meed-logo

line1 line2 line3
SIGN IN / REGISTER

Gaza conflict tests UAE-Israel ties

13 June 2024

 

The stance of the UAE towards Israel has cooled dramatically in the past eight months amid the conflict in Gaza, which is proving to be a major test of the partnership built between Abu Dhabi and Tel Aviv.

From boasting of warm and open trade dealings, the UAE has gone quiet on its business deals with Israeli partners, while on a political and diplomatic level the humanitarian tragedy in Gaza has increasingly drawn condemnatory statements from UAE officials.

It is a twist in developments that neither country could have foreseen, as nor indeed had Saudi Arabia, which was nearing its own normalisation agreement with Israel. It has also taken a bilateral strategic partnership that was long in the making into uncertain territory.

Long-term partnership

The 2020 Abraham Accords that normalised relations between the UAE and Israel came at the tail end of at least a decade’s worth of interaction between the two countries. The agreement emerged first and foremost as a set of shared strategic interests in opposition to regional threats in the early 2010s.

In a very tangible interaction in 2016, pilots from the UAE and Israel for the first time participated together in aerial combat training exercises hosted by the United States Air Force (USAF) in Nevada.

The UAE’s relationship with Israel also intersects with its relationship with the US, including its hope of securing access to advanced US military technology and assets, such as the F-35 Stealth Fighter Jet.

In September 2020, UAE foreign ministry spokesperson Hend Al-Otaiba stated that a request for the F-35 had been made six years previously, and that, “given that the UAE intends to be a partner to Israel, and already has a deep strategic partnership with the US, we are hopeful the request will be granted”.

While the sale of the F-35 by the US to the UAE has yet to materialise, relations between the UAE and Israel have nonetheless thrived on their own since the accords, on the basis of ongoing shared security interests and the opportunities for business, trade and investment between the two countries.

Since 2020, the value of trade between the UAE and Israel has swollen to about $3bn annually, and defence ties have only strengthened. In 2022, Israel supplied the UAE with air defence systems following long-range attacks on the UAE's oil infrastructure by the Iran-aligned Houthi movement in Yemen.

Israel-Palestine problems

It was as early as June 2023, however, that US Secretary of State Antony Blinken first warned that rising tensions in Palestine and Israel’s actions in the West Bank could imperil the process of normalisation.

With the advent of the war in Gaza, those fears of a damaging escalation in tensions have been realised.

As the conflict erupted in October, the UAE kept its distance and restricted itself to only the most limited commentary, condemning the “serious and grave escalation” by Hamas-led militants while calling for the full protection of all civilians under international humanitarian law.

By November, as the violence in Gaza ratcheted up, Abu Dhabi similarly affirmed its commitment to the accords even as individual UAE officials publicly condemned Israel’s actions and called for an end to the violence, pushing for a ceasefire, humanitarian aid and the release of hostages.

Anwar Gargash, a diplomatic adviser to the president, labelled the conflict a “profound setback” for the region, and stressed that the tragic course of events should lead to a political re-engagement on the issues of realising a two-state solution with East Jerusalem as its capital.

The close working relationship between the UAE and Israel nevertheless continued, as evidenced by Israel’s acquiescence to Abu Dhabi’s humanitarian efforts in Gaza, which have included the UAE setting up a field hospital and performing aerial aid drops in the territory.

The long grind of the conflict and the increasing inflexibility and intransigence on ceasefire negotiations by Israeli Prime Minister Benjamin Netanyahu have nevertheless steadily eroded this early good will.

While in early January, Gargash affirmed that the normalisation agreement was “a strategic decision, and strategic decisions are long-term”, by late January, senior UAE officials were ringing alarm bells.

Four months on, speaking at the Arab Media Forum in Dubai in late May, Gargash lambasted the conflict in Gaza as having taken on “brutal and inhuman dimensions”, stating that the “heinous attack in Gaza and Rafah cannot be overlooked” – a far more critical tone than his earlier conciliatory speech.

Unreliable partner

On the international stage, the disinclination of the Israeli government to listen to any of its key allies or partners has been trying for all, including the US. For Israel’s normalised partners in the Middle East, the conflict has underscored the tension between the Abraham Accords and underlying regional sentiments.

The UAE’s own founding father, Sheikh Zayed, was an ardent personal supporter of the Palestinian cause, and under his watch, the UAE was one of the first states to recognise Palestine as an independent state.

In the present, the humanitarian catastrophe in Gaza is drawing the competing influences of the UAE’s contemporary strategic interests and underlying sympathy for the Palestinian people into stark relief, and it is having a chilling effect on relations.

