Israel hardly affected by cut in Arab trade ties

Published November 1st, 2000 - 02:00 GMT

There was a paper tiger countenance to the summit of Arab heads of state, which gathered in Cairo on October 21 to discuss a unified response to what they uniformly agreed was gross aggression by Israel in the Palestinian territories. But, when all was said and done, the resolutions they passed contained a good deal of rhetoric and considerably less substance. 

 

However, the one area in which the summit appeared to have elicited more than just verbal lip service on behalf of the Palestinians was the trade relations that certain of the Arab countries have developed with Israel over recent years. For while the Arab leaders in Cairo did not oblige those countries to cut their commercial ties with the Jewish state, they strongly recommended that they do so.  

 

One of them, Oman, has unilaterally done so before the summit, and before the week was out it had been followed by Tunisia and Morocco. Indeed, by the end of the month, other than Egypt and Jordan, both of which have signed formal peace treaties with Israel, the only Arab states to still have formal trade relations were Qatar and Mauritania. 

 

Israeli officials were quick to point out that, on paper at least, the amount of trade that would be lost would have little to no effect on the Israeli economy. According to Mandy Barak, the head of the International Trade Relations Division and the Federation of Israeli Chambers of Commerce, when Egypt and Jordan are removed from the equation, the total volume of Arab-Israeli trade equals $40 million per annum. In 1999, that was less than one-10th of 1 percent of Israel’s total volume of trade. 

 

But both psychologically and in terms of the image Israel was trying to create for itself in the world business community, the termination or suspension of formal trade relations with countries in the region came as a blow. Since the signing of the Oslo agreement almost seven years ago, it had pitched itself in Western countries as a preferred stepping stone to the markets in the Middle East. Following the Cairo summit, such a claim will be difficult to sell. 

 

According to figures released in July by the Manufacturers Association of Israel, exports to Arab countries during the first six months of the year stood at $62 million, representing an increase of 37 percent when compared to the same period in 1999. Imports from Arab countries rose 28 percent to stand at $26.4 million. 

 

Israel’s most important trading partner in the Arab world was Egypt, to whom exports rose by 32 percent during the first half to $32.8 million. It was followed by Jordan, whose import of Israeli-made products rose by 7.6 percent to $16 million.  

 

What this meant was that the two countries with which Israel has concluded formal peace treaties accounted for all but 21 percent of its exports to Arab countries during the first six months of 2000. Those two countries accounted for all but $1 million worth of the Israeli imports from the Arab world over the same period. 

 

Other than Morocco, to whom exports grew by 102.5 percent during the first half of 2000 to stand at $4.4 million, and Oman, who saw its import of Israeli products rise from $37,000 to $98,000, the other countries with whom Israel had formal trade ties had witnessed a falling level of trade during the first six months of the year. Exports to Tunisia were down 85 percent to $302,000, and exports to Qatar fell $84,000 to $26,000. Mauritania’s figures were not even registered. 

 

In contrast, a number of countries with whom Israel did not have formal trade relations did figure in the data supplied by the Manufacturers Association of Israel. This included the UAE, who, at $736,000 worth, imported 133 percent more of Israeli goods during the first half of the year than it did during the corresponding period in 1999. 

 

Even then the actual level of Israeli-Arab trade is difficult to judge, because of the bulk of it is managed through third parties who generally do not list the country of origin or the destination. For example, with about one-half of all polished diamonds in terms of value passing through the Israeli diamond center near Tel-Aviv, it stands to reason that similar percentage of diamond sold in Arab countries was sold and quite possibly cut in Israel. 

 

The true volume of Arab-Israeli trade is therefore vague. In 1984, Forbes magazine had estimated the figure at $500 million, basing its calculations on the estimate of an Israeli business consultant, Illan Barzel, whom the magazine quoted as putting upper limit on indirect Israeli sales to the Arab world at 5 percent. If that number were accurate today, direct and indirect exports from Israel to the Arab would be in excess of $1 billion. 

 

Of course the Arab nation with the closest commercial ties with Israel is Palestine, which imports some $2 billion worth of Israeli products each year. The Palestinians’ primary export to Israel is labor. At present through, the 120,000 or so Palestinians who regularly work in Israel are being blocked from getting to their jobs by the Israeli military. Unintentionally, that too is changing the trade balance. — (Albawaba-MEBG) 

 

By Ahmad al-Qurayshi


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