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Arab-Israeli trade potential enormous
Journal of Commerce / May 11, 2000

By Larry Luxner

TEL AVIV -- Last month, a delegation of Israeli lawmakers returned from the North African nation of Mauritania -- marking the first time officials of the Jewish state have visited this predominantly Arab country since it recognized Israel in October 1999.

Nearly 4,000 miles to the east, the government of Yemen has granted permission for Israeli citizens of Yemenite descent to visit their ancestral homes, with the president of Yemen publicly declaring that Jewish tourists are now welcome in his country.

Meanwhile, dozens of Israeli-owned factories operate just over the border in Jordan, while joint ventures between Israelis and Palestinians are proliferating in everything from textiles to telecom.

And that's just the beginning.

According to a new report issued by the Israel Export Institute, total trade between Israel and her Arab neighbors totaled $100 million last year, even in the absence of a comprehensive Arab-Israeli peace settlement. If true peace were to arrive, says the report, the economic benefits for everyone would be enormous.

The 28-page report, entitled "Potential for Trade Relations Between Israel and the Arab Countries" and issued last October, outlines specific opportunities for Israeli exports and services in 11 Arab markets ranging from Bahrain to Syria to Morocco.

At present, the biggest opportunities are in the three Arab countries which have formally established diplomatic relations with Israel: Egypt, Jordan and Mauritania.

Despite chilly relations between Israel and Egypt, the two countries do have a peace treaty, and about 20 Israeli firms currently operate in Egypt. Together, they have invested $30 million or so in joint ventures, mainly in the spheres of textiles, agricultural equipment, medical devices, plastics and air-conditioners. In 1998, the last year for which statistics are available, Israeli exports to Egypt dropped 3.7% to $55 million, while Egyptian exports to Israel (excluding petroleum) fell by 40% to $18 million.

In the case of Jordan, relations are considerably warmer. The country's new leader, King Abdullah, last month paid his first official visit to Israel. In 1998, bilateral trade came to $40 million, with Israeli exports including fertilizers, chemicals and mechanical devices. Jordanian exports to Israel consisted of sand, cement and industrial air-conditioners.

The report puts the potential for Israeli exports to Jordan at between $60 million and $200 million annually, led by products such as irrigation systems, fresh fruits and vegetables, telecom equipment and synthetic raw materials for the textile industry.

"Israeli exporters can use Jordan as a platform for exports to the Persian Gulf countries," says the report, estimating the future export potential from Israel to the Gulf states via Jordan at around $150 million a year. "At the same time, it will be difficult to realize this potential in light of the Gulf states' established trade ties with suppliers from Western countries and the psychological difficulty in purchasing Israeli products."

Despite its diplomatic overtures to Israel, Mauritania -- which wants Israeli expertise in agriculture and medicine -- will never likely be a major trading partner for the Jewish state, partly because it is so far away, and partly because of its relatively small population. Over half the country's 2.6 million people live below the poverty line.

Kuwait, one of the wealthiest nations in the world on a per-capita basis, hasn't bought much from Israel. According to the report, in 1998, Israel exported $86,521 in goods to Kuwait -- four times the amount in 1997.

On the other hand, Israel has trade offices in two other oil-rich sheikhdoms -- Oman and Qatar -- and enjoys relatively good trade relations with Morocco, even though none of those countries recognize Israel officially.

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