An Israel-US delegation flies out to the Moroccan capital of Rabat today to sign protocols ahead of normalization. The Israeli delegation is led by Israel's National Security Adviser and Chief of Staff for National Security Meir Ben-Shabbat and the US delegation is led by President Trump's Special Envoy Jared Kushner.
The two practical agreements that will be signed during the visit will be for the opening of special interest offices in the two countries and the establishment of direct flights between the countries.
The new agreements will also set the scene for major trade opportunities between Israel and Morocco. In 2018, Israeli exports to Morocco amounted to $5 million and imports from Morocco reached $68 million. These figures do not include security technology exports and trade via third countries. These figures are set to jump enormously.
Gadi Arieli, CEO of the Israel Export and International Cooperation Institute, which has mapped the opportunities, said, "The agreement opens the gates to cooperation in many areas including agriculture, water, tourism, homeland security, cybersecurity, and advanced medicine. We welcome this new and additional market for exports and the business opportunities that the agreement brings."
Experience with the UAE and Bahrain has taught that indirect trade and economic ties are very limiting but nevertheless form a good basis for direct relations. This will be the case with Morocco too, even though it is very different economically from the Gulf states. The country's annual GDP is $120 billion with annual per capita income of $3,300. Annual growth was 3% before the Covid-19 pandemic. Morocco has a free trade agreement with the US and a preferential trade agreement with the EU.
Morocco has the world's largest reserves of phosphorous and is the biggest exporter. Other resources include iron, silver and cooper and important exports include textiles, mainly to France.
More than 40% of the country's workforce is employed in agriculture with major produce including olives, grapes, wheat and barley, although desertification is diminishing output.
Thus in agriculture Israel has major potential for trade. A large UAE investment company has purchased extensive agricultural lands in Morocco and is in talks with Israeli agri-tech companies on developing and managing the land, using irrigation and advanced crops developed in Israel.
Adv. Shiran Shai of the Gideon Fischer & Co. law firm specializes in trade with Morocco. She has been living there for almost 10 years and has Moroccan citizenship as well as extensive connections in the business community there and government corridors. She says that Israeli agricultural techniques are already common in many farms there. These include drip irrigation, cherry tomatoes and avocadoes developed in Israel which are popular among farmers and especially the larger and more advanced farms. With direct relations, she says it will be possible to develop this swctor even more.
Shai also recommends infrastructures and energy as a good sector for cooperation. Morocco and especially the less developed southern region, is set for a development boom including construction of transport infrastructures, industry and housing. Energy is already very developed because of European investments, mainly in the Sahara region, which has an abundance of sunshine and wind.
Morocco can also serve as an economic and trade bridge to the countries of West Africa like Senegal and Gabon. The country is an important trade center between three continents - Africa, Europe and America.
Shai says that knowledge of French is a great advantage because it is spoken by business leaders and in the corridors of power. But she warns that patience is required to cut through the country's complex regulation and bureaucracy. She says it is an emerging economy with power concentrated among the few and the royal family is involved in everything.
Waiting for the Israeli tourist
Einat Levi, a researcher at the Mitvim - Israeli Institute for Regional Foreign Policies, and the founder of inter-faith organization Connection to Morocco, says that the main imports from Morocco will be food products and agricultural produce including such items as sardines, olives and couscous. Israel can help Moroccan agriculture develop and there will be high demands for Moroccan food in Israel, she says.
But perhaps the biggest economic impact for Morocco will be in tourism. Israelis with a European or US passport won't need a visa and for Israeli passports a visa can be swiftly granted for $40-150. In 2019 between 30,000 and 45,000 Israelis visited Morocco. In the peak of its popularity 500,000 Israelis visited Turkey annually and while Morocco is unlikely to attract such a large number it could draw hundreds of thousands per year.
In 2019, 3,000 Moroccan tourists visited Israel and the potential to increase that number dramatically exists. Morocco has a large middle class and the holy Islamic sites in Jerusalem could be a major draw.
There is also major potential for the development of renewable energy in Morocco. The country is dependent on imported oil and gas but by 2030 Morocco wants 52% of its energy to be produced from renewable sources like the abundance of sun and win in the Sahara.
Minister of Intelligence Eli Cohen said, "In contrast to the UAE where it is possible to quantify expected trade, here it is still too early. The economic potential is based on tourism and trade in agriculture, infrastructures and water, and that is what we will work to develop."
Published by Globes, Israel business news - en.globes.co.il - on December 22, 2020
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