Israel's $5 Billion Trade Opportunity in Spain and Brazil Hinges on Political Climate
Translated & summarized from Maariv by baba
Israel's annual trade with Spain and Brazil totals approximately $5 billion, but political climates in these nations significantly affect business dealings. Expert Ovad Cohen explains that governmental "spirit of the commander" can lead to indirect avoidance of Israeli partnerships, even without explicit bans. While a change in government might not drastically increase trade volumes, it could open doors for major infrastructure projects and encourage more risk-averse financial institutions to engage with Israel.
The story in 6 lines · by baba
- Israel's annual trade with Spain and Brazil reaches $5 billion, but political climates influence business decisions.
- Governmental 'spirit of the commander' can lead to indirect avoidance of Israeli business, according to expert Ovad Cohen.
- While direct trade may not surge with political shifts, large projects and financial sectors could see increased engagement.
- Spain's participation in major tenders, like the metro project, could be influenced by a change in government.
- Financial institutions are particularly sensitive to political risk, potentially increasing their engagement with Israel.
- Symbolic gestures, such as Spain's potential return to Eurovision, can signal a shift in Israel's diplomatic standing.
Israel's annual trade with Spain and Brazil collectively amounts to approximately $5 billion, but the political climate in these countries significantly influences business decisions. While trade has continued even during periods of strained diplomatic relations, with Spain accounting for about $3 billion and Brazil $2 billion annually, the governmental approach in Madrid and Brasilia impacts the business environment for Israeli companies.
According to expert Ovad Cohen, companies may not explicitly state they are avoiding business with Israel. Instead, decisions are often made indirectly, with businesses opting out of engaging with Israel due to perceived political complications or a lack of strong pro-Israel sentiment among senior management. This "spirit of the commander" from the government can lead to companies choosing to forgo dealings with Israel, not due to legal prohibitions, but to avoid potential friction.
Cohen contrasts this with countries like Colombia, where relations are more directly bilateral. He notes that being part of larger blocs, such as the European Union for Spain, can mitigate the impact of political animosity. While governments can take "annoying steps," like the Netherlands' actions regarding products from the West Bank, they have limited ability to dismantle entire trade agreements unilaterally.
Cohen believes that even a change to a more pro-Israel government in Spain or Brazil might not lead to a dramatic surge in trade figures, as those who wished to do business with Israel likely already are, directly or indirectly. He suggests that currency fluctuations, particularly Brazil's Real, could have a more significant impact on trade volumes.
However, shifts in political atmosphere can be crucial for large-scale projects and sectors where political sentiment carries weight. Cohen cites Japan's improved economic relations with Israel following Shinzo Abe's proactive engagement in 2013-2014 as an example. In Spain, a change in government could encourage Spanish companies, skilled in areas like infrastructure, to reconsider participation in major tenders, such as the ongoing metro project, if they previously abstained due to the current government's stance.
Financial institutions, being risk-averse, are also sensitive to the political climate. If Spanish banks, which are active in Latin America, perceive less government-imposed risk, it could influence their willingness to engage with Israel. Even symbolic gestures, like Spain's potential return to the Eurovision song contest after elections, could signal that Israel is no longer being boycotted, influencing business decisions.