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196 PART 2 • MANAGING ACROSS CULTURES
C A S E S T U DY
Copyright © 2022. Pearson Education, Limited. All rights reserved.
Economic Diplomacy: Normalizing Relations between the UAE and Israel90
On September 15, 2020, the United Arab Emirates (UAE) and Israel signed a historic agreement called
the Abraham Accords at the White House in the United States to normalize relations between the two
Middle Eastern countries. In international diplomacy, normalizing ties between two countries means
that they agree to establish friendly relations after hostilities or war. The UAE thus became the first Gulf
country and the third Arab country to normalize relations with the Jewish state, after Jordon in 1994.
The countries agreed to allow travel, commerce, and eventually the setting up of diplomatic offices.
Both the countries are relatively young; the UAE was established in 1971 and Israel in 1948.
Nevertheless, they have made remarkable progress as socially, educationally, and economically advanced nations. The UAE has a unique position in the Middle East as the region’s dominant trade,
transport, financial, and commercial center. Israel is well established as a leader in R&D spending,
Nobel Prizes, and technology and innovation. It has the highest number of startups per capita, which
has earned it the moniker of “startup nation.” The establishment of diplomatic and business ties between the two countries holds a lot of promise for the region.
The negotiations leading up to the signing of the Abraham Accords were centered on
economic and business rationales that promise to benefit both the UAE and Israel. Building
relationships and establishing trust were an integral part of the national-level negotiations. To set a
positive tone, common goals were stressed instead of past differences, and a new model of mutual
understanding, coexistence, and tolerance was proposed for the region. Emphasis was placed on
decision-making that would engage the people of the two countries based on an understanding of
each other’s cultures. The communication between the leaders of both countries—Israeli prime
minister Benjamin Netanyahu and UAE foreign minister Abdullah bin Zayed Al Nahyan—
signaled a willingness to let go of past differences and initiate cooperation and dialogue.
On August 13, 2020, touting the United States’ role in brokering the deal and managing
the negotiation process, President Trump announced the peace agreement between the two nations
and described it as aimed at building a peaceful and prosperous Middle East. The approach to
the negotiations was one of problem-solving based on group consensus, with respect for both the
parties involved, an impartial U.S. stance, and an effort to find honorable solutions for both sides.
The outcome of the negotiations was the signing of the Abraham Accords, following which each
of them opened embassies in the other’s country. Pictures of the diplomats and ambassadors of the
countries doing the elbow bump—as a substitute for the handshake in accordance with the COVID-19
etiquette—were widely circulated to mark a new era in the relationship between the countries.
Following the historic deal, the countries exchanged various high-level trade delegations to explore opportunities in the healthcare, aviation, agriculture, education, telecommunications, energy,
technology, and tourism sectors. The UAE, the United States, and Israel announced the Abraham
Fund, through which the U.S. International Development Finance Corporation, the UAE, and Israel
will mobilize more than $3 billion in private sector-led investments and development initiatives to
promote regional economic cooperation and prosperity in the Middle East and beyond. Within the
first year of the normalization of ties, nearly 200,000 Israelis had visited the UAE despite the coronavirus pandemic. By August 2021, business between the two countries had reached $500 million.
The UAE–Israel Business Council was set up immediately to help promote trade and exchanges, and
it gained thousands of members within a matter of weeks. Similarly, the Abrahamic Business Circle
was founded to promote economic diplomacy. These forums aim to help in connecting the business
communities of the two countries, advise the companies conducting business in them, identify opportunities for collaboration, facilitate seminars and information sessions, and organize delegation visits.
In 2021, H.E. Mohamed Mahmoud Fateh Ali Abdulla Al Khaja, the UAE’s ambassador to
Israel, and Eitan Na’eh, the head of Israel’s mission to the UAE, in the embassy at Abu Dhabi,
co-authored an opinion editorial in The National, a UAE daily. The two diplomats talked about
their collaborations on cross-cultural deals and on decision making related to expanding economic exchanges. There is a regular update on the near-daily announcements of new deals and
agreements that are signed between the universities, research institutes, startups, and medical
centers of the two countries.
