The Weekly Circuit
đ Good Monday morning in the Middle East!
A free-trade deal between the United Arab Emirates and Israel comes into effect this week, promising tax breaks and a raft of other economic dividends envisioned in the Abraham Accords. Representatives from the two countries signed a customs pact in Jerusalem on Sunday night to complete a final prerequisite for the Comprehensive Economic Partnership Agreement that was approved in May. In a ceremony attended by Israeli Prime Minister Benjamin Netanyahu, the customs agreement was signed by Israeli Foreign Minister Eli Cohen and the UAEâs ambassador to Israel, Mohamed Al Khaja.
In a tweet, UAE Foreign Trade Minister Thani Al Zeyoudi announced last week that the trade deal will take effect on April 1, âlowering tariffs, opening market access for exporters and creating new investment opportunities.â Al Zeyoudi told The Circuit in December that because of the agreement, the two countries will likely reach their goal of generating an annual $10 billion in bilateral economic activity by 2026, two years ahead of earlier projections.
Diamond dealers from Dubai, Antwerp, Johannesburg, Mumbai and other trading centers around the globe are converging on Israel this week for the World Diamond Congress and a variety of connected events. Among those who were planning to attend is Ahmed Bin Sulayem, executive chairman of the Dubai Multi-Commodities Centre, who will be given the âDignitary Awardâ by the Israel Diamond Exchange for promoting commerce in the precious gems.
Diamond trading between the UAE and Israel in 2022 soared 163% from the previous year to $1.75 billion, according to government figures. The DMCC, a city within a city made up of 87 office and residential towers with 100,000 people, is home to the Dubai Diamond Exchange. It is also the address for more than 75 Israeli companies in industries ranging from financial services to telecommunications and cybersecurity.
The hundreds of diamantaires arriving at Ben Gurion International Airport may have a difficult time, however, reaching their hotels in Tel Aviv as protests against the Netanyahu governmentâs proposed overhaul of the judiciary have intensified. Hundreds of thousands poured into the streets on Sunday night, lighting bonfires and shutting down traffic on the Ayalon freeway after Netanyahu fired his defense minister, Yoav Gallant, for publicly proposing a pause to the legislation. Protest leaders vowed to paralyze the country this week as the government seeks final parliamentary approval of the judiciary measures.
Welcome to The Weekly Circuit, where we cover the Middle East through a business and cultural lens. Read on for the stories, deals and players at the top of the news. Please send comments and story tips to [email protected].
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GROWING UP
Vertical farming rises to new heights in the UAE and Saudi Arabia
From Newark, N.J., to Saudi Arabia, David Rosenberg preaches a gospel that contends bountiful, nutritious produce can be grown without soil and sunshine. Instead, the agricultural entrepreneur builds sprawling vertical farms where kale, arugula and baby lettuce are bathed in magenta light, roots suspended in the air and cultivated with nourishing mist, Melanie Lidman reports for The Circuit. Rosenberg believes that techniques pioneered by his company, AeroFarms, may provide answers to the challenges of food security for billions of people living in arid regions and places where climate change poses a growing threat to agriculture.
