When the Abraham Accords were passed in August 2020, it formally established business ties between Israel and the United Arab Emirates (UAE).
However, it not only meant the dawn of a new Middle East. It completely opened up this lucrative region for U.S. asset managers.
Further Context
The Abraham Accords provided more than a bridge for Middle Eastern countries to conduct business with Israel. They represented a new “mindset” shared by Israel, its Arab neighbors, and America’s leadership.
The potential for unbridled economic opportunity and prosperity for all participating countries is now the priority. Not long-standing political and religious tensions.
With the U.S. brokering the treaty, this new “mindset” makes the UAE more accessible and open for U.S. asset managers to expand and secure licensing.
The cloud of uncertainty has been lifted, and the next 6-12 months could pose significant opportunities for U.S. asset managers to increase their AUM.
Why Should U.S. Asset Managers Care?
The Abraham Accords changed how business is conducted in the Middle East. Particularly, if U.S. asset managers have dealings with Israeli companies.
Israel and the UAE are America’s two largest Middle Eastern trading partners. However, until now, U.S. asset managers doing business with both countries had to walk on eggshells and tolerate long bureaucratic delays.
Regional operations have always been bifurcated between Israel and the rest of the Middle East. With the Abraham Accords, the UAE abolished its Israel boycott law. In return, the U.S. Treasury Department removed the UAE from its “boycotting countries” list.
That means substantially friendlier ties between the UAE and the U.S. and reduced barriers to entry. Especially for U.S. asset managers and UAE institutions, including capital-rich Dubai SFOs (Single Family Offices) and MFOs (Multi-family Offices), wanting to invest with them.
Private equity or VC shops from the U.S. establishing a presence in Dubai can now invest in Israeli tech companies from Dubai.
It’s also more accessible for U.S. asset managers to simultaneously invest in Israel and the UAE’s flourishing energy, tourism and travel, and health and pharma sectors.
Moreover, the Abraham Accords show how quickly warmer relations can benefit everyone economically.
- According to the Rand Foundation, the Abraham Accords could create as much as $1 trillion in new economic activity when fully realized over the next decade.
- The $3 billion Abraham Fund jointly formed between the U.S., Israel, and the UAE could reduce barriers in conducting business and lead to major investment initiatives.
Many of the largest U.S. asset managers saw opportunities from the Abraham Accords from the start.
With the Abraham Accords in motion for two years now, it’s not only easier for U.S. asset managers to get licensed now and conduct business in the UAE. It’s clarified how to get licensed and conduct business. Citibank, for instance, called the Abraham Accords a “perfect fit,” opening up exciting investment opportunities in the Middle East that were previously “unavailable.”
Consistency eliminates risk. The Accords reduced the veil of uncertainty and formalized the regulatory process rather than ad hoc.
Plus, consider the potential longer-term implications. Today it’s Dubai. Tomorrow it could be Saudi Arabia.
Furthermore, asset managers looking to enter the Middle East may not only have a more accessible inroad to Dubai with reduced barriers. They may also now have a more accessible entrance into East and Southeast Asia.
Black Swan’s Role
The UAE has long been an attractive destination for American asset managers. However, the Abraham Accords changed the business and regulatory landscape in the Middle East. Regulations eased, and openness increased with economic cooperation as the priority.
Black Swan can serve as your quarterback for navigating this new era.
At Black Swan, we have unique insights into the region and the interplay among regulatory agencies. While much of the focus of the Accords involves the Israel-UAE economic relationship, it also opens up opportunities for American asset managers.
As a U.S. asset manager, Black Swan can help you leverage these warming ties and introduce you to the proper regulators and connections. We are a central repository firm focused on regulatory compliance and can assist you with your expansion needs to grow your AUM. We can help you with the licensing application and associated Compliance Manuals, referrals to placement agencies and tax counsel, and more.
With doing business in the Middle East further codified, it’s never been clearer how and why to expand to the UAE as an asset manager to increase your AUM. We can help you every step of the way.