Israelis, Arabs Get Down to Business at Conference

Saudi Arabian executives openly swapped business cards with their Israeli counterparts Tuesday, while the Persian Gulf state of Qatar acknowledged a preliminary agreement to sell natural gas to the government of Israel through a U.S. company.

And a new $5-billion Middle East Development Bank was established--along with regional tourism and business councils--which was the main fruit of Israel’s negotiations with its principal peace partners, Egypt, Jordan and the Palestinians.

These events consummated during a three-day economic meeting here, although modest in some cases and controversial in others, illustrate how quickly Israel is becoming a legitimate business partner in the Arab world. The former enemies are starting to do deals at the front door.

Among the biggest of those deals would be Israel’s intended purchase of $2 billion of liquefied natural gas from Qatar through a subsidiary of the Houston-based energy company Enron Corp.

Israeli Energy Minister Gonen Segev signed a letter of intent with Rebecca Mark, chairwoman and chief executive of Enron Development Corp., on the final day of the Middle East-North Africa Economic Summit, held to promote Middle East investment and regional development projects.

“This is a very important step in the normalization of the relationship in the Middle East, in building an economic peace, not just a political one,” Israeli Foreign Minister Shimon Peres said.

The Qatar gas deal, like a $50-million Jordanian-Israeli chemical joint venture announced at the conference, was known in advance. It was not firm, but it was public--and for the Israelis such open dealings represent progress.

Israeli officials estimate they do hundreds of millions of dollars of trade with the Arab world each year through third countries, most of it well out of the limelight.

The Arab League refuses to lift its primary embargo on trade with Israel until there is region-wide peace. But a secondary embargo was eliminated last year, allowing for business between Arab companies and third parties--such as Enron--that also trade with Israel.

Despite the progress, divisions over how to deal with Israel remain and were evident at the summit. Jordan is moving quickly toward economic integration. But Egypt would like to slow the pace until Syria and Israel make peace. Some business people feel the United States is pushing too hard to make Israel and its Arab neighbor interdependent.

“Economic cooperation is different from economic interdependence,” said El-Sayed Elewa, an adviser to the Federation of Egyptian Industries. “Cooperation is voluntary. We feel this orientation toward integration under pressure of the superpower. The region is not ready.”

He called the regional development bank another example of U.S. pressure to integrate Israel and Israeli economic projects into the Arab world.

The United States is the main backer of the development bank, which was officially announced at the close of the conference of more than 1,000 business and government leaders. The bank, which will be based in the Egyptian capital of Cairo, was proposed at the first summit in Casablanca, Morocco, a year ago and is still about two years away from lending any money.

European governments such as Germany and France opposed the new bank, arguing that it would duplicate the efforts of existing financial institutions. U.S. officials said they support it primarily because it is one of the few ideas conceived and agreed upon by the four Middle East peace partners--Israel, Egypt, Jordan and the Palestinians.

The bank will remain small, with about $1.4 billion paid into it, and operate like a merchant bank to promote regional projects, U.S. officials say. About 75% of the shares will be allocated at a meeting next month among Canada, Japan, Russia, the United States and several European and Middle Eastern countries. Some shares will be put aside for future members.

The United States is expected to take about a quarter of the bank’s shares, and the bank should give the United States another tool for influencing the region’s economic development.

While the United States and Israel argue that this kind of economic integration will help cement regional peace, Israeli Economics Minister Yossi Beilin spent much of the conference trying to reassure Arab business leaders that Israel does not aim to dominate their countries economically.

He and the Israeli businessmen reminded their Arab colleagues that Israel’s primary markets will remain in the United States, Asia and Europe.

But that does not mean the Israelis were not looking for business. They were, and happily so.

“I really feel the change,” said David Kimche, chairman of New Middle East Ltd., which invests in export projects. “In Casablanca, people really didn’t want to be seen in public with me. Here, I feel the difference.”

Just how many of those contacts and exchanged business cards will actually lead anywhere is another question. Hussam Hudhud, managing director of HudhudShand Ltd., a Jordanian firm of engineering contractors, described how he had met an Israeli businessman at Casablanca last year and spent nine months negotiating over a joint venture for construction-related manufacturing in Jordan, only to have the talks collapse.

“He wanted 75% and I wanted 51%. I said this is what I want, that this is my country and I have to be proud,” Hudhud said. His feeling about doing business with Israelis in general, he said, is that “Israel has to be generous. They have won the war and can afford to be.”