Despite the excitement surrounding normalized relations between the UAE and Israel, skeptics
say there are challenges that will require time and expert negotiation skills. In cross-cultural business
Deresky, Helen. 2022. International Management: Managing Across Borders and Cultures,Text and Cases, Global Edition. Harlow: Pearson Education, Limited. Accessed May
M05_DERE0362_10_GE_C05.indd 196
12, 2023. ProQuest Ebook Central.
Created from curtin on 2023-05-12 07:08:00.
5/6/22 8:03 PM
CHAPTER 5
•
Decision-Making and Negotiating across Cultures 197
deals amid a history of past disputes, decision making needs to take into account deeper variables that
contribute toward trust-building. While the two economies seem parallel in terms of population and
GDP, there are significant differences too: Israel’s economic growth is linked to technology, while the
UAE has a diversified economy based on oil, derivates, real estate, aviation, and tourism.
In the UAE, 30 percent of Emiratis fully support building a stronger long-term relationship with
Israel; however, the majority want to it take it slow and see if the accord will last. According to Rena
Krakowski-Riger, an advisor to Israel’s former prime minister, although the UAE is keen on doing
business, Israelis should be sensitive to their culture and should learn how to do business the Emirati
way, which includes showing humility and adaptability. She further added that Israelis will have to
change their mindset of “we have the brains, you have the money; let’s do business.” It’s not just about
signing several deals; actual success is managing relations on a long-term basis.
Dr. Raphael Nagel, a Jewish investor living in the UAE and the founder of the Abrahamic
Business Circle, says that the Abraham Accords were signed with high expectations and excitement, but maintaining that spirit with a realistic appraisal of the facts is important. Although the
two countries are in the Middle East, they have different backgrounds, and the way they handle
things is different. Israel is a country with an entrepreneurial spirit and abounds with startups,
particularly in tech. However, UAE investors are looking to bring established businesses to their
country and are less interested in putting money in startups and new ventures. They want sustainable growth and are happier partnering with a business that has a long-term view. Israeli
companies that are willing to invest and locate themselves in the UAE and are ready to become
part of the UAE business sector will have a better chance of gaining trust and building long-term
customers. When a group of Israeli executives from the tech industry visited Dubai six weeks
after the signing of the Abraham Accords, they were greeted very warmly by Emirati investors,
who attended presentations and pitches made by the Israelis in areas related to cybersecurity,
artificial intelligence, and even food tech, like the company Innovopro, which extracts a plantbased protein from chickpeas.
Since the Abraham Accords Bahrain, Sudan, and Morocco have also begun normalizing
relations with Israel. Many are waiting to see if Saudi Arabia will join the other Arab nations.
Copyright © 2022. Pearson Education, Limited. All rights reserved.
Case Questions
5-11. Comment on some of the negotiation variables involved in the signing of the Abraham Accords.
How lasting are the results of the negotiations likely to be?
5-12. What are some of the similarities and differences that should be accounted for when signing
business deals between Israeli and Emirati businesses?
5-13. Discuss the similarities between the countries that can be used to build a mutually beneficial
relationship.
5-14. In forums like the UAE–Israel Business Council and the Abrahamic Business Circle, who are the
stakeholders, and what is at stake for each of them?
5-15. Research updates to this economic diplomatic agreement between Israel and the UAE. What are its
implications for the wider Middle East?
Endnotes
1. Arash Massoudi, “Hitachi Looks for Deal with ABB on Power
Grids Business,” Financial Times, November 19, 2018, https://
search-proquest-com.libweb.lib.utsa.edu/businesspremium
/docview/2166434341/B8D86AB54E1C40F3PQ/6
?accountid=7122 (accessed February 14, 2019).
2. Ibid.
3. Ralph Atkins, “Hitachi Lines up Deal for ABB Grids Unit:
Industrials Japanese Group Targets Foreign Growth as Swiss
Engineer Refocuses,” Financial Times, December 13, 2018,
https://search-proquest-com.libweb.lib.utsa.edu/businesspremium/
docview/2166434341/B8D86AB54E1C40F3PQ/6?accountid=7122
(accessed February 14, 2019).
Deresky, Helen. 2022. International Management: Managing Across Borders and Cultures,Text and Cases, Global Edition. Harlow: Pearson Education, Limited. Accessed May
M05_DERE0362_10_GE_C05.indd 197
12, 2023. ProQuest Ebook Central.
Created from curtin on 2023-05-12 07:08:00.
5/6/22 8:03 PM
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