Public announcements in the UAE of deals with Israeli companies, which abounded before the conflict, have evaporated, and at least one very public deal has been put on hold amid the uncertainty.

Abu Dhabi National Oil Company (Adnoc) had been due to take a $2bn stake, alongside the UK’s BP, in Israeli gas producer NewMed, which holds 45% of Israel’s Leviathan offshore gas field.

In mid-May, Netanyahu suggested that the UAE could be involved in the governance of Gaza – drawing a swift rejection from UAE Foreign Minister Sheikh Abdullah Bin Zayed Al-Nahyan, who stated: “The UAE refuses to be drawn into any plan aimed at providing cover for the Israeli presence in the Gaza Strip.”

The episode was a stark demonstration of the breakdown in communication and diplomatic alignment between Abu Dhabi and Tel Aviv, and it joins a wider pattern of reports that UAE officials are already looking beyond Netanyahu and cultivating relations with his potential successors.

On 5 June, the UAE’s foreign minister again condemned the Israeli government after it allowed the divisive annual ‘Flag March’ of Israeli settlers through Jerusalem’s old city, as well as settler activism in the Al-Aqsa Mosque compound, despite the extraordinarily heightened tensions over Gaza.

For UAE-Israel ties to thrive, Abu Dhabi needs a government partner in Tel Aviv that it can work with on a productive basis to safeguard interests between the two countries while avoiding diplomatic affronts.

Unfortunately for the UAE, the current Israeli government – with the far-right ministers that Netanyahu has brought into the cabinet – has had a habit of proving itself to be the very antithesis of such a partner.

Looking ahead, it could be a long road for UAE-Israel ties to return to resembling their halcyon state of 2021-22, and it will take a government in Israel under someone other than Netanyahu to get there.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11898933/main.gif
John Bambridge

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Caution governs Jordanian bank lending

    12 June 2026

     

    In a region where geopolitical turbulence has amplified by an order of magnitude, Jordan is managing to stand out as a beacon of relative stability, with the Hashemite kingdom’s banking sector acting as a case in point.

    Lending has grown in recent years, with credit up by an average 4.9% between 2020 and 2025, according to the Central Bank of Jordan (CBJ) – a faster rate than average nominal GDP growth of 2.3% over the same period.

    The IMF took care to note an increase in credit to the private sector in its latest Article IV assessment of Jordan, standing at 80.1% of GDP at end-2024, compared to just 66.6% 10 years earlier.

    Banks in the kingdom ended 2025 in a liquid state, but caution remains the watchword for local lenders. The loan-to-deposit relationship bears that out. For that year, deposits ended up 7.1% to JD50bn ($70.5bn), while credit facilities were up just 3.7% to JD36.1bn ($50.9bn).

    Analysts see this as a case of Jordanian banks being prudent, given the tricky operating environment and limited lending opportunities, rather than banks being excessively defensive. 

    According to Christos Theofilou, an analyst at Moody’s Investors Service, it is cautious lending in fraught macroeconomic conditions.

    “On the one hand, we’ve seen a structurally strong and stable deposit base that has been growing more compared to lending. That indicates a certain degree of limited risk appetite, but also the fact that, given the challenging operating conditions, there were limited business opportunities in the market,” says Theofilou.

    Liquidity banked

    Jordan’s banks look able to withstand further shocks, given solid capital positions and relatively strong earnings performances. Arab Bank, the largest lender, saw net profits grow 12% last year to $1.13bn, despite a highly charged geopolitical situation across Jordan and the neighbouring Palestinian territories.

    As Moody’s notes, Jordanian banks’ funding base remains stable, with banks mainly deposit-funded – with deposits at 67% of total assets as of December 2025 – mostly comprising well-diversified retail deposits. The ratings agency noted that banks retain the capacity to increase lending without relying on more volatile and costly external funding, as indicated by the 72% loan-to-deposit ratio.

    The earnings outlook in Jordan may be better than other banking sectors in the immediate region, but this does not translate into a picture of booming profits going forward.

    “Profits should remain resilient, but we’re not expecting any significant improvement,” says Theofilou. “We have the challenging operating conditions, and the lower interest rates that have come down over the past few years. On the other hand, banks have had lower provisioning in the past 12 to 18 months compared to the period prior to that.”

    Asset quality remains a strong point, despite some weakening over recent years. Moody’s sees non-performing loans (NPLs) falling below 5.5% this year from 5.8% in June 2025.

