Bahrain Could Be Gateway to Saudi Arabia For Israeli Businesses
Establishing economic ties with the Persian Gulf nation might open the Jewish state up to lucrative markets in the Arab world and beyond
Israel’s developing economic ties with Bahrain following September’s White House signing ceremony of the Abraham Accords, which also normalized relations with the United Arab Emirates, could hand the Jewish state the keys to Saudi Arabia’s massive market even without a peace deal in place with the kingdom.
That is the assessment of Zeev Lavie, vice president of international relations and business development at the Federation of Israeli Chambers of Commerce, who spoke to The Media Line in the middle of a three-day visit to Israel by Bahrain’s Minister of Industry, Commerce and Tourism Zayed Alzayani.
Bahrain is a small but important market because it is a part of the Gulf Cooperation Council, which includes Saudi Arabia, its immediate neighbor to the west, connected by the 15-mile long King Fahd Causeway, Lavie told The Media Line.
“A lot of Saudis are coming to Bahrain. Other than looking at Bahrain as just a market, it can also be used as a gateway to the Saudi market,” Lavie said, describing a scenario where Israelis who want to do business with Saudis can fly 2.5 hours over Saudi airspace from Tel Aviv to the Bahraini capital of Manama to meet with their Saudi partners and sign export deals to Saudi Arabia via Bahrain.
“Bahrain’s close ties with the Saudis include free customs, free movement of goods, free movement of people,” Lavie explained. “Because Saudi Arabia is the biggest economy in the Arab world it gives you a lot of potential as well.”
According to the most recent World Bank data for each country, Saudi Arabia has the highest gross domestic product in the Middle East and North Africa region at $792.97 billion compared to Israel at $395.10 billion and Bahrain with $38.57 billion.
Other than looking at Bahrain as just a market, it can also be used as a gateway to the Saudi market
A Bahraini business and trade delegation of some 40 people landed at Ben-Gurion Airport on a Gulf Air flight on Tuesday for meetings with the business community and government officials.
The event comes just two weeks after Bahrain’s foreign minister, Abdullatif bin Rashid Al Zayani, became the first minister from the island nation in the Persian Gulf to officially visit Israel.
Alzayani was greeted on the tarmac by Economy Minister Amir Peretz, Regional Cooperation Minister Ofir Akunis and Tourism Minister Orit Farkash-Hacohen.
On Wednesday, Alzayani was in Jerusalem where his itinerary included meetings with Prime Minister Binyamin Netanyahu and Foreign Minister Gabi Ashkenazi.
At a press conference with Netanyahu, Alzayani discussed the normalization agreement with Israel.
“The steps we are building today are everlasting steps for future generations,” Alzayani said. “That was a courageous move by his majesty [Hamad bin Isa bin Salman Al Khalifa] and yourself and we thank you for that. We thank the American administration led by President Trump for facilitating it.”
Alzayani continued: “And we feel we are paving a new future for future generations to leave this world a better place for them then what we have inherited.”
Lavie will be at the Hilton in Tel Aviv on Thursday for a signing ceremony with the government organization Export Bahrain, which follows another memorandum of understanding inked with the Bahrain Chamber of Commerce & Industry in October in Manama.
There is tremendous export potential from Israel to Bahrain, Lavie said, including in the areas of financial innovations, water and irrigation, tourism, consumer goods, food and agricultural technologies, and renewables such as solar energy.
Imports from Bahrain to Israel could include furniture, designers, textiles, petrochemicals and building materials such as aluminum, he added.
Investments from Israel would mostly involve the tourism sector, according to Lavie, who said that Bahrain is making a push to promote tourism like the successful Dubai tourism campaign.
“Perfect weather, great hotels, great hospitality. It’s a very liberal environment. Really interesting place to visit,” Lavie said.
Bahrain’s close ties with the Saudis include free customs, free movement of goods, free movement of people
Dr. Yoel Asseraf, head of marketing and international business at Ruppin Academic Center in Israel, told The Media Line that there is a lot of potential for international business between Israel and Bahrain but that, in general, there is more risk and uncertainty when doing business with foreign countries compared to doing business domestically, and that there are some cultural differences that need to be understood.
“An outside-in approach will enable Bahraini and Israeli firms to closely assess the new markets, build new relationships with partners and set up the right product and marketing promotion,” Asseraf said.
One cultural difference, Asseraf explained, is something called power distance, which measures the degree that a society accepts inequality. Studies show that Israel is very low in power distance while Bahrain is very high. A cultural difference where there is similarity is a high ranking for both countries in uncertainty avoidance, where there is a feeling of being threatened by risk or uncertainty.
According to Asseraf, “managers and entrepreneurs from Israel and Bahrain should remember that ‘We do not see things as they are; we see things as we are’ and therefore in international business, it is wiser to slow down in order to speed up.”