Israel wants Saudi Arabia to be part of common Middle East market

Israeli Finance Minister Avigdor Lieberman (AFP)

MEE Staff

Middle East Eye  /  July 11, 2022

Finance minister says Saudi Arabia could be part of ‘a kind of trans-Middle East highway’.

Israeli Finance Minister Avigdor Lieberman said on Monday that he hopes US President Joe Biden’s visit to the region this week will lead to the creation of a common Middle East market.

Biden is scheduled to embark on a four-day trip to the Middle East this week, where he will first visit Israel and the occupied West Bank. The visit will then culminate with a major gathering of regional leaders in the Saudi Arabian port city of Jeddah.

At an economic conference hosted by the Calcalist newspaper, Lieberman discussed the prospects of integrating economies in the region: “It is time to create a new, common market in the Middle East.”

“It will change the reality here from end to end, in both the fields of security and of economics. Therefore, I hope the emphasis during Biden’s visit will be on creating this new market in the Middle East.”

Israel established full diplomatic relations in 2020 with Bahrain and the UAE through the US-brokered Abraham Accords agreements. Morocco and Sudan normalized ties soon after.

The move broke with decades of precedence among Arab states which long conditioned recognizing Israel on the establishment of an independent Palestinian state within the 1967 borders.

Egypt and Jordan established diplomatic ties with Israel decades ago, but interactions have remained largely between the governments. In contrast, the Abraham Accords signatories, to varying degrees, have sought to build economic and cultural links with Israel. More than 250,000 Israel tourists have visited the UAE since the signing of the Abraham Accords. Earlier this year, the two countries also signed a free trade agreement, removing tariffs on 96 percent of bilateral trade.

Lieberman included Saudi Arabia, in addition to Jordan and other Gulf states, as potential members. He said the creation of such an economic bloc remained “[a] big challenge”.

It is no secret that Gulf states have struggled to integrate their economies. The Gulf Cooperation Council (GCC) states have not completed the establishment of a long-delayed customs union or a common Gulf market, and a near four-year Saudi-led embargo on Qatar only ended last year. Free trade talks between the EU and the GCC floundered in 2008.

‘Breakthroughs’

Saudi Arabia, the Arab world’s only G-20 economy, has no formal ties with Israel. Ahead of Biden’s trip to the region, US officials have hinted that new states could take steps to normalize relations with the country.

The US is believed to be negotiating a deal to transfer two Red Sea islands from Egypt to the Kingdom, in a move that could eventually pave the way for Riyadh to normalize ties in the future. In a symbolic move, Biden will be the first US president to officially fly from Israel to Saudi Arabia this week.

Also speaking at the conference, Israeli national security adviser Eyal Hulata said that within the framework of Biden’s visit “it is certainly possible to begin talking about the potential expansion of our markets in the region”.

“It’s no coincidence that Biden is coming here on Wednesday and continuing on Friday from here to Saudi Arabia by direct flight,” Haluta added. “The ability to attend to these things carefully, step by step, can bring about breakthroughs.”

Lieberman said his regional vision would include “a kind of trans-Middle East highway” and rail network linking up partner countries such as Israel, Jordan, Saudi Arabia, Bahrain – and Abu Dhabi and Dubai in the United Arab Emirates.