The Daily Circuit: Expats fuel Gulf growth + MGM nixes Dubai casino

👋 Hello from the Middle East!

Today we’re looking at efforts by Turkey and Egypt to revitalize trade, MGM dispelling Dubai casino rumors, the PIF’s new joint venture with Italy’s Pirelli and Tiger Woods on prospects for the PGA-LIV merger. But first, an ode to Gulf expats.

Retaining wealthy expatriates for the long-term is critical to the growth of Gulf economies as cities vie to attract workers who are projected to live longer and retire earlier, according to a new report from Mercer, released with the World Governments Summit in Dubai this week.

“GCC countries like the UAE – because of their significant proportion of high-net-worth international expatriates – could benefit from more expatriates staying for retirement,” said Mercer’s Robert Ansari, a co-author of the report. Opportunities are growing for expats in technology and financial services across the region as the GCC relaxes visa rules and expands incentives to lure start-ups, tech companies and multinational financial firms. The UAE’s visa reforms, including its move last month to lower spending requirements to secure a 10-year residency visa, the so-called “Golden Visa,” is one example.

Home sales, a barometer of long-term commitment, are a mixed bag in the Gulf as high prices and rising interest rates pinch buyers. Residential real estate transactions in Saudi Arabia declined 16% last year compared to 2022, according to a new report by property consultancy Knight Frank. Dubai, by contrast, is shrugging off the affordability challenge — the market is hot and international buyers are flocking. The emirate counted a record 1.6 million real estate transactions last year, up 17% compared to 2022, according to the Dubai Land Department.

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Public Investment Fund: The European Commission has granted approval to Italy’s Pirelli Tyre SpA and the PIF for a joint venture to manufacture and sell passenger car tires in Saudi Arabia.

Qatar Investment Authority: The QIA’s CEO Mansoor Bin Ebrahim Al-Mahmoud met with Kazakhstan’s President Kassym-Jomart Tokayev in Doha and discussed establishing a Qatari-Kazakh investment fund. Singapore’s Capitaland is raising a follow-on fund for co-living investments to the Ascott Serviced Residence Global Fund set up by Ascott Ltd. as a 50-50 joint venture with the QIA.

International Holding Co.: Alpha Dhabi, the diversified conglomerate controlled by Sheikh Tahnoon bin Zayed’s IHC, reported a 25% increase in net income, which reached $3.6 billion in 2023.

Business councils promote pact linking UAE, Israel, India and U.S.

A joint campaign by India, Israel, the United Arab Emirates and the U.S. to stimulate trade is picking up momentum.

Under the banner of the so-called I2U2 Initiative, business leaders from the four countries signed a memorandum of understanding last week pledging their cooperation in the project’s six target areas: water, energy, transportation, health, food security and space.

The heads of the UAE-India Business Council, the UAE-Israel Business Council and the U.S.-UAE Business Council approved the document calling for private sector involvement in the partnership, following up on the I2U2 Business Forum that was held in the UAE capital of Abu Dhabi in February.

Dorian Barak, co-chairman of the UAE-Israel group, told The Circuit that the four-way initiative is “emerging as an important pillar” of regional economic integration. “Israelis have long found India a very complex place to do business,” Barak said in an interview. “Some have succeeded magnificently, while many others are now finding that Dubai offers a simpler and more familiar way of engaging with Indian consumers and suppliers.”

Faizal Kottikollan, chairman of the Indian council, said in a statement that he was “committed to rally our members’ support behind this mini-lateral.”

The I2U2 group – a play on the four countries’ initials – was established in 2021 as an outgrowth of the Abraham Accords that normalized Israel’s relations with the UAE, Bahrain and Morocco. It was given a top-level boost during President Joe Biden’s trip to the Middle East last July, when he visited Jerusalem and met with Yair Lapid, who was Israel’s prime minister at the time. Joining them in a video conference from their home countries to launch the I2U2 initiative were Indian Prime Minister Narendra Modi and the UAE’s leader, Sheikh Mohammed bin Zayed Al Nahyan, now president.

Among the activities planned by the business councils, according to their joint statement, are promoting the I2U2 initiative with a series of events held in the four member countries aimed at stimulating commercial ventures. The councils intend to commission a series of papers by think tanks, scholars and thought leaders exploring business opportunities in the six target areas. Those would be supplemented by recorded video interviews made available on websites and other platforms.

In a Washington event to mark the agreement’s signing, the U.S. under secretary of state for economic, growth, energy and the environment, Jose Fernandez, praised the I2U2 as a good example of helping allies increase regional trade. Also present at the April 19 meeting in Washington’s St. Regis Hotel were Yousef Al Otaiba, UAE ambassador to the U.S.; Sripriya Ranganathan, India’s deputy chief of mission to the U.S., and Eliav Benjamin, Israel’s deputy chief of mission to the U.S.

The first project announced after the video conference in July was a $2 billion investment by the UAE in developing a series of food parks across India that would use Israeli and U.S. technologies to reduce food waste, conserve fresh water and use renewable energy sources. A second project is a hybrid renewable energy initiative in India’s Gujarat state to generate 300 megawatts of wind and solar capacity along with a battery system to store the energy.  Last week, Abu Dhabi’s sovereign wealth fund Mubadala and Canada’s Columbia Investment Management announced that they have become anchor investors in Cube Highways Trust, an infrastructure investment trust in India.

Danny Sebright, president of the U.S.-UAE Business Council, said at the meeting that I2U2 ”is a unique partnership of key stakeholders, which will undoubtedly bring value to the business community and to our collective membership in all four countries.” 

