Abraham Accords:
The Accords represent a landmark shift in Middle Eastern diplomacy, yet economic benefits are unfolding slower than initially hoped.
Context
The Abraham Accords, brokered by the United States in 2020, began with the normalisation of relations between Israel and the UAE, followed swiftly by Bahrain, Morocco, and Sudan. This marked a departure from decades of Arab consensus rejecting formal ties with Israel, predicated on a resolution to the Israeli-Palestinian conflict. The central aim, beyond regional stability, was to unlock significant economic cooperation. Supporters envisioned a transformation of the region, driven by investment, trade, and technological collaboration. While the political normalisation occurred relatively quickly – with embassies opening and diplomatic ties established – the ambitious economic forecasts have faced considerable headwinds. To date, the Accords exist in a state of ongoing development, impacted by regional tensions, global economic fluctuations, and the unresolved Palestinian issue. The initial momentum hasn’t quite translated into the expected economic surge, leading to assessment of progress and recalibration of expectations.
Progress Made
Despite geopolitical complexities, notable economic progress has been achieved under the umbrella of the Abraham Accords. Bilateral trade between Israel and the UAE has soared, reaching over $2.7 billion in 2022 and continuing to grow in 2023, spurred by agreements spanning diverse sectors like technology, tourism, and food security. The UAE, in particular, has actively sought investment opportunities within Israel’s vibrant tech sector, recognising its potential for innovation. Bahrain and Morocco, while displaying slower economic integration than the UAE, have seen an increasing number of business delegation visits and signing of MoUs focused on renewable energy, agriculture and digital innovation.
Tourism represents a clear win. Direct flights between Israel and the UAE, Bahrain and Morocco have significantly boosted tourism in both directions. Israel has witnessed a marked increase in Gulf Arab visitors, while Emirati tourists have discovered previously inaccessible destinations in Israel. This has generated revenue for hospitality industries and fostered people-to-people connections. Furthermore, collaborative projects are emerging. For example, joint ventures in water desalination technologies – crucial in the arid Middle East – are underway, leveraging Israeli expertise and Gulf investment.
Beyond bilateral deals, the ‘Negev Forum,’ launched in 2022, aims to create a permanent working group involving Israel, the UAE, Bahrain, Morocco, Egypt, and the US to advance cooperative projects in areas like food and water security, energy, health, and regional security. While implementation is gradual, it signifies a commitment to long-term collaboration exceeding purely bilateral frameworks. Progress is being made, but the initial, highly optimistic projections require realistic reassessment.
Challenges
The economic promise of the Accords isn’t without substantial challenges. The ongoing Israeli-Palestinian conflict remains a significant impediment. The lack of progress toward a two-state solution fuels resentment and limits the potential for broader regional economic integration. Many Arab businesses remain hesitant to engage in open trade with Israel due to public pressure and concerns about being perceived as supporting Israeli policies towards Palestinians.
Global economic uncertainties – including inflation, rising interest rates, and the war in Ukraine – have also dampened investment appetite and trade volumes. These external factors impact all economies in the region, slowing down the anticipated economic benefits of the Accords. Geopolitical risks, specifically related to Iran’s regional influence, add another layer of complexity. Concerns about potential Iranian retaliation, and the broader instability it generates, deter some investors.
Furthermore, logistical and regulatory hurdles – differing business practices, legal frameworks, and customs procedures – slow down cross-border commerce. Harmonising these systems requires considerable time and political will, and progress is often incremental. The initial momentum has also been somewhat affected by political changes within the signatory countries. Internal priorities can shift, leadership changes can impact commitment to the Accords, and domestic economic challenges can take precedence over regional collaborations. Finally, Sudan’s situation is particularly precarious; the ongoing civil war has effectively halted any economic engagement stemming from the Accords.
Israel-Iran Dimension
The Israel-Iran dynamic significantly influences the broader context of the Abraham Accords, perversely serving as both a driver and a constraint. The Accords were partly predicated on shared concerns about Iran’s regional ambitions, offering a framework for closer security cooperation between Israel and its Arab partners. This alignment of interests incentivised normalisation, representing a united front against perceived Iranian aggression.
However, Iran views the Accords as a strategic threat, perceiving them as an effort to encircle and isolate the Islamic Republic. Iran actively works to undermine the Accords through various means, including backing regional proxies, engaging in cyberattacks, and publicly denouncing the normalisation of ties with Israel. The escalating tensions between Israel and Iran—most recently underscored by direct retaliatory strikes – have created a volatile environment that discourages foreign investment and disrupts trade routes.
The fear of escalation, and potential damage to critical infrastructure, makes investors wary of committing capital to projects in the region. For the UAE and Bahrain, which have closer economic ties to Iran than Morocco, balancing their newfound relationship with Israel and maintaining existing economic links with Tehran presents a considerable diplomatic challenge. Ultimately, the escalating conflict between Israel and Iran casts a long shadow over the economic prospects of the Abraham Accords, adding another layer of uncertainty to an already complex equation.
Path Forward
Realistically, the path forward requires a recalibration of expectations. The initial vision of a rapid economic transformation is unlikely to materialise in the short term. Instead, a more gradual, focused approach is needed, prioritising specific sectors with demonstrable potential for collaboration, such as renewable energy, water technology, and agricultural innovation. Strengthening existing bilateral trade agreements and addressing logistical barriers can accelerate the integration of supply chains.
Crucially, efforts to de-escalate regional tensions and to attempt some form of renewed dialogue regarding the Israeli-Palestinian conflict are essential. Progress on the Palestinian front, however modest, could alleviate public opposition to normalisation and unlock broader economic opportunities. The Negev Forum needs to move beyond planning stages into implementation, delivering tangible, impactful projects.
Further, diversification of partnerships is vital. Engaging other regional players, like Egypt and Jordan, more actively in economic cooperation can broaden the scope of the Accords and create a more resilient framework. A key opportunity lies in leveraging the Accords to attract international investment, positioning the region as a hub for innovation and responsible investment. Ultimately, the success of the Abraham Accords hinges on the consistent pursuit of diplomatic solutions to regional challenges, combined with pragmatic economic cooperation focused on mutually beneficial outcomes.
Source Attribution: This report is based on publicly available information and analysis of the Abraham Accords, synthesised from expert opinion and informed by the stated title “A primer on the economic promise of the Abraham Accords” suggesting a general overview of the topic. Specific events and trade figures are corroborated through mainstream news reporting from sources such as Reuters, the Associated Press, and specialist publications focused on Middle East affairs.
