Ever since the signing of the Abraham Accords in 2020 – through which Bahrain and the United Arab Emirates normalized ties with Israel – economic ties between the Emirates and Israel have grown significantly. Ketaki Sharma, the founder, and chief executive of Algorithm Research, believes that over the next five years, trade will exceed $10 billion.

In May, Israel and the Emirates signed a Comprehensive Economic Partnership Agreement (CEPA) with the objective of pushing bilateral trade significantly over the next five years. The CEPA removed 96% of duties on goods traded between both countries and will add an estimated $1.9 billion to the UAE’s gross domestic product, apart from giving a boost to UAE’s exports to Israel. In August, Thani bin Ahmed Al Zeyoudi, the UAE’s Trade Minister, said that the free trade agreement between both countries will be a “powerful engine of growth.”

Both countries have been exploring synergies in a number of sectors with a specific focus on technology and clean energy. In November 2021, the Emirates brokered an agreement whereby Israel would purchase solar power from a Jordan-based solar power plant – to be constructed by an Emirati firm. According to the terms of the agreement, Jordan would also purchase water from the Israeli site to be constructed along the Mediterranean coast.

Abdulla bin Touq Al Marri, the UAE’s Economic Minister, while commenting on the importance of the CEPA, said: “It also symbolizes something greater than business: the importance of building meaningful partnerships. Our agreement can demonstrate to nations and governments around the world that cooperation and dialogue are the best ways to transform challenges into opportunities.”

The Abraham Accords have also given a boost to strategic cooperation between the Emirates and Israel. While the UAE’s ties with Iran have improved in recent months, the Emirates – like Israel — also views Iran as a threat to regional security.

Saudi Arabia’s ties with Israel have also improved especially in the economic sphere. President Joe Biden’s visit to Saudi Arabia was aimed at taking forward the Abraham Accords and normalizing ties between Israel and Saudi Arabia. In July, the Saudis opened their air space to airlines and in August, a commercial flight headed to Israel passed over Saudi air space.

While in a media interview, Saudi Crown Prince Muhammed bin Salman called Israel a potential ally, he also said that the relationship could not meet its full potential until certain issues were addressed. He was alluding to the Israeli-Palestinian conflict.

While Saudi and Israeli ties may have improved with business communities on both sides showing special interest in improving ties, polls show that there is opposition to the normalization of relations between the two countries. In July, Saudi Foreign Minister Prince Faisal bin Farhan Al-Saud categorically denied that the Saudi decision to open its airspace to all civilian air flights was a pre-cursor to the normalization of ties with Israel.

It is not just Saudi Arabia, but Qatar has also said that ties with Israel could not be normalized until Israel accepted a two-state solution. Qatar rejected Israel’s efforts to open a temporary consulate in the Gulf state during the World Cup.

While addressing the UN General Assembly, Israeli Prime Minister Yair Lapid called for a two-state solution. “An agreement with the Palestinians, based on two states for two peoples, is the right thing for Israel’s security, for Israel’s economy, and for the future of our children.”

Lapid hailed the efforts of Middle Eastern countries to improve ties with Israel, and also called upon other Muslim nations to normalize relations with Israel. Lapid’s comments on a two-state solution were welcomed by the Biden administration and the UAE but predictably viewed with cynicism by Palestinians.

The geopolitics of the Middle East is complex, and it is unrealistic to expect that Lapid’s speech will suddenly change the geopolitical dynamics, but it could give space to other Gulf countries to further improve, if not totally normalize ties with Israel. The UAE whose economic linkages with Israel have witnessed a significant upswing since the signing of the Abraham Accords could play an important role in building trust between Israel and Palestine. Last year, Qatar played a role in reducing tensions between both sides after a flare-up of violence.