Letâs build: âIf we use zero soil, we can do a lot more with less,â Rosenberg, the Newark-based companyâs co-founder and CEO, told The Circuit. Last month, AeroFarms opened a 65,000-square-foot (6,040-square-meter) facility in Abu Dhabi, United Arab Emirates, that it touts as the worldâs largest vertical farm focused on research and development. The company was one of four that split a $100 million grant from the Abu Dhabi Investment Office, or ADIO, aimed at supporting development of agricultural technology. Later this year, AeroFarms will break ground on a vertical farm near the Saudi capital of Riyadh capable of growing 2.4 million pounds (1.1 million kilograms) a year of crops in a joint commercial venture with the kingdomâs $620 billion Public Investment Fund. âThereâs not much arable land [in the Gulf] and not much fresh water, but there are abundant sources of energy,â Rosenberg said, adding, âthereâs a lot of capital and a spirit of, âLetâs build and embrace new technology.ââ
Watercress & strawberries: The global vertical farming market is expected to quintuple in size in the next few years, increasing from $4.3 billion in 2021 to nearly $20 billion by 2028, according to a report from The Insight Partners. Vertical farming can produce some 240 times greater yields on 99% less land, compared with conventional farming, the report said. AeroFarms already runs two commercial vertical farms in Ithaca, N.Y., and Danville, Va., selling 11 different varieties of packaged greens to retailers such as Walmart and Whole Foods, where the approximately $4.50 a bag price is comparable to field-grown bags of salad. The company focuses on specialty greens with high levels of nutrients, including kale, watercress, mustard greens and arugula. It is testing more than 550 varieties of crops, including 70 types of berries. Premium fruits like strawberries are likely the next big crop for vertical farms, though indoor pollination remains a challenge.
Cocoa threat: While leafy greens are an ideal market because they grow quickly with minimal space requirements, the UAE facility in Abu Dhabi is looking at a wider variety of crops, including the possibility of growing trees. AeroFarms, for example, is partnering with Cargill Cocoa on a pilot project in Abu Dhabi to grow cocoa trees, which are producing catastrophically low yields due to climate change and warming temperatures. As much as 90% of the fruits and vegetables in the UAE are imported. âAgTech is a priority sector for the Abu Dhabi government, and our long-term goal is to support the development of innovation that will contribute to solving challenges of regional and global importance,â ADIO Director-General Tariq Bin Hend said at the mid-February launch of the facility, known as AgX.
Israel link: Rosenberg, who has an MBA from Columbia University and represented the U.S. at World Cup fencing tournaments, winning three championships on the national team, is a serial entrepreneur. Before AeroFarms, he founded Hycrete, based on a weatherizing system his grandfather invented that enables buildings to use less cement. Heâs been honored by the World Economic Forum as a Young Global Leader and was a member of the Global Agenda Council on Water Security. As an American Jew whose company does business in Israel, Rosenberg said heâs had no trouble working in Saudi Arabia and other countries that donât have diplomatic ties with the Jewish state. In the UAE, which normalized relations with Israel in 2020, heâs found a fascination with AeroFarmsâ use of Israeli technology. âThey want to lean in and find more collaborationâ with Israel, Rosenberg said.
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CIRCUIT Q&A
To build up business in Bahrain, Israeli envoy says take it slow
After 16 months as Israelâs first ambassador to Bahrain, Eitan Naâeh says heâs learned some important lessons while trying to promote business between two countries that were longtime adversaries in the Middle East conflict. Above all are taking it slow and adjusting ambitious expectations for what constitutes success after the initial exuberance generated in 2020 by the Abraham Accords. Speaking to The Circuitâs Jonathan Ferziger in the Bahraini capital of Manama, the 59-year-old diplomat said the small island nationâs importance goes beyond the modest bilateral trade volume generated so far and may play a crucial role whenever Saudi Arabia, the regionâs biggest economy, is ready to establish official ties with Israel. Naâeh previously served as Israelâs head of mission in Abu Dhabi and as ambassador to Turkey and to Azerbaijan. The interview, conducted in mid-March on the sidelines of the Israel-Bahrain Connect2Innovate business conference, has been edited for length and clarity.
The Circuit: How has your experience as an Israeli diplomat in two Arab Gulf states altered your approach to cultivating business in the region?
Eitan Naâeh: When I started in Abu Dhabi, I went to see the heads of the investment departments of the big sovereign government funds, Mubadala and ADIO. Thatâs where it really clicked for me that nothing is going to happen quickly, or just like that. They said, look, the way we invest in new markets, it takes six years to come in. That is the process. We invest in funds, or funds of funds, and we see what happens over two years, using small amounts of money. And then we come again with other investors for another four years. Thatâs six years in total. Depending on the result, we may then [fully] come in. That was in early 2021 — about two years ago. And now you see them buying 22% of Tamar [an Israeli offshore gas field]. And you see them trying to buy Phoenix [Insurance Group] and you see them wanting to go into Haifa port and you see them buying shares in other high-tech companies. So you see a process. It didn’t happen in one day. We are two years into the Abraham Accords. It will be slower than we expected. I can clearly see it happening once they understand us better, once we understand them, what makes each other click, how things work. Maybe not in my time. But we have laid the foundations.
