The Next Accord of the Abraham Accords

By Efraim Chalamish

The Abraham Accords, signed in September a year ago, have changed the Middle East forever. From hundreds of thousands of Israeli visitors to the UAE, to headlines about major potential cross-border transactions, to other Gulf countries that would like to join the new Middle East – new Arabian winds are blowing and are here to stay.

Yet, this moment of reflection is also a unique opportunity to look more carefully at how local, regional and global markets reacted and what needs to be done to remove the barriers that make progress more challenging on the ground.

The disproportionately high number of Israeli visitors to the UAE this past year, and the urge to capitalize quickly on the agreement, jeopardized the level of knowledge parties have. The cancelation of the potential investment by a UAE royal in Jerusalem’s leading soccer team due to his questionable finances and other similar cases have highlighted the trust deficit and the limited intelligence available to the respective entities. Better background checks, more structured and longer processes, and humble expectations will be needed to prevent similar fiascos.

The presence of international players can help to solve this issue by providing both Israelis and Gulf-based entities the necessary linkage and legitimacy. It has been reported that Japanese companies are interested in transactions that would create an energy corridor from Israel to the Gulf, and similar strategic moves are needed.  The Abraham Fund, an international financial commitment to support cross-border infrastructure and energy security projects, should be saved despite recent calls to suspend it.

Gulf-based investors are often looking for the strategic value in every project. While financial returns are important, there is a need for a strategic alignment. The Delek-Mubadala deal in which Abu Dhabi-based Mubadala Petroleum purchased a $1 billion stake in the Tamar natural gas field is a case in point. The parties will be better off focusing on similar transactions in the next few years. 

Cultural differences have also been identified. While Israelis have been looking for ‘quick wins’, such as venture investing with a short timeframe, Emirati and Bahraini individuals and companies have different time horizons, expecting relationships to develop and mature over time until they can generate the expected results. This gap has created significant frustrations on both sides and should be considered as part of the learning curve of the Abraham Accords and their consequences. While cultures cannot change overnight, governments on both sides should not create false expectations and should better prepare the parties for a more constructive dialogue.

In addition, we should not forget the framework of the Abraham Accords and the original text of the declaration. The accords are named after Abraham, the common patriarch of the three monotheistic religions, Judaism, Christianity, and Islam. The spiritual aspect was an important component of the journey to the accords and their current framework. Leaders from all relevant religions have met over the years as part of the track-II diplomacy efforts to bring the countries together. They all emphasized what values and practices those religions have in common.

Unfortunately, the rush to advance commercial transactions left the spiritual component behind. While certain projects and deals are short-lived, the religious aspect can give the long-term oxygen, legitimacy, and much-needed resilience to the agreements. Despite the ongoing political sensitivities in the region, religious leaders and programs should be accelerated.

The need to re-emphasize the religious component should be part of broader efforts to add bottom-up stories following the leaders’ framework. A recent report by the Atlantic Council and INSS think tanks and policy groups highlights the areas where civic engagement can be improved and developed. Religious dialogue, sports activities, and academic research programs are some of the key elements. 

As the report shows, the progress in this area has been limited, and a lot can be done with local and international support. The incentives are concrete and beyond relationships maintenance. For instance, religious leaders from both sides can de-legitimize extremist groups in the region. The decline in enrollment in Israeli academic institutions in recent years can be addressed by a rise in participation of Gulf students. Israel’s leading athletes, such as chess players, can help the Emiratis improve their performance via joint camps, training programs, and yearly competitions. The United States can and should play an important role in this civic engagement by providing the necessary umbrella for the various projects.

As we are all eager to see the next chapter of the Abraham Accords and Jewish-Muslim relations in the Middle East more generally, only a nuanced and transparent approach can lead to the desired progress and regional growth.

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Dr. Efraim Chalamish is an international economic law professor, advisor, and media commentator. He has been involved in international legal practice in New York, Paris and Israel, along with research in, and analysis of, cutting edge areas in public and private international economic law. Dr. Chalamish teaches at NYU Law School. Read full bio here.

WHEN VALUES GO GLOBAL-A COUNTRY AND PEOPLE REDEFINED

By Efraim Chalamish

This past week brought us the unique opportunity to observe two very different events and occasions that happened to take place on the same day — Tu Bishvat and International Holocaust Remembrance Day. One is nature’s New Year in Judaism and the other commemorates the unprecedented events of the Holocaust and their role in the international community. While these two very distinct events have very little in common, this coincidence of time and place projects important developments in Israel’s rapid growth as a sovereign nation and its role on the global stage. And the lessons should be applied to other Israeli and Jewish events moving forward.

