As the ceasefire between Israel and Hamas appears to hold, ending the relentless Israeli bombing of Gaza and attacks on Arabs within Israel, the fourth Gaza war has cooled down some of the initial optimism and euphoria over the Abraham Accords.

During the 11 days of aerial attacks at least 248 Palestinians in Gaza were killed, including 67 children, while in Israel, 13 people died, including two children, according to officials on both sides.

Yet, it is too early to make any tangible forecasts as to what extent the conflict between the Israelis and Palestinians will affect the newly established Gulf-Israeli ties. The signatories of the accords grew high hopes that normalization would expand into bilateral trade and investments reaching “billions of dollars for each side,” as Ofir Akunis, Israel’s Minister of Regional Co-operation, initially stated, but the recent clashes may slow the dynamics of investments from the Gulf.

The signatories of the accords grew high hopes that normalization would expand into bilateral trade and investments reaching “billions of dollars for each side.”

William Wechsler, Senior Advisor for Middle East Programs at the Atlantic Council, observes that when emotions run high there is always a pause on implementing new agreements, adding that there are likely to be periods in the future when emotions will flare up again. However, the underlying common interests that set the foundation for the Abraham Accords still remain and “the enthusiasm for deeper people-to-people and business-to-business ties will likely continue,” he told Inside Arabia.

Daniela Huber, Head of the Mediterranean and Middle East Program at the Istituto Affari Internazionali (IAI) in Italy, added that whilst there have been demonstrations all over the Arab world in solidarity with Palestinians, all governments which have signed the normalization agreements with Israel are autocratic and it is unlikely that they will give in to pressure from their own populations. This is because they have vested economic, military, and geopolitical interests in these agreements, Huber added.

For example, despite the UAE calling for Israel to end the clashes in Jerusalem and expressing its concern over “acts of violence committed by right-wing extremist groups in the occupied East Jerusalem,” Abu Dhabi’s criticism has been limited. Therefore, Abdulkhaleq Abdulla, a political scientist at the United Arab Emirates University in Abu Dhabi, believes there “is not enough popular criticism to make the government change its stance toward Israel, which has opened the door to tourism and commercial opportunities.”

Gaza Gulf investments Israel

Israel’s Ambassador to the UAE, Eitan Na’eh, left, talks with an Emirati official during the Global Investment Forum in Dubai, UAE, June 2, 2021. Israelis and Emiratis gathered to discuss investment opportunities aimed at making the most of their deepening ties. (AP Photo/Kamran Jebreili)

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However, Huber told Inside Arabia that “the past weeks have deterred Saudi Arabia from normalizing relations to such an extent as the Emiratis have pursued,” as this move would now be inconceivable given the Israeli police firing tear gas bombs into the central hall of the Al-Aqsa mosque, Islam’s third-holiest site after Mecca and Medina.

Still, even if Israel cannot hope to get recognition from Saudi Arabia – the most powerful Arab state – for the time being, the majority of experts firmly believe that the accords will not be derailed, as all parties have invested too much in establishing ties with Israel. Moreover, their normalization was driven by national security needs and economic aspirations.

Furthermore, Professor Gawdat Bahgat, from the Washington, DC-based Near East South Asia Center for Strategic Studies (NESA), explains that the Abraham Accords are not peace agreements. The UAE and Bahrain (along with Morocco and Sudan) have never been at war with Israel. Therefore, as Bahgat points out, the accords signal an alliance against Iran and Turkey. He noted that despite the recent talks between Iran and Turkey on one side and some Arab countries on the other side, some Gulf leaders still perceive Iran and Turkey as enemies and see Israel as a viable security partner.

“Some Gulf leaders still perceive Iran and Turkey as enemies and see Israel as a viable security partner.”