The Circuit: What were your biggest initial challenges in representing Israel in the Gulf?
Eitan Naâeh: I was sent to Abu Dhabi first and then to Bahrain to set up an embassy, to map contacts and to deepen relationships. There are four solid legs in diplomacy, like a table: Political [affairs], security, economic and people-to-people. I compare it to Turkey, a country I know very well. We had relations with Turkey since 1949. We had an embassy, we had staff, we recruited more, but we had the basics when I came. In the Gulf, we had barely anything. For the very few people who were in touch with Israelis, it was all under the table, hush-hush. The leadership at the very top were in touch. Discreet meetings were held in various European capitals, sometimes here but nobody knew about it.
The Circuit: Bahrain is connected to Saudi Arabia by a 17-mile causeway in the waters of the Gulf and by numerous political, economic and cultural ties. How would the situation change if normalization spreads to Saudi Arabia and other Gulf states?
Eitan Naâeh: Only two countries in the Gulf have normalized relationships with Israel, but there are more than just two countries in the Gulf. So it’s baby steps, but they’re meaningful steps, especially when you know where we started. When you know the capabilities, when you know the constraints, you learn to appreciate that. People here want to invest in Israel. Let’s see what happens with Saudi Arabia. [If thereâs an agreement between the two countries], that will open the potential for hundreds of billions of dollars of trade from east to west. That’s a lot of money. That will open up more markets. It will go around Africa, it will go through the Suez Canal, it will go through [Bahrain] on the causeway. It will take time. But you are witnessing here the beginning.
Click here to read the full interview.
Circuit Chatter
Russian Trade: Two UAE companies, Tejarineft and QR Trading, are among six firms that Bloomberg identified as the new top traders in Russian oil, bucking U.S. sanctions.
No Raises: Check Point, the Israeli cybersecurity pioneer, told employees they will not receive salary raises this year, rolling out a stock-based 5% bonus program instead.
Room with a View: Dubai will soon be home to the worldâs tallest hotel, rising 82 stories and close to completion by The First Group, with an opening planned for 2024.
Bank Shares: Citigroup raised its stake to 3% in Israel Discount Bank, the countryâs third-largest lender, offering a vote of confidence amid global banking doldrums.
Space Funding: Badeel, Saudi Arabiaâs water and electric company, and Alpha Dhabi in the UAE may join a multibillion-dollar funding round for Elon Muskâs SpaceX.
Copter Parking: Looking to park your helicopter for a UAE shopping spree? The Dubai Helipark is now under construction at the cityâs Mohammed Bin Rashid Aerospace Hub.
Swiss Roast: Gulf investors that suffered big losses from backing Credit Suisse are becoming more cautious about putting money into banks, Bloomberg found.
Closing Circuit
Credit Partners: Mubadala Investment Co., the $284 billion Abu Dhabi sovereign wealth fund, and Nasdaq-traded Ares Management Corp. formed a joint venture to invest in the secondary private-credit market, starting with approximately $1 billion.
Leaving Jordan: Standard Chartered will sell its operations in Jordan to Arab Jordan Investment Bank to focus on higher growth markets in Africa and the Middle East.
Gas Profit: Energean reported a $17 million net profit last year compared to a $96 million loss in 2021 as production started at Israelâs offshore Karish gas field.
Suez Strategy: UAE-based AD Ports Group contracted with the Suez Canal Economic Zone to develop projects along the waterway as part of a strategic expansion in Egypt.