Tu Bishvat is originally a Jewish holiday that celebrates the birth of the trees. Israeli kids historically are heading to nature on that day, planting their first seeds. The holiday not only symbolizes the renewal of nature, but also the unique role of trees and the environment in the Jewish tradition and its culture. Jewish patriarchs, matriarchs, and thought leaders used trees to dream and grow for generations.

Yet, the nature of Tu Bishvat has changed over the years. It was the first birthday of the Knesset, the Israeli parliament, which became a symbol of modern democracy, despite its weaknesses and challenges. It also introduced the concept of environmental preservation and ‘climate change’ to new audiences in Israel and the Jewish community around the world. Most importantly, though, it took particular Jewish events and turned them into a universal message, presenting the meaning of the day to the wider global community.

Holocaust Remembrance Day (Yom HaShoah) has been mainly an internal Israeli event. Commemorated in Israel and Jewish communities around the world in April every year, it became an international event in 2006 when the United Nations announced the new International Holocaust Remembrance Day to be marked on January 27, the date of the liberation of Auschwitz by the Red Army.

Following advocacy efforts by various organizations, which I had the opportunity to be part of, the leadership of the United Nations and the international community concluded that it is the right moment in history to turn the memorial day into an international day, educate next generations in every country and religion, and project the importance and relevance of the horrific events to today’s world. While for years the Holocaust has been perceived in some circles as an internal Jewish element, now the universal message has been delivered loud and clear.

The transition of Tu Bishvat and Holocaust Remembrance Day should have a special meaning to us. They represent a dramatic change in the way Israel defines itself and projects its role in and to the world.

The story of Israel as a startup-nation resonates with broader audiences globally since it shows how you can take internal challenges and convert them to innovation and technological solutions that change positively the world completely, one app at a time. It also brought Israel to the forefront of impact investing, social investments, and Tikkun Olam.

Yet, it is not only Israel’s technology that can take a national narrative to the universal stage in order to re-define Israel’s role in the world. The Jewish and Israeli calendars are comprised of many dates, events, and themes that can be shared with the world to give them current meanings and modern applications.

The benefits are many. While some groups question the importance of these holidays and events even within the Jewish community itself, a universal messaging helps them understand their broader context. Moreover, it provides more opportunities for Israel as a sovereign nation to contribute to the most cutting-edge discussions in the world today, from health policy to security. Also, similarly to the U.N. example, it can create additional forums where leaders from around the world can connect on these key issues, where Israeli diplomacy plays a meaningful constructive role.

The Abraham Accords and consequent agreements between Israel and Arab nations, including the United Arab Emirates, Bahrain, and Morocco, also reflect this change. Listening carefully to the region’s leaders and reading the relevant texts, the agreements reflect not only a new regional strategic order, but also a deep understanding between religions that can be used to surface key issues in inter-religious dialogues, and can be relevant to other religions and crises around the world.

The world of trees met the world of European and World history in a week that reminded all of us of the power of universal relevance and messaging of Jewish and Israeli events and values. We should all continue and explore ways to bring this unique voice to the world. I have no doubt it will be heard. The world is listening.

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Dr. Efraim Chalamish is an international economic law professor, advisor, and media commentator. He has been involved in international legal practice in New York, Paris and Israel, along with research in, and analysis of, cutting edge areas in public and private international economic law. Dr. Chalamish teaches at NYU Law School.

HOW ISRAEL CAN ANSWER THE CHINA QUESTION

By Efraim Chalamish

Pompeo’s recent visit to Israel during the Covid-19 pandemic and the public controversy surrounding Chinese involvement in Israel’s companies and infrastructure have intensified the discussion about the way Israel balances U.S. and Chinese interests in the region.

There is no doubt that China’s engagement with Israel has been on the rise for a few years now on all levels, including: a 5 times increase of Israeli export to China this past decade, the rising Chinese capital flows into Israel’s tech and innovation ecosystem, and the intense participation of Chinese companies in pubic tenders and key infrastructure projects.

The Israel-China economic renaissance has been driven by a well-designed government-to-government dialogue alongside strategic initiatives among public and private entities in academia, business, and NGOs.  

