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Regional Security in the Era of Arab-Israeli Détente and Economic Cooperation between Korea and the Middle East economic cooperation, international politics

Author Dahn Park, Hyondo Park, Il-Kwang Sung, Ji-Hyang Jang, and Jae Wook Jung Series 21-08 Language Korean Date 2021.12.30

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   The purpose of this study is to predict changes in the regional order and economic cooperation in the Middle East after the normalization of relations between Arab countries and Israel in 2020 and to explore potential areas in economic cooperation between Korea, Israel, and the Arab World. In order words, it aims to infer changes in the political and security order in the Middle East and their implications from various viewpoints and to seek our response strategies.
   Chapter 2 explores the idea that the Iranian threat and the United States withdrawal from the Middle East have led to the recent Arab-Israeli détente and their subsequent cooperation. After the Islamic Revolution in Iran in 1979, the conflict in the Middle East intensified along the fault line between the Arab Sunni monarchies and the Islamic Revolutionary forces of Iran. This confrontation is currently in progress. The Chapter also points out that since the Obama administration, the United States has pivoted to Asia, leaving the Middle East and leading from behind in the region, which has resulted in the current Arab-Israel détente.
   Chapter 3 examines the transformations in the political and security order in the region after the Arab-Israeli détente and analyzes the confrontational process between the new détente alliance of Sunni Arab countries led by the UAE, Saudi Arabia, and Bahrain and Israel on the one hand, and the Shiite coalition of Iran, Houthi, and Hezbollah on the other. We examine the changes in the foreign policies of Qatar and Turkey, which are pro-Islamic, after the signing of the Abraham Accords. Qatar maintains friendly relations with Iran and Turkey and has recently been working to improve relations with the neighboring Gulf countries. The UAE, Bahrain and Qatar have expressed their support for Saudi Crown Prince Mohammed bin Salman after the United States released reports on the murder of Saudi journalist Jamal Khashoggi and the Crown Prince’s approval of the killing. Meanwhile, Turkey has recently begun to express a conciliatory attitude toward the United States and Europe. Turkey, with the second-largest military forces among NATO countries, occupies a key geopolitical position in safeguarding European security, even though it is far from a democratic country. Given that the strategic competition between the United States and China continues to grow, and that the Biden administration balances values and interests in reestablishing relations with Turkey, Turkey-US relations could not only be regenerated, but also have profound effects in the region.
   Chapter 4 discusses increasing economic cooperation between Arab countries and Israel after the Arab-Israeli détente, specifically cooperation between the UAE and Israel and between Bahrain and Israel. By March 2021, UAE and Israel had signed more than 86 bilateral agreements. Since the signing of the Abraham Accords in September 2020, trade between the two countries has increased rapidly in about a year. According to the Central Bureau of Statistics of Israel (CBS), bilateral trade between the UAE and Israel recorded approximately $500 million from September 2020 to July 2021. Israel's exports to the UAE in the first half of 2021 amounted to $120 million, expanded by 14.4 times compared to the previous year period. In both 2019 and 2020, no Israeli import from the UAE was reported, but in the first half of 2021 alone, it recorded about $240 million. The total trade in the first half of 2021 was about $360 million, which is a 42.9 times increase from the same period of the previous year.
   Bahrain and Israel signed eight bilateral agreements in October 2020, five of which were related to economic cooperation. The cooperation agenda covered fields of economy and trade, aviation, information and communication, agriculture, and finance. In December 2020, three additional memorandums of cooperation were signed on innovation and technology and small and medium-sized enterprises (SMEs) development. While there was no trade between Israel and Bahrain before the signing of the Abraham Accords, the trade volume between the two countries during the first half of 2021 has reached $300,000. 
   Finally, Chapter 5 presents policy suggestions for expanding economic cooperation between Korea and major Middle Eastern countries, such as the UAE, based on the analysis of previous chapters. In so doing, it proposes several ways to discover new opportunities and chances in Korea-Middle East economic cooperation after Arab-Israeli relational changes, namely close monitoring on regional economic and political changes, utilizing the Korea-Israel FTA to find potential markets in the middle east, and triangular economic cooperation between Korea, Israel, and UAE. It will take a long time to stabilize the Arab-Israeli relationship because many complicated geopolitical factors need to be settled down and resolved. As significant ups and downs are expected in the future, even with new changes, including expanded UAE-Israel economic cooperation, Korea should prepare for any volatile situations and be ready for a strategic response to them. However, it is too complicated for individual companies to anticipate and prepare for such cases. Therefore, at the government level, it is necessary to inform and coordinate the strategic directions and forecast political and economic environments in the Middle East. At least for now, Korean companies entering the Middle East and targeting the Arab markets should take a proactive strategy of seeking to create new business opportunities rather than a passive, wait-and-see strategy, considering the competition with Israel in the same market.
   If Israel's political disadvantage in the Middle East market is resolved as economic cooperation between Arab countries and Israel deepens, Korean firms can consider a new route of exporting to the Middle East market, promoting Israel as a reliable base. As the cooperation areas of the Korea-Israel FTA encompass investment, high technology, and venture start-up in addition to trade, the Korea-Israel FTA secures access to not only the Israeli domestic market but also to the wider Middle East market through joint ventures with and local investment in Israel as an effective and productive means. In the future, if Israel forms a free trade agreement with Arab countries, such as the UAE in particular, it seems feasible for Korea to explore ways to link such an agreement with the Korea-Israel FTA.
   Given the fierce political and diplomatic confrontations that the UAE and Israel have experienced in the past, it requires a substantial effort to plan viable Korea-UAE-Israel trilateral cooperation projects from the beginning under mutual consultation among all three parties. Rather, it would be more effective and productive for Korea to start with the already consolidated, trust-based bilateral relations of either Korea-UAE or Korea-Israel in order to find a field in which the three parties can generate synergy and share mutual interests. It is again more feasible because Korea as a third party can keep a distance from Arab-Israeli confrontational issues and solely stress economic incentives. In this regard, Korea should incentivize the UAE and Israel to focus on private sectors with sufficient capacity-driven economic cooperation since the principle of separation of politics and economy will ultimately lead to the success of cooperation as long as the government and public sectors only have initiatives for cooperation.  

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