UAE unlocks more of Gulf to Israeli companies, envoy says

ABU DHABI, United Arab Emirates — A year after beginning his posting as Israel’s ambassador to the UAE, Amir Hayek has a new office, a track record for boosting trade and a view that the tiny Gulf country is an ideal perch for Israeli companies to do business throughout the Arab world.

“You would like to sell to the Saudi market, to the Qatari market, to the Indonesian market? You can do it easily,” Hayek told The Circuit in an interview last week at the Israeli Embassy’s sprawling new location inside an office tower in the UAE capital.

In order for Israelis to penetrate markets that are still closed to them, Hayek said, they must work with an Emirati partner, register as an Emirati company and establish an office or manufacturing site inside the country. “Why not? That’s the way of doing business today.”

Israel’s bilateral trade with the UAE was $1.6 billion in the first eight months of 2022 and is on track to reach $2.4 billion by the end of the year, double the volume of 2021. The two countries signed a free-trade agreement in May that Emirati officials said would bring annual commercial activity to $10 billion a year. That doesn’t include defense sales, which are not public, and reportedly growing at a swift pace.

The 58-year-old ambassador spoke days before Saudi Arabia hosts its sixth Future Investment Initiative conference, a gathering of 6,000 investors, business executives and government policymakers that is often referred to as “Davos in the Desert.” Israeli hopes that the kingdom might join the 2020 Abraham Accords that were signed by the UAE, Bahrain, Morocco and Sudan have receded, though some Israeli companies are reportedly operating in Saudi Arabia with third-country registrations.

Hayek’s advice to Israeli executives doing business there, however, is not to discuss it publicly. “As much as you’ll talk less, you’ll do better,” he said.

Hayek, who comes from a family of Iraqi immigrants to Israel and speaks fluent Arabic, previously held a series of senior positions in the Israeli government, including director-general of the Industry and Trade Ministry. He was also chief of the Israeli Export Institute, the Israel Manufacturers Association and the Israel Hotel Association.

The exact site of Israel’s sleek new diplomatic headquarters can’t be reported for security reasons. “It is a brand new embassy, completed in less than two years since signing the accords, that will accommodate the full team of one of the core foreign missions of Israel abroad,” spokeswoman Shifra Weiss-Kubany said.

Hayek describes a winnowing-out process since the initial enthusiasm that followed the normalization agreements and brought a torrent of Israeli executives fishing for opportunities in the UAE and nearby Bahrain.

“On day one, everybody came here and thought they could do business,” Hayek said. “But the Emiratis learned the Israelis and the Israelis learned the Emiratis. Those who would like to do business here need to come, look the Emiratis in the eyes, build trust and then build cooperation.”

What characterizes Emirati investors, he said, is that they don’t move quickly and are willing to spend whatever time and expense it takes to develop a deep understanding of potential partners. Their interests are “impact industries,” Hayek said, including renewable energy, water desalination, food tech, agrotechnology, transportation and healthcare.

“They will hardly invest in seed companies,” he said. “They are ready to pay even a little bit more, but to reduce the risk, and they would like to see proven sales.”

Emiratis estimate trade volume with Israel will reach $5 billion in the next few years

Trade between the United Arab Emirates and Israel is expected to reach $5 billion in the “upcoming few years,” Emirati Minister of State for Foreign Trade Thani Ahmed Al Zeyoudi predicted at the 2022 Davos World Economic Forum.

Al Zeyoudi detailed the economic benefit from the Abraham Accords at a Davos session titled “The Future of the Abraham Accords” alongside co-panelists Dorit Dor, the chief product and technology officer at Check Point Software Technologies Ltd; Stuart Eizenstat, the State Department’s special adviser on Holocaust issues and partner at Covington & Burling law firm, who currently serves as the State Department’s Special Advisor on Holocaust Issues; and Khalid Bin Ahmed Al Khalifa, an advisor to Bahraini King Hamad bin Isa Al Khalifa.

Less than two years since the signing of the historic normalization agreements, the trade volume between Israel and the UAE has eclipsed $2.5 billion, leading Al Zeyoudi to forecast that bilateral trade between Israel and the UAE will exceed $2 billion this  year and that 1,000 Israeli companies will operate in his country by year’s end.

Al Zeyoudi also noted both countries share common challenges — water scarcity, agriculture, and energy diversification — and referenced past areas of cooperation, including the creation of a water research institute, Israel’s sale to the UAE of stakes in its Tamar gas field and the two countries’ collaboration on launching the Beresheet 2 space mission.

The panel also touched on long-standing obstacles in the Middle East, including the Israeli-Palestinian conflict, tensions between Saudi Arabia and Iran and relations between the Gulf states and Turkey.

Al Khalifa reiterated that his country remains committed to the Arab Peace Initiative, a proposal to resolve the Israeli-Palestinian conflict, and claimed the 2002 document was a tacit acknowledgement of Israel’s legitimacy by the Arab world.

“It’s a de facto acceptance by every Arab country of the State of Israel in the region,” he said.

Sounding a note of optimism, Eizenstat expressed confidence that Israel’s relationship with Abraham Accords countries could deepen, and proposed the U.S. create “Qualified Industrial Zones,” regions in which the U.S. allows free trade on products manufactured with Israeli help, in Abraham Accords countries. 

“As much as we’ve had remarkable change for the good in a little over a year, there is room for enormous expansion if we do the right things and we continue down this path,” Eizenstat said.

Asked about the possibility of promoting peace between other Middle Eastern countries, Al Khalifa stressed the importance of patience, but said, “We will need to work harder and harder and harder to make that go at a faster pace.”