UAE and Bahrain’s normalization of relations with Israel is likely to favor the economies of all three nations and contribute to the region’s greater geopolitical stability, S&P said.
The ratings agency expects that the direct commercial flights from UAE and Bahrain to Israel, that is likely to be introduced soon, would greatly increase cooperation in the areas of tourism, security, telecommunications, technology, health, education, financial services and agriculture.
“It is also likely that the parties to the Abraham Accords will establish reciprocal embassies at some point. Diplomatically, Israel’s regional isolation has been reduced, while GCC sovereigns may be able to leverage Israel’s significant military capabilities against common threats,” S&P said.
The ratings agency said that the degree to which the respective governments tie the speed of normalization to the resolution of the Israeli-Palestinian dispute is another important factor. “If the resolution is a prerequisite for normalization, as we assume is the case with Kuwait, then it is doubtful that normalization will happen soon.”
S&P noted that while Saudi Arabia is generally supportive of recent developments, it will take time for the kingdom to normalize relations with Israel and could be influenced by the transfer of power from King Salman bin Abdulaziz of Saudi Arabia, the Custodian of the Two Holy Mosques, to his son, Crown Prince Mohammed bin Salman.
“Oman is likely to move relatively slowly, given that Sultan Haitham bin Tariq is only in his first year of rule and had indicated a preference for maintaining Oman’s traditional role as a mediator between the US, the GCC, and Iran and between the GCC countries,” said S&P.
It was by the end of August that UAE and Israel signed the peace treaty called Abraham Accord following which the UAE president, Khalifa bin Zayed Al Nahyan issued a decree that nullified the law that led to the boycott of Israel and its products. Less than a month later, Bahrain also normalized its diplomatic relationship with Israel. US president Donald Trump brokered both the deals.