The agreement between Israel and the UAE to normalise their diplomatic relations will have important economic and geopolitical ramifications for both sovereigns, with the UAE particularly benefiting from enhanced tourism and transportation opportunities, while it will support Israel's improving security situation, global ratings agency Moody’s said.
Last Thursday, Israel and the UAE announced that they would normalise diplomatic ties and forge a new relationship. The agreement, which makes UAE the third Arab country after Egypt and Jordan to make peace with Israel, calls for a temporary suspension of Israel's planned annexation of occupied West Bank territory, but not withdrawal.
According to UAE news agency WAM, delegations from Israel and the UAE will meet in the coming weeks to sign agreements regarding investment, tourism, direct flights, security, telecommunications and other issues.
Saudi Arabia's foreign minister Faisal bin Farhan Al Saud on Wednesday described the normalization deal as a potential contribution to peace in the region.
While ties between Israel and the GCC sovereigns have been improving informally for many years, the formalisation of diplomatic ties with the UAE is a further step in Israel's improving diplomatic and economic relations with Arab countries, Moody's noted.
Following the announcement, the Emirati APEX National Investment company signed a commercial agreement with Israel's Tera Group to conduct research on COVID-19 and develop a testing device that produces accurate results faster.
Although coronavirus effects will constrain near-term benefits for on air travel, the UAE’s air transportation sector is well positioned to take advantage of a normalisation in relations.
The UAE's two largest airlines, Emirates and Etihad, could attract Israeli passengers by leveraging their hub status, the global ratings agency said, adding, in addition to passengers using the UAE as a hub for onward travel, there may also be some demand for direct tourism between the two countries, supporting passenger traffic volumes marked by slower growth in arrivals even before the pandemic.
(Writing by Seban Scaria; editing by Daniel Luiz)
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