    However, the continuing Iran conflict and its deleterious regional impacts – including on the West Bank, where about 9% of Jordanian banks’ loans are located – suggest that bank exposures to troubled sectors will require focus.

    Concentration bites

    Another challenge is the banks’ high credit concentration among large corporates, with a noted high exposure to real estate.

    Commercial and residential real estate loans accounted for 17.4% of total credit facilities as of year-end 2024, while residential mortgages accounted for 40.9% of household credit. Regulatory oversight may limit the impacts – the CBJ caps loans for real estate at 20% of local currency customer deposits.

    The real estate exposures are meaningful, but Moody’s views overall concentration risk as more material rather than real estate risk per se.

    “So, on the one hand, Jordanian banks have real estate loans, both commercial and residential, slightly below a fifth of the total credit facilities,” says Theofilou. “Banks also face challenges in quickly disposing of properties, but within the context of a relatively lengthy foreclosure process. On the flipside, we see Jordanian banks having fairly high collateralisation, so they do hold a lot of collateral against the real estate exposures.”

    The CBJ has earned plaudits for its regulatory oversight, with the IMF lauding its strengthening of the Financial Stability Committee, while refocusing its role on macroprudential policies and systemic risks. 

    Jordanian banks’ brisk uptake of digital technologies has also been a positive.

    Last year, digital payment systems in Jordan recorded over 184 million digital transactions, exceeding $38bn in value. The CBJ has introduced an AI regulatory framework for the sector and the authorities are now working to burnish the country’s credentials as a fintech hub, based on a 90% plus internet penetration. 

    In the year ahead, Jordanian banks will be looking to find exposures to new lending opportunities, given the past risk aversion that has prevented them from building stronger growth avenues.

    Projects beckon

    Big new infrastructure projects could yet come to the fore as bankable opportunities for local players. For example, the National Water Carrier Project, costed at $5.8bn and aiming to increase water supply by 40%, is looking to achieve financial close this summer. It is the type of project that could prove significant in helping diversify local lenders’ exposure away from real estate towards infrastructure.

    “If we see a lot of these infrastructure projects requiring financing coming to the market, then we could see a bit of a pickup in lending growth as well,” says Theofilou.

    New lending opportunities will come from large corporates and infrastructure-related lending. Those will play the key role in any significant pickup in credit growth, says the Moody’s analyst, in contrast to the small- and medium-enterprise (SME) sector, which poses a different challenge for banks.

    “The SME segment does represent a potential growth opportunity and it’s supported by policy focus, however its expansion is constrained by the operating environment. The sector is exposed to high overall credit risks, and when conditions are challenging, banks tend to be more cautious in lending to the SME markets,” says Theofilou.

    So long as the regional conflict persists, banks will be inclined more towards caution than exuberance in their lending approaches. And yet that strong and stable inclination may be what serves them best in a notably turbulent year in the Middle East’s recent history.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17204176/main.gif
    James Gavin
  • Oman tenders environmental survey consultancy contract

    12 June 2026

    Nama Power & Water Procurement Company (Nama PWP) has issued a tender seeking consultancy firms to provide environmental and seawater quality surveys under an ad hoc services contract.

    The selected consultants will be appointed for a four-year period and engaged on an as-needed basis to undertake environmental survey work.

    According to the tender notice, the scope of work includes environmental surveys, vertical profiling of seawater quality, seawater sampling and testing, environmental and social baseline studies, and bird and bat surveys.

    Bids are due by 1 July.

    Environmental and seawater studies are typically undertaken during the early development stages of power generation, desalination and other water infrastructure projects.

    Oman’s project pipeline includes a series of large-scale independent power projects (IPPs) scheduled for delivery between 2027 and 2031, according to the seven-year plan released by Nama PWP in March.

    Earlier in June, Nama PWP issued a supervisory consultancy tender for the 280MW Marsa solar IPP project in North Al-Batinah Governorate.

    The project is scheduled to enter commercial operation in the first quarter of 2028.

    The company is seeking project management and supervisory consultancy services during the construction, commissioning and testing phases of the project.

    The bid submission deadline is 26 July.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17209109/main.jpg
    Mark Dowdall
  • Emirates to offer passengers insurance amid travel warnings

    12 June 2026

    Dubai-based airline Emirates is to offer its own insurance product to passengers flying to or through Dubai, as it seeks to reassure travellers deterred by government advisories against travel to the region.

    The airline’s president, Tim Clark, confirmed the move in an interview with the London-based Financial Times. He said Emirates was working with insurance companies to introduce a “reasonably priced” product that would guarantee passengers could get home regardless of whether they returned on Emirates or another carrier.