Waste Not: Israelâs TripleW, which makes plastic from food waste, raised $16.5 million in a funding round led by Firstime VC and joined by LG Technology Ventures.
Digital Dirham: The UAE Central Bank contracted with Abu Dhabiâs G42âs R3 unit to address digital payment issues as it prepares for operating a cashless society.
Coding Test: CodiumAI, an Israeli startup that helps developers test their coding, raised $11 million in a seed funding round led by Vine Ventures and TLV Partners.
On the Circuit
Abdulrahman Al Fageeh was appointed chief executive of SABIC, the Saudi petrochemicals maker, after serving as interim CEO and chairman of its fertilizer unit.
Avi Mayer was named editor-in-chief of The Jerusalem Post, replacing Yaakov Katz. Mayer was previously communications chief for the American Jewish Committee.
Sheikha Shamma bint Sultan bin Khalifa Al Nahyan, CEO of Independent Climate Change Accelerators in the UAE, was named to the World Economic Forum Young Leaders. Among others in the 2023 class are Idan Roll, Israelâs former deputy foreign minister; Noura Bint Faisal Al Saud, managing director of Saudi Arabiaâs Global Culture House; and Wafa Al Obaidat, CEO of Obai & Hill PR in Bahrain.
Ahead on the Circuit
March 28-30, Ramat Gan, Israel: World Diamond Congress. Diamond dealers from across the globe meet in Israel for 40th international gathering. Israel Diamond Exchange.
April 21, Dubai, UAE: Global Business Summit 2023. Corporate heads, policy makers, thought leaders come together to discuss economic agendas. Floral Grand Hotel.
April 26-27, Dubai, UAE: FiNEXT Awards and Conference 2023. A platform for the global investors, financial institutions and fintech companies to connect and interact. Le Meridien Dubai Hotel and Conference Centre.
May 2-3, Tel Aviv, Israel: Agritech Israel. Introducing innovative farming technologies for growing food and meeting the challenges of climate change, water shortages and desertification. Expo TLV.
May 3, Tel Aviv, Israel: GoForIsrael Investment Conference. Connecting global investors and technology companies. Co-hosted by Cukierman & Co and Catalyst Investment. Tel Aviv Hilton.
May 11, Dubai, UAE: Annual Private Wealth Middle East Forum. Conference connecting family offices, high-net-worth wealth managers and investors. Shangri-La Hotel.
May 15-16, Dubai, UAE: IFINEXPO DUBAI. International conference on innovative finance, focused on areas including fintech, crypto and forex. Jumeirah Emirates Tower Dubai.
May 30, Airport City, Israel: Annual Economic Conference for Kibbutz Industry. Meeting for financial chiefs of Israeli kibbutz farms and companies. Avenue Conventions and Events Center.
Culture Circuit
Demolition Art: The Imperial Hotel, a block from the Tel Aviv beach, was for decades the place to go for cocktails, from old-fashioned martinis to artisanal margaritas. Now slated for demolition, the four-story inn has been transformed into a pop-up museum dubbed âWonderland,â with each of its 37 rooms turned into a project of reimagination by a legion of Israeli artists. Twin beds sprout tropical foliage and turn one room into a terrarium, the ceiling in another is covered with more than 6,000 butterflies, while a soundtrack of moans emanates from a corner chamber that echoes with years of intimate encounters. Open daily, online reservations required, until the building is torn down on an undetermined date in the near future.
Dubai World Cup: Japanâs Ushba Tesoro galloped to victory on Saturday in the $12 million Dubai World Cup. Trailing in the 15-horse field at the Meydan racetrack were second-place finisher Algiers from Dubai and Saudi Arabiaâs Emblem Road, winner of the 2021 Saudi Cup, in third.
Teed Off: The Saudi-backed LIV Golf tournament, which is waging an antitrust suit against the PGA, charged that a PGA executive unlawfully tried to kill TV network streaming deals for the new upstart rival. LIV Golf paid as much as $200 million to lure golf champ Phil Mickelson and other top pros away from the PGA.
