Ever since the UAE and Israel signed on September 15, 2020, the normalization agreement between the two countries, a wave of interest of new economic horizons have emerged in the region, as previously untapped markets became open for business.
Last week, former Labor Knesset member Erel Margalit, chair of Jerusalem Venture Partners (JVP) capital fund and one of the chief architects of Israel’s startup nation status, led a delegation of 14 CEOs and other leading business people to Dubai where they held meetings with senior officials and innovation counterparts to build cooperation between the two nations’ business sectors.
In an interview with Majalla, Margalit, who is one of Israel’s top venture capitalists, having backed more than 150 high-tech start-ups, discussed how the signing of the Abraham Accords will facilitate the two economic powerhouses to open their economies and grow entrepreneurship and technological innovation, and in turn, address the region’s most pressing economic and social challenges.
The interview has been edited for clarity and brevity.
Q - You led a first of its kind delegation of Israeli business people visiting the UAE. Could you talk to us about your visit?
Our trip to the UAE was one of the most moving visits for us as business people and Israelis that we have ever had. I brought with me 14 CEOs and 10 JVP and Margalit Startup City partners, along with a variety of reporters, all of whom were very eager to join the trip. I took great interest in the discussions I had with ministers and innovation and investment counterparts about setting up innovation hubs and other exciting initiatives between the two counties. The delegation was perhaps the first significant high-tech delegation out of Israel. The whole of Israel was listening. I initiated a vital dialogue that many Israelis see as a potential gateway to other Arab countries and a heralding of hope and change for the region.
Q – You mentioned that JVP is in talks with potential partners in the United Arab Emirates to set up an innovation hub. Could you talk to us about this initiative?
The hub will focus on various booming sectors, including artificial intelligence, FinTech, InsureTech, and Healthcare IT. Other areas of innovation are FoodTech and AgriTech, which are significant initiatives for both JVP and Israel. Countries like Egypt, which is confronting a looming water crisis that has been exasperated by the construction of the Renaissance Dam in Ethiopia, and Saudi Arabia, which is facing more extreme heatwaves and water shortages, need new agricultural and food tech strategies that we can work on together. We can create centers in the UAE and Israel that can cooperate with our bases in New York and Europe, creating an international leadership strategy which both our counties will be at the pinnacle of.
Q – What distinguishes the UAE within a global context, and what are some of the synergies between the UAE and Israel that make deeper economic integration compelling?
One of the things that we've witnessed in the UAE is not just that it is a financial center. We saw a small country with the reach of a major power. The UAE is accessing markets of 3 billion people in a way that Israel does not.
Israel is a haven for technology and innovation, while the UAE is one of the world's major trading countries and certainly a leader in the region. If you marry the business leadership of Dubai and Abu Dhabi with Israel's technology leadership, the result is a lot more business, not only within the UAE but with the region and beyond. If we're selling artificial intelligence systems to banks in the UAE that are making significant investments in banks in counties such as Egypt, Jordan, Saudi Arabia, Pakistan, and India, the model of change that we can present together is then replicated within those countries, bringing with it much more revenue, and thus, much more good. For example, if we are working in Dubai within the area of Healthcare IT, which allows for remote patient care, management, and engagement, we can expand into other potential markets across the region with the help of Dubai's business leadership. This partnership will not only generate a lot more business, but it is also about the positive social impact our partnership can have on segments of society.
Q - What are some of the most promising areas of cooperation for mutually profitable investment relations between the Gulf and Israel?
The world needs a new beginning following the Coronavirus pandemic. COVID-19 has triggered an unprecedented demand for digital health technology solutions and has brought to the fore the need for healthcare reform in major countries. There needs to be an understanding that in addition to having vast hospitals, medical care in the home and monitoring patients at the community clinics are also essential. If medical technologies can deliver the same level of care to patients nationally, even in the most remote areas of a country, then you have a breakthrough.
The pandemic also underscores the importance of FoodTech, AgriTech. The crisis lays bare some of our globalized supply chains' fundamental flaws, including our food systems, aiming a powerful spotlight on the need for food self-sufficiency. This is important because it has direct implications for a country's or region's ability to grow crops to independently meet its population's dietary needs, regardless of external circumstances such as extreme heat and water shortages.
The COVID-19 crisis has also escalated the risk of cyber-crime and malicious cyber-attacks of various forms. Cybersecurity today means protecting the safety of flights, hospitals and patient medical records, banks, the oil and gas industries, and the individual's rights and privacy. Therefore, cybersecurity is another big area for international cooperation.
Q - What are some of the promising areas for cooperation between Israel and other countries in the region, such as Bahrain, Sudan, and Egypt?
Egypt and Israel can work together on high-tech agricultural projects with the help of the UAE as it is one of the prominent investors in the country. Accords to normalize relations with Bahrain has opened doors to technology cooperation. In Morocco, we are involved in FinTech and InsureTech within the financial sector, and cooperation can also be found in agriculture. Israel has also had discussions with Tunisia as it has some of the best AI engineers, and the time has come to join forces within this field through the UAE and independently.
Sudan, which has recently signed a peace agreement, is home to some of the world's most fertile land. If we work together with the UAE, we can create a comprehensive FoodTech strategy that increases agricultural productivity. This strategy of adopting new technologies and innovation could transform much of the agriculture and food industry in much of Africa and the Middle East.
Saudi Arabia has unique and influential leverage in terms of the region's trajectory, and what we want to tell the Saudis that it's time that we cooperate. Let us work together to transform the Kingdom's oil-reliant economy into a knowledge economy. We understand that your position that full-ties can only happen when peace is reached with the Palestinians, but people need bridges, and where politicians fail, entrepreneurs will build those bridges. Provide us with the framework to work together and turn economic and technological cooperation into goodwill in the region.
We are working with Palestinian entrepreneurs in Jerusalem, Ramallah, Rawabi, Bethlehem, Hebron, and all over the country. In Jerusalem, we used innovation as a mechanism to connect Arabs and Jews and religious and secular groups. If innovation can change our city, it can also change our country and build bridges to the entire region. Let the entrepreneurs and technology lead the way, and politicians and the public will follow.
Q - How important is innovation today, not only for business but for our future survival?
Innovation is not only crucial for business; it is essential for social change. Innovation, education, and community are the three pillars of economic inclusion. What I found most striking in the UAE was that the successful people were not just about making money; they were about making a positive impact. We have a phrase in Hebrew, Tikkun Olam, which means mending of the world. Many of the Arab business leaders we met have the compassion to do good for their people and their region. If we can build businesses and cooperation together, which stems from a place of justice and a desire to improve people's lives using innovation, we will fulfill our mission.
Q - What is your vision for the future following the signing of the accord between Israel and the UAE?
There are many young and dynamic people across our region. We probably have more young people than any other region in the world. In the past, they called it the Fertile Crescent, but the Fertile Crescent today needs water, and the water that it needs is the water of innovation, compassion, and cooperation. Let the agreement between Israel and the United Arab Emirates be an opening for a new era of collaboration and strength in the face of mutual security threats from terrorist networks and Iranian aggression. We need security cooperation to protect ourselves, but we also need innovation and cooperation to move towards a brighter and more prosperous future - one that is full of hope, jobs, and a better future for the younger generation.