Since its creation as a Jewish state in 1948, Israel has been isolated from nearly every other country in the predominantly Muslim Middle East. While Egypt and Jordan made peace with it, other Arab countries said they would withhold recognition pending formation of a separate Palestinian state in the West Bank and Gaza Strip, territories Israel conquered in the 1967 war. Prospects for a Palestinian state have faded in recent years. Still, the United Arab Emirates and Bahrain, Persian Gulf monarchies, have agreed to establish normal ties.

1. Why do the deals matter?

They suggest that Israel’s conflict with the Palestinians is no longer an impediment to its acceptance by its Arab neighbors, and that mutual mistrust of Iran is a more powerful force. The accords solidify a growing alliance between Israel and some Arab countries to contain Persian Iran. While Iran’s population is predominantly Shiite Muslim, the Arab states mostly have Sunni Muslim majorities; Bahrain has a Shiite majority but a Sunni ruling family.

2. Why now?

The UAE said a key factor behind normalization was Israel’s agreement to put its plan to annex parts of the West Bank on ice (for how long is unclear). Analysts argue that concerns about Iran, especially its regional ambitions and nuclear program, were the more decisive catalyst. The UAE and Bahrain share Israel’s interest in pushing back against a strain of political Islam that the Gulf monarchies view as a threat to hereditary rule and a destabilizing influence primarily emanating from Iran, Qatar and Turkey.

3. What are the economic implications?

Although trade between Israel and its neighbors Jordan and Egypt never boomed despite normalization, and Bahrain has a relatively small economy, it’s expected to be different with the UAE, a federation of seven emirates. Dubai is a business hub for the region and Abu Dhabi is keen to lessen its dependence on hydrocarbons. As soon as the normalization deal was revealed Aug. 13, ministers from the UAE and Israel rushed to open phone lines and unblock internet access, while companies in the two countries announced new pacts.

4. What role did the U.S. play?

Arguably it was President Donald Trump’s unsuccessful effort to secure a peace deal between Israel and the Palestinians that indirectly expedited the UAE-Israel accord. Though the Palestinians rejected the U.S. proposal, Israeli Prime Minister Benjamin Netanyahu controversially pledged to annex parts of the West Bank that the Trump plan envisioned Israel keeping. Concerned that such a move would provoke protests in support of Palestinians and jeopardize growing ties with Israel, UAE officials began secret talks with Israeli counterparts, with the Trump administration acting as a go-between. That led to the UAE’s decision to establish relations with Israel in exchange for Netanyahu suspending annexation. Bahrain announced Sept. 11 that it would follow suit.

5. What do the Gulf states get?

The UAE’s agreement enables it to develop commercial, diplomatic and security ties with Israel while arguing it helped the Palestinians by getting Israel to halt annexation. It helps the UAE clean up an image tarnished in the U.S. by its role in the devastating Yemen war. The accords could give the Gulf states access to previously off-limits U.S. weaponry, just as Egypt was able to secure better American arms after its peace deal with Israel. However, Israel has publicly objected to the UAE’s request for F-35 combat planes. It gives both Arab countries an opportunity to collaborate on technology and health care with Israel, a leader in both, at a time when combating Covid-19 is every country’s chief concern. UAE-based APEX National Investment said it agreed to conduct research on the coronavirus with Israel’s TeraGroup.

6. What does Israel get?

For Israel, establishing normal diplomatic ties with Arab countries has long been a strategic goal. It signals greater acceptance in the Middle East and the potential for more commercial ties for a country that has until now conducted very little of its business in its own region. It could lead to additional normalizations. And it’s a rare bit of good news for Netanyahu, who is under fire politically for his handling of the Covid-19 outbreak and faces multiple indictments for corruption.

7. Where does this leave the Palestinians?

Rejecting the UAE’s argument that it helped them out, Palestinian leaders have denounced the normalizations as betrayals by allies. To many Palestinians, the deals give Israel the benefits of peace without requiring it to pay the price of relinquishing its grip over seized land. Acknowledging that this was “certainly true,” Dennis Ross, a former Middle East peace envoy for the U.S., wrote in the Washington Post after the UAE’s move that it “should also signal to Palestinians that others are not going to wait for them” to make peace with Israel.

For more articles like this, please visit us at

©2020 Bloomberg L.P.