L
ast month’s landmark decision by the United Arab Emirates
to normalize relations with Israel has attracted both plaudits
and skepticism, but Israel is betting the agreement with the
Persian Gulf ’s second-largest economy will provide a trade windfall.
Israel’s Economy Ministry calculates that the normalization of ties
could increase exports to the UAE to US$300 million to $500 mil-
lion annually while according to Moody’s Investors Services, UAE
investments in Israel could reach US$350 million a year.
The UAE is only the third Arab nation after Egypt and Jordan to
formally establish ties with the State of Israel; Mauritania froze links
in 2009. The surprise announcement by US President Donald Trump
has fueled hopes that other Gulf sovereigns may emulate the UAE’s
decision, paving the way for deeper regional economic integration.
Yet the reality looks more nuanced. Saudi Arabia has said it will
not recognize Israel absent a peace agreement with the Palestinians
and Kuwait has all but ruled out any rapprochement. Nonetheless
Bahrain and Oman as well as Sudan and possibly Morocco have
been tipped to follow the UAE’s move. Oman received Israeli Prime
Minster Benjamin Netanyahu on a visit to the sultanate in 2018; the
following year, Bahrain hosted the US-sponsored Peace to Prosperity
conference attended by Israeli media and business leaders.
Whether the initial euphoria surrounding the agreement leads to
formal ties looks uncertain, how-ever. The UAE move was broadly
welcomed by their leaders, but civil society figures in Bahrain and
Oman expressed reservations.
The pivot point could be the economy. If the UAE succeeds in
securing Israeli investment, other cash-strapped Gulf governments
may take notice. For Oman, this would be one way of lessening
dependence on its Gulf neighbors for a bailout.
For now, the UAE’s security, healthcare, transport and logistics
sectors look to be the main beneficiaries of new cross-border oppor-
tunities. But investment in Israel by UAE firms may be more dif-
ficult. Political uncertainty remains a threat to the deal if Netanyahu
revives plans to annex additional parts of the West Bank, for exam-
ple, or pushes back against Gulf defense deals that diminish Israel’s
security. Additionally, the UAE risks aggravating simmering ten-
sions with Iran and Turkey should it contribute to Israel’s economy.
—Mark TownsendMIDDLEMEN
Game Developer
Challenges
Giant Over FeesMIDDLE EAST
Historic Israel/UAE Deal
Promises To Boost CommerceA
pple, the world’s most valuable company, and
Epic Games, a video game developer, are lock-
ing horns in a legal fight over how to sell content
through iOS. At issue is Apple’s right to impose a 30% fee
on game sale proceeds. The high-stakes battle is being
watched closely as a showdown over the vast commercial
power of the iPhone producer.
Marketplaces such as Apple’s App Store and Google ‘s
Play Store usually charge developers and content sellers
30% of revenue over the first 12 months and 15% there-
after—a cut that many consider excessive. To get around
this “tax,” Epic intro-
duced its own pay-
ment mechanism for
one of its most popu-
lar games, Fortnite.
Apple responded by
removing Fortnite
from the App Store.
This is where the
legal battle started.
Epic wants its game
reinstated on App
Store and accuses
Apple of assuming
the monopolistic role
that IBM held 20
years ago. Apple is
demanding that any
sellers using the App
Store, which analysts
estimate generates
about $15 billion in
annual sales, observe its payment rules.
While a court hearing was set for the end of September,
Yvonne Gonzalez Rogers, the federal judge hearing the
case in California, said last month that neither company
has a “slam-dunk case.” Meanwhile, she granted a tem-
porary restraining order barring Apple from revoking Epic’s
developer accounts while allowing Apple to continue ban-
ning Fortnite.
The Justice Department has reportedly opened an anti-
trust investigation into Apple over its App Store practices,
after the European Commission opened a similar probe
earlier this year. –Tiziana BarghiniMILESTONES
8 | Global Finance | September 2020SHUTTERSTOCK.COM