Ivan Levingston in Tel Aviv

Charted Territory

The U.S.'s deficit in merchandise trade swelled to the second-largest on record last month as imports climbed to pre-pandemic levels, buoyed by demand for automotives.

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On the Bloomberg Terminal

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  • Use the AHOY function to track global commodities trade flows.
  • Click HERE for automated stories about supply chains.
  • See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
  • Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

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