To outward appearance they exert massive pressure on Burger King, Disney and Benneton not to recognize either Israel or its capital. Behind the scenes, they are establishing trade relations with us. "They" include Bahrain, Oman, Qatar, Saudi Arabia, Indonesia, the United Arab Emirates, Morocco, Mauritania, Tunisia and Kuwait, all officially defined as hostile nations.
Concerns trading with Dubai allege that Israeli merchandise is finding its way via Dubai to Iran, Pakistan and Iraq. Prime Minister Ehud Barak's declarations of commitment to peace with Syria, regional reconciliation and withdrawal from Lebanon have helped create an optimistic atmosphere, strengthening commercial ties. Mauritania has announced the establishment of diplomatic ties with Israel, Indonesia says it intends to consolidate economic relations and Yemen reluctantly admitted that Israel could contribute to its economy.
The success of these commercial ties is due, in large measure, to the activity of Israel's trade representatives in Oman, Qatar, Tunisia and Morocco. Those countries recalled their representatives in 1996, due to the political deadlock. Now, with the change of regime and efforts being made to promote peace, negotiations are in progress for reinstatement.
But the lion's share of the credit is due to a single individual who, in view of the circumstances, must remain anonymous. With a European passport and communication channels leading to one of those European capitals that more readily accommodate anonymity, he plies the Europe-Israel-Gulf States line, Dubai being his principal stopping-off point in the latter.
Officially, he is a Foreign Ministry employee. In practice, the governments of hostile nations permit him to enter and act in their jurisdiction. The only condition they pose is that he should introduce himself as a European. In most cases, he is also required to refrain from presenting the products he promotes as being Israeli. He dedicates most of his energy to Dubai, which outwardly maintains a facade of loyalty to the Arab League, even issuing warnings to countries not observing the principles of the Arab boycott.
Israeli export to Dubai, Oman and Qatar is estimated at several hundreds of millions of dollars annually. A precise estimate is not possible, since not all is either reported or recorded on the Israeli side.
Dubai is well on the road to becoming a tourism, commercial and business center for the Gulf States. Together with the image advertising campaign it has launched in Europe and Asia, it offers convenient terms for foreign investment, especially in electricity infrastructures, water conduction, development of desert agriculture, medical and communications equipment. Incidentally, it currently purchases most of these services and products from Israeli manufacturers.
Related sources say Israeli products attract great interest in Dubai in, although their origin is not admitted, since they conform to the country's requirements. Normalization of relations, they maintain, if only on the level of commercial ties, would increase Israeli export to those countries, especially in technological infrastructures and agricultural inputs.
Some weeks ago, Mauritania announced that it was ready to form diplomatic ties with Israel. This declaration will transform the hitherto weak commercial relations into a commitment and a firm basis for investment and sales in that country.
Although the Indonesian President has said that he is suspending the establishment of commercial relations with Israel, it is an open secret that in the past ten years, import and export trade with Indonesia has developed to an annual volume of $100 million. Israelis import textiles, leather and timber products from Indonesia.
Chambers of Commerce Federation President Danny Gillerman estimates that the establishment of commercial relations between the countries will boost the export volume within three years to $1 billion. Manufacturers of sophisticated communications, agriculture and irrigation infrastructure products can already start making the necessary preparations.
The bond was forged through exhibitions in third countries, or by trade representatives, whether of third countries or of Israel. Merchandise is usually routed through Egypt and Jordan. Israeli trucks change license plates at the border, or else the goods are loaded onto local trucks. From there, they proceed overland through the desert or are airlifted.
In other instances, the merchandise is routed through Cyprus or other European ports, continuing from there by sea or air. As soon as the merchandise reaches the third country, it is issued a fresh set of papers, with the third country being recorded as the country of origin. Payment is made via the middleman. An essential condition is that the goods should not bear any Israeli identifying marks.
Concerns related to trade with the Gulf states assess that the political process will confer legitimacy on commercial considerations. The atmosphere of peace and openness, they maintain, makes it legitimate to separate commercial from political considerations. An Israeli trading with Oman and Qatar assesses that when commercial ties are established, merchandise will be able to be delivered more directly, cheaply and conveniently, with reduced customs duties, bureaucracy, and costs.
Once relations are put on an established footing, other formalities, such as merchandise insurance, will be rendered feasible. IFTRIC (Israel Foreign Trade Risk Insurance Company) director Doron Klausner reported that in recent years, there had been no applications for insuring transactions with those countries, beyond a limited number of specific deals concluded with Jordan, Egypt and Morocco.
These countries are expected to evidence a demand for knowhow, technologies and products related to agriculture (desert agriculture, irrigation and fresh agricultural produce), communications (infrastructures, cable and cellular telephony), engineering services, medicine (equipment and drugs), oil applications (petrochemicals, metallurgy, chemicals), processed foods and energy (electricity, gas). Import is expected to focus on gas, petroleum and its inputs and mining products.
Many industrialists were afraid to expose their export to the Gulf states, for fear that the publicity would undermine progress already achieved and future potential. Bikel Flowers general manager Gideon Bikel isn't too worried since he owns the Belgian Flower Exchange which, in the nature of things, brokers flower transactions to and from all parts of the world, including the Persian Gulf.
Bikel Flowers exports to Dubai, Qatar, Abu Dhabi, and Kuwait, and will shortly start exporting to the UAE, in an annual volume of millions of dollars. Gideon Bikel claims that if this export is legitimized, it will amount to tens of millions of dollars. Flower export takes place via third parties, mainly in Europe.
Published by Israel's Business Arena November 23, 1999