On May 31, 2022, the United Arab Emirates and Israel signed a free trade agreement, which is an important event of milestone significance in bilateral relations since the two countries established diplomatic ties in September 2020. The free trade agreement will consolidate the diplomatic relations between the two sides, substantially change the geoeconomic and geopolitical landscapes of the Middle East, tilt the regional geopolitical map in Israel's favor, and further enhance Israel's strategic position in the region.

1. Arab-Israeli détente is an inevitable trend

Since the United Arab Emirates and Israel established diplomatic relations in 2020, their relationship has been on the fast track of development: the two countries successively established embassies in their respective countries in June and July 2021; Israeli Prime Minister Bennett paid a visit to the United Arab Emirates in December 2021; and a senior representative of the United Arab Emirates attended in March 2022 the Negev Summit between Israel and neighboring countries which was also attended by US Secretary of State Antony Blinken. The signing of the free trade agreement between the two sides marks that the bilateral relations have entered a stage of consolidation to enrich the economic connotations.

Apart from the push by the United States and the high economic complementarity between the two countries and other inherent driving factors, the relatively light moral responsibilities that the United Arab Emirates bears is also an important reason why UAE-Israeli relations can achieve a series of important progress in less than three years.

Although détente between Arab countries and Israel is a general trend, the Palestinian issue is still an important factor restricting the easing of relations between the two sides because it involves complex religious sentiments and the Al Aqsa Mosque, which is the third holiest site in Islam. In particular, although Saudi Arabia has maintained unopen relations with Israel for a long time, it has always held a cautious stance on developing official relations with Israel because it regards itself as the leader of the Arab-Islamic world. By comparison, the United Arab Emirates ranks second among the GCC countries in terms of economic and population sizes. It does not need to bear more moral responsibilities on the Palestinian issue like Saudi Arabia does, so it is easier for the United Arab Emirates to develop relations with Israel at its own pace. It is precisely because of this unique position that the United Arab Emirates has become a key target for Israel to make diplomatic breakthroughs in the Arab world.

2. The geoeconomic landscape is undergoing significant changes

The signing of the free trade agreement will have multiple far-reaching impacts. Among them, the following two aspects deserve special attention. First, it will substantially alter the geoeconomic landscape of the Middle East. It is reported that after the signing of the agreement, the United Arab Emirates and Israel will cancel 96% of their trade tariffs, with the scale of their bilateral trade expected to reach US$10 billion in five years. Israel has advantages in high-tech industries and agricultural products, but its domestic market is small, and it has not been able to enter the markets of neighboring Arab countries due to their boycott. After the signing of the free trade agreement, Israeli products will have the opportunity to smoothly enter the United Arab Emirates and then the broad Arab market via the United Arab Emirates. While boosting Israel's economic strength, this will help to achieve the nation's economic integration with Arab countries, which will in turn greatly boost the Israeli economy.

Like Saudi Arabia and other GCC countries, the United Arab Emirates has also entered a new round of economic development in recent years with its "2030 Vision" as the blueprint, aiming to build itself into a logistics hub that radiates towards vast regions including the Middle East, Asia, Europe and Africa. After signing the agreement with Israel, the United Arab Emirates will enhance its position as a logistics hub and further consolidate its status as an important economic center in the Middle East.

Second, the geopolitical map of the Middle East will continue to evolve in the direction that favors Israel. Although Arab countries remain verbally committed to supporting the national rights of Palestine, the normalization of relations between Arab countries and Israel has nevertheless accelerated the marginalization of the Palestinian issue. Undoubtedly, the United Arab Emirates has played a certain exemplary role in this process. After the establishment of diplomatic relations with Israel, the United Arab Emirates, on the one hand, still condemns Israel for its violation of Palestine's national rights. On the other hand, it still maintains the momentum of developing relations with Israel, which has put into practice a new path for Arab countries to develop relations with Israel. This is a path of verbally abiding by moral responsibilities on the Palestinian issue and developing relations with Israel at the same time.

3. Israel is gaining a more prominent position

To a large extent, the rapid development of bilateral relations between the United Arab Emirates and Israel has solved the problem of how to maintain a balance between abiding by moral responsibilities and developing relations with Israel, providing a feasible reference and legitimate support for more Arab countries to develop relations with Israel. It can be expected that with the example of the United Arab Emirates, under the diplomatic offensives by Israel and with the diplomatic mediation of the United States, more Arab countries may choose to normalize their relations with Israel, while those countries that have already normalized their relations with Israel will deepen their economic, political, and even strategic cooperation with the Israeli state.

As the normalized relations between Israel and Arab countries further expand in scope, Israel's political, economic and strategic positions in the Middle East will be further consolidated. Although it has played varying roles in the Iraq War in 2003, the Syrian War and other issues, Israel as a force resisted by Arab countries has long failed to enter the core position in Middle East politics. In the future, with the normalization of diplomatic relations and the consolidation of economic ties between Israel and more Arab countries, Israel is expected to further enhance its influence on Arab countries, and its strategic cooperation with Arab countries is also anticipated to be on further strengthening. As a result, the position of Israel as an important power broker in the region may become more prominent.



Source: Jin Liangxiang, Associate Research Professor, Shanghai Institutes for International Studies