    The move is designed to address concerns that travellers could become stranded if the conflict were to restart. More than three months after fighting began, several countries continue to maintain no-fly recommendations covering Gulf routes, leaving passengers unable to obtain conventional insurance for trips to or through the region.

    “I think one of the big concerns is that if they get caught overseas and they can’t get back,” Clark said. The group was working with insurance companies “to do the right thing”, he added.

    Emirates has played a leading role in supporting Dubai’s tourism sector since Iran began targeting the UAE with missiles and drones on 28 February.

    In early June, the Department of Economy and Tourism told stakeholders attending its bi-annual City Briefing that the emirate worked closely with airports and aviation partners, including Emirates and FlyDubai, to ensure continued connectivity for travellers.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17206867/main.jpg
  • Conflict to push global growth to post-pandemic low

    12 June 2026

    The ongoing conflict in the Middle East is expected to drag global economic growth to its lowest level since the Covid-19 pandemic, with Gulf states bearing the heaviest burden of any region, the World Bank Group has warned in its latest Global Economic Prospects report.

    Global growth is forecast to slow to 2.5% in 2026, down from 2.9% in 2025, with forecasts downgraded for two-thirds of economies. Economies in the Gulf directly affected by the conflict are expected to see growth collapse from 3.9% in 2025 to nearly zero this year, marking the steepest regional decline.

    The closure of the Strait of Hormuz has severely disrupted energy markets, with Brent crude prices projected to average $94 a barrel in 2026, 36% above 2025 levels, assuming the worst disruptions ease by July. Fertiliser price increases are compounding the pressure, feeding through to food prices and pushing global inflation to an expected 4.0% this year, up from 3.3% in 2025.

    The World Bank says downside risks remain substantial. Should energy supply disruptions prove more severe than currently assumed and be accompanied by significant financial stress, global growth could fall as low as 1.3% in 2026, with inflation climbing to 4.4%.

    The World Bank is making up to $50bn-$60bn immediately available through existing instruments, including $25bn in pre-arranged financing, to support affected countries through social safety nets, fiscal capacity and working capital for businesses. More than 30 countries are actively working with the bank to enhance readiness under the response plan. If the conflict and its economic fallout persist, support could be scaled to $80bn-$100bn over 15 months.

    Despite the severity of the near-term shock, the bank projects a significant Gulf rebound, with growth recovering to around 5% in 2027-28 as trade normalises and reconstruction spending begins.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17204153/main.jpg
    Colin Foreman
  • Emaar announces $55bn Dubai project

    12 June 2026

    Register for MEED’s 14-day trial access 

    Mohammed Alabbar, the founder of Emaar Properties, has released a statement saying that the Dubai-based real estate developer is about to announce a $55bn project in Dubai.

    On his social media channels including Instagram and X, he said: “Emaar is preparing to unveil its most ambitious project yet: a development worth AED200bn (around $55bn), commanding an extraordinary vista that brings together, in a single frame, three of the city’s timeless icons – Burj Khalifa, Burj Al-Arab and Palm Jumeirah – complete with the finest essentials of modern living, in the city of Dubai.”

    Emaar has delivered some of the world’s most ambitious real estate projects, including the world’s tallest tower, the 828-metre-tall Burj Khalifa, and the surrounding Downtown Dubai development.

    Commenting on the new project, Alabbar added: “This is no ordinary new development. It is a landmark that takes its place in the legacy of the United Arab Emirates, writing a new chapter in the story of a nation that knows no limits to its ambition.”

    In a statement on the Dubai Financial Market on 11 June, Emaar Properties said it “stands on the threshold of a historic announcement” and revealed more details about the project. It said it will have a total development value of AED200bn, with a gross floor area exceeding 4.5 million square metres.

    It added that it will include a mix of landmark residential towers, signature villas and mansions, Grade-A commercial offices, world-class retail destinations, luxury hospitality, and civic and cultural amenities. Altogether, the development will accommodate a projected population of nearly 150,000 residents. The statement also said the development will be connected to proposed metro lines.

    The exact location of the development was not revealed. Emaar has announced major projects in the past without giving precise locations. In June 2023, it announced the $20bn Oasis project. At the time, the details on the site’s location indicated it was situated in a prime location in Dubai, surrounded by high-end developments and within proximity to four international golf courses. It was later confirmed that the site sits between Damac Properties’ Lagoons development and Dubai Investment Park.   

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17203921/main5547.gif
    Colin Foreman