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After Normalization, Israeli Trade With Morocco Expected to Take Off

After Normalization, Israeli Trade With Morocco Expected to Take Off

Agricultural technology, health care sectors believed certain to flourish, but some are less optimistic about burgeoning ties

Israel is hoping that normalization with Morocco will bring with it significant new business opportunities and open up fresh markets across North Africa.

Rabat announced the resumption of ties with Israel on December 10, joining the United Arab Emirates, Bahrain and Sudan, who all have recently signed on to normalization pacts as part of US President Donald Trump’s diplomacy campaign in the region. In return, the United States recognized Morocco’s annexation of Western Sahara, a disputed territory on the northwest coast of Africa.

Adiv Baruch is chairman of the Israel Export and International Cooperation Institute (IEICI), a non-profit organization established and funded by both the government and the private sector. The IEICI is in charge of all exports from Israel, except defense products.

While bilateral trade between Israel and Morocco currently is not substantial, there is enormous potential for growth, especially in the agritech and health care sectors, Baruch said.

“I think that the potential will reach $100 million in trade between the two countries in the very short-term,” he told The Media Line. “The target is to exceed over $1 billion in trade over the next three years.”

Morocco principally exports clothing and textiles, fruit, electric components and inorganic chemicals. Its dominant economic sector is agriculture, which employs 34% of the country’s workforce, according to World Bank figures from 2019.

The target is to exceed over $1 billion in trade over the next three years

Until now, Israeli companies wishing to conduct business in Morocco have had to work through third-party solution providers or foreign companies.

Thanks to normalization, however, “the business community will be able to start interacting directly, not via third parties,” Baruch said. “Once you have direct interaction between business communities, this will increase trade because we’ll be able to understand their vision and strategy, not only to react to needs.”

From right, Jared Kushner, White House senior adviser; Meir Ben-Shabbat, Israel’s national security adviser; and David Friedman, US ambassador to Israel before a joint Israeli-U.S. delegation takes off on an official visit to Rabat, Morocco on Dec. 22, 2020. (David Azagury/U.S. Embassy Jerusalem}

The first flight from Israel to Morocco took off on Tuesday, carrying with it a joint Israeli-American delegation and plans to sign several bilateral and trilateral deals. Israel’s National Security Adviser Meir Ben-Shabbat, himself of Moroccan descent, led the Israeli delegation. Israel is home to some 700,000 Jews of Moroccan origin.

Beyond economic opportunities in Morocco itself, normalization also paves the way for Israeli companies to enter numerous other African markets.

“Morocco is the gateway to other countries in the region and that’s something that will be explored as well,” Baruch affirmed.

In Morocco, though, some are questioning what concrete benefits peace will bring to the country’s people.

Morocco is the gateway to other countries in the region

Amine Ayoub is the managing director of KKB Partners, a consulting firm based in Morocco that deals with market intelligence and business development.

A long-term advocate of normalization, Ayoub first visited Israel in late 2015 when he participated in an innovation-themed business tour that was sponsored by the Israeli Foreign Ministry’s Mashav agency. Mashav is dedicated to bolstering international development cooperation.

“The innovation sector is where we could have an impact on the local Moroccan economy,” Ayoub told The Media Line. “We are having a lot of issues with unemployment, especially youth unemployment. People are trying to leave the country.”

Even though there has been a lot of talk of the agritech sector flourishing under new agreements, Ayoub is unsure of what overall effect normalization will have.

“I don’t think it’s going to have a big economic impact,” he said.

Like Baruch, Ayoub noted that Israeli companies have worked in Morocco for a long time. As an example, he pointed to Israeli agricultural technology giant Netafim, which has operated a subsidiary in the North African country for a number of years.

The Moroccan people are not really hot about this normalization

Still, the Moroccan public’s views of Israel are unlikely to change so quickly. In fact, Moroccans are primarily celebrating US recognition of Moroccan sovereignty over Western Sahara and not focusing on potential economic benefits, he said.

“The Moroccan people are not really hot about this normalization,” Ayoub said. “When you talk to people, they’re confused because this thing happened so fast.”

“I know that people are not ready so there is a need to educate them about the state of Israel,” he added.

Despite such difficulties, Baruch believes that ultimately business ties will succeed in shifting public perception and establishing a broader peace in the region.

“We believe that the economic diplomacy that Israel has been leading the last few years is now coming to realization,” Baruch said, adding: “The economic train of peace has left the station and we see more and more countries that are coming onboard.”

 

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