Peace accord to spur tourism, tech sectors
The normalisation of relations by the UAE and Bahrain with Israel is likely to benefit economies of all three nations and contribute to broader geopolitical stability in the region, S&P said.
The ratings agency expects the launch of direct commercial flights to Israel that would significantly increase cooperation in the areas of tourism, security, telecommunications, technology, health, education, financial services and agriculture.
“It is also likely that the parties to the Abraham Accords will establish reciprocal embassies at some point. Diplomatically, Israel’s regional isolation has been reduced, while GCC sovereigns may be able to leverage Israel’s significant military capabilities against common threats,” S&P said.
The ratings agency said another important factor is the extent to which the respective governments tie the pace of normalisation to the resolution of the Israeli-Palestinian issue. “If the resolution is a prerequisite for normalisation, as we believe is the case for Kuwait, then normalisation is not likely to happen soon.”
S&P said that although Saudi Arabia is broadly supportive of recent developments, the kingdom’s normalisation of relations with Israel would take time and might be affected by the transition of power from the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz of Saudi Arabia, to his son, Crown Prince Mohammed bin Salman.
“Oman is likely to move relatively slowly, given that Sultan Haitham bin Tariq is only in his first year of rule and had indicated a preference for maintaining Oman’s traditional role as a mediator between the US, the GCC, and Iran, and between the GCC countries,” said S&P.