It should be no surprise, Bahgat added, if some Gulf Cooperation Council (GCC) leaders buy Iron Dome and other Israeli military equipment. Domestically, he continued, a major driver of Gulf-Israeli cooperation is some GCC states’ desire to buy Israel’s surveillance software. “Israel is a leader in this field and some GCC leaders feel the need to spy and monitor their citizens and dissidents. This is not likely to change any time soon. Indeed, this desire is likely to grow stronger,” he told Inside Arabia.

But the Abraham Accords go beyond security issues. Gulf states are eager to diversify their economies away from oil and partner with Israeli businesses, especially in the technology and tourism sectors. Likewise, for Israel, attracting wealthy Gulf investors would be a gamechanger for its economic interests.

In January, the Masdar investment fund from Abu Dhabi announced the first major UAE investment in Israel – worth hundreds of millions of dollars – to develop renewable energy projects there. In addition to a preliminary agreement to transport Gulf oil through Israel to ports on the Mediterranean, with Dubai’s port operator bidding for Haifa Port, the United Arab Emirates’ Mubadala Petroleum, in April, signed a memorandum of understanding to buy a 22 percent stake in Israel’s Tamar offshore field. If completed, this will be the biggest business deal between the two Middle Eastern nations since they normalized their ties in August 2020.

However, the majority of announced investments from the Gulf come from companies and funds that are strongly linked to state entities, and therefore, actively protected and supported by the state. Private investors, on the contrary, are much more vulnerable to public backlash. The recent Israeli-Palestinian conflict, which amplified strong anti-Israeli public sentiments in Arab countries, may discourage them from making further steps towards Israel.

Thus, the geopolitical dynamics in the region will always have an impact on the accords, especially in the short run, and this will likely fluctuate over time, explains Wechsler. In the long run, he added, professional, institutional investors tend to be driven by where they can find uncorrelated returns far more than other factors. As far as direct trade relations go, private companies are not a monolith — some will move forward more rapidly than others. Retail companies, who sell directly to Arab consumers will likely be more cautious, according to Wechsler, “as they are potentially most vulnerable to negative public campaigns [on] social media.”

And while traditional Arab allies have been distancing themselves from Palestinians, ever stronger social media campaigns and rights organizations advocating in favor of the deprived nation could continue to pressure business entities not to engage with Israel. The decision made by of one of the most prominent global sovereign wealth funds from Norway to drop firms associated with Israeli settlements in the West Bank is one such example.

Ever stronger social media campaigns and rights organizations advocating in favor of Palestinians could continue to pressure business entities not to engage with Israel.

Wechsler pointed out that sovereign wealth funds and other especially large global institutional investors, have to set their own policies about the degree to which their investment decisions will be driven by social, environmental, political, or other such concerns, including the Israel-Palestinian issue. But according to him, “there is no consensus today, and there is not likely to be one in the future; and in this regard, Gulf entities are no different.”

However, Huber explained that Norway’s and other similar decisions follow the International Court of Justice’s (ICJ) advisory opinion on the Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory. In it, the ICJ reminded the signatories of the Geneva Conventions of their third-party responsibility; and in line with this, the UN Security Council Resolution 2334 called upon all states to distinguish in their relevant dealings between the territory of the State of Israel and the territories occupied since 1967, she further noted.

Based on this resolution, the UN has published a blacklist of companies that are operating in the settlements which are illegal and in systematic breach of the Fourth Geneva Convention. Furthermore, pressure from civil society in Europe is also increasing. So far, however, Huber observes that it is not clear whether the UAE has considered this in its dealings with Israel. As for Bahgat, in reference to the UAE and Israel, he thinks “the two sides might try to avoid publicity, but the cooperation is likely to grow deeper.”

Nevertheless, Wechsler believes that over time, the growing economic ties that derive from Gulf countries’ normalization with Israel will provide them with additional leverage as they become increasingly involved in diplomacy regarding the Israel-Palestine conflict and the search for a two-state solution. Accordingly, there will be a much larger number of Israelis whose businesses become increasingly dependent on trade with the Gulf. He hopes that they will then advocate inside Israel for policies that prevent that trade from being interrupted.