The Kingdom of Bahrain and Israel: Normalisation of relations

On Friday 11 September 2020 it was announced that the Kingdom of Bahrain would establish diplomatic relations with Israel, making it the fourth Arab country to do so following the UAE in August 2020, Jordan in 1994 and Egypt in 1979. The full details are not yet publicly known but it is likely that the details will be similar to some extent to those of the “Abraham Accord” agreed by Israel and the UAE just last month.

The agreement between Bahrain and Israel is likely to provide commercial benefits for both nations, and will allow them to develop, diplomatic and security ties with each other, which is particularly significant given that Israel has conducted minimal business in the Gulf region until now. The agreement will provide an opportunity for both nations to benefit from the flow of cross-border investment and technological cooperation.

Israel has a highly developed economy with a strong focus on technology and innovation, and has the reputation as a “start-up nation”, which may provide synergies with various start-up initiatives in Bahrain, such as the Central Bank of Bahrain’s Regulatory Sandbox, which facilities and encourages the development of FinTech, and the presence of various incubator and accelerator hubs, such as Flat6Labs, C5 Accelerate, Brinc and the Bahrain Business Incubator Centre.

The agreement will likely also provide opportunities for collaboration, particularly in respect of healthcare and technology, as well as oil and tourism. The agreement will likely permit businesses in Bahrain to enter into direct commercial agreement with counterparts in Israel to exchange, import, trade in and possess Israeli products in Bahrain.

As for the tourism sector, the BBC reported that, immediately following the announcement of the Abraham Accord, the most searched for words in the UAE were “hotels in Israel”.  Similar interest from tourists is expected between Bahrain and Israel.

Many observers are watching to see if other nations follow suit, with Oman, Sudan and Saudi Arabia being potential candidates.  Particular focus has been on the latter, in part because of Bahrain’s close ties to Saudi Arabia and the fact that Saudi Arabia recently permitted Israeli commercial flights to use its air space.