Yet, very little attention has been paid to the need to balance the multiple interests in the region. The Israel-US unique nexus and the Israel-China track have been perceived as parallel, with limited points of intersection. However, this might have to change as the Trump Administration perceives China as a strategic threat and as China’s involvement in Israel expands to include Israeli strategic assets, such as its ports.

The growing calls from Washington and other parts of the international security community to reduce Israel’s dependence on China have been characterized as a zero-sum game. 

That said, recent experience shows that Israel can navigate this potential crisis well and should continue the constructive dialogue with both nations concurrently.

First, Israel is not the first nation to chart these waters and should learn from the experiences of others. The EU and its member states are facing similar dilemmas. When Mathias Dopfner, the CEO of influential media conglomerate Axel Springer, called for an economic and tech ‘de-coupling’ from China post-Covid19, many European politicians and business leaders criticized him for picking a side.

On a related note, various countries had to decide if and how to implement Chinese 5G technology, while the U.S. administration has been trying to prevent such adoption. 

Most countries found a middle ground by allowing Chinese 5G technology in certain parts of the market that are more secured. The British government, for one, announced at the beginning of 2020 that it would cap Huawei’s market share at 35% and exclude the vendor from sensitive locations. 

That decision was criticized by a Chinese PR campaign and is under review by the UK government for security reasons. While Chinese companies are currently excluded from Israel’s 5G technology push, a similar, more balanced approach, may be needed with respect to other aspects of Israel’s tech environment. 

Second, the Israeli government adopted a screening mechanism for foreign investments for national security purposes. Unlike the U.S., Canada and other nations, the Israeli mechanism has been kept secret with limited execution. The ramifications are significant. The lack of transparency creates uncertainty in the market, both in Israel and China, and imposes constraints on capital flows. It also gives the impression that Israel doesn’t do enough to consider security interests and US-Israel bilateral relations.

Israel needs to open the process, engage the private sector more closely, and develop a reporting mechanism which would give the process the credibility and legitimacy necessary for its success. 

Third, significant parts of the current Israel-US tension surrounding the ‘Chinese Question’ result from Trump’s specific take on trade and investment protectionist measures and the Chinese threat to U.S. allies. It is not unreasonable to think that some of these policies may change during a Biden Administration following the upcoming November 2020 elections. Many of the Israeli projects being criticized by the U.S. government are long-term and it would be prudent to re-assess them following the U.S. election season.

Fourth, several sectors in the Israeli market are lacking major U.S. participation, such as construction. The construction and renewables sectors have been dominated by European and Asian players in recent years. The U.S. government should do more to bring American players to Israel’s infrastructure space.

Fifth, as more military technologies globally are being used for civilian purposes and vice versa, there is a growing connection between ‘dual use’ export-control regime and screening of foreign investment for national security risks. The U.S. is going through a similar transition. Israel has a sophisticated export control mechanism but a very limited review process of foreign investors. Israel should bring these 2 regimes closer to each other. The tech industry has rejected the government’s review of tech investments, while embracing a careful approach to the export of sensitive technologies. 

The time for change has come.

Also, any review of Chinese commercial activity should be conducted via intra-disciplinary lenses, including diplomatic, commercial, and civic factors. Israel’s National Security Council (NSC), currently responsible to execute Israel-China strategy on this matter, has been historically lacking the resources and the capabilities to support such a review. 

Incidents like the military action against the Turkish flotilla in 2010 that reshaped Israel-Turkey relations emphasize the risk of over-reliance on security concerns. Empowering and strengthening the Israeli NSC should be part of the new Israel-US-China balancing act.

Finally, international trade has been shifting directions. Asian international trade, mostly from China, is now more than twice as big as America’s international trade. Israel cannot ignore the changing economic reality, and ‘de-coupling’ is less attractive in the Israeli unique economic context. 

Yet, Chinese bidders have lost major tenders in Israel lately, such as the world’s largest desalination plant and Ramat Hovav’s power plant. It reflects both Israel’s policy preferences as well as new commercial and financial constraints in China. But while Israel tends to think about the here and now, China has a very long-term view on global and local markets. 

Israel should show China that it knows how to address real security concerns while keeping the critical flow of inbound capital. 

Balancing US and Chinese interests in the region is not an impossible task and the benefits are compelling.

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Dr. Efraim Chalamish is an international economic law professor, advisor, and media commentator. He has been involved in international legal practice in New York, Paris and Israel, along with research in, and analysis of, cutting edge areas in public and private international economic law. Dr. Chalamish teaches at NYU Law School.