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October 8, 2024
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Trade relationship with Israel in turbulence after a year of conflict

Trade relationship with Israel in turbulence after a year of conflict

After a year of the conflict between Hamas and Israel, and in which the Government of Colombia has taken sides for the offensive in the Gaza Strip, The country has bilateral trade with the Israeli state at risk and which, according to sources in the sector, has been deteriorating.

(Read: It is one year since Hamas attacked Israel: this has happened since then)

Last August, precisely because of the conflict, the Government made the decision to prohibit exports of Colombian coal to Israel through Decree 1047 of August 14, 2024. This was justified by the seriousness of the humanitarian situation that has been unleashed in Palestine on the occasion of the military operation carried out by Israel after October 7, 2023.

According to sources consulted by Portafolio, it is not only coal exports that are affected, but also imports of products from Israel to Colombia, that in the midst of tensions also suspended the arrival of high technology from the Defense sector to the country.

(Read more: US sanctions group of Hamas supporters for making donations)

Analyzing the details of the commercial relationship, according to Dane, Colombian export data until August of this year has fallen by around 46%, compared to the same period in 2023. Among the products sold, the most resentful, clearly before the Decree, is coal, which until that date already had a downward trend of 49%, going from US$340.3 million in 2023, to US$173.7 million this year.

For Javier Díaz, president of Analdex, not only are commercial relationships impacted by the messages, but also the diplomatic ones between both countries that impose challenges in matters of cooperation or national defense.

(See: Conflict in the Middle East: Iran affirms that its allies ‘will not back down’ before Israel)

Anniversary of the Israel-Palestine conflict.

EFE

Regarding coal, Díaz assured that “Commercial relations with Israel entered a phase of turbulence due to the Decree that contemplated prohibiting coal exports from Colombia to this destination. In fact, it is the product that Colombia has sold the most in recent years.”.

(Read more: Israel considers attacking Iranian oil sector)

It should be noted that in terms of imports between January and July of this year These increased by 3.6%, reaching US$54.5 million, mainly due to the growth of mineral or chemical fertilizers and electrical conductors.

Among the projections of the president of Analdex, it is maintained that the risk of imports falling is high, not only because in 2023 external purchases from that destination decreased, but also due to the lower acquisitions of the Colombian Government in strategic sectors.

(Read: Iran’s warning to Israel if it responds to its attack: ‘The response will be more severe’)

For her part, Laura Lizarazo, global risk analyst at Control Risks, told this medium that lDiplomatic tensions between the two countries around the conflict will undoubtedly generate costs for the commercial situation, since both governments have already adopted decisions in this regard.

Coal

Coal.

iStock

It is important to highlight that these types of consequences do not necessarily materialize in all episodes of disagreement or diplomatic clash between different countries, but, in this case, both parties have an express political intention to escalate the implications to the commercial sphere.”, he indicated.

(See more: Oil and gold prices soar after Iran attack on Israel)

At the same time, Lizarazo predicts that Deciding to suspend coal exports to the Israeli country will have consequences especially for Colombiawhose trade balance with Israel has traditionally been in surplus and has been highly concentrated in mining-energy products at around 90%.

Coal has an important weight in Israeli imports because more than half of external purchases of this product come from Colombia. Therefore, it is expected that there will be a significant reduction in the royalties received for the export of this product, with a significant impact for the main producing departments, which are La Guajira and Cesar.“, project.

(Read also: Netanyahu says Iran ‘made a big mistake and will pay for it’ after attack on Israel)

Another point that stands out about the effects of diplomatic ruptures are the “ideologized” measures that lead to polarization. This was mentioned by the international analyst, Luis Alberto Villamarín, who also explained that having expelled the Israeli diplomats from Colombia and having broken relations with that country “They are wounds that are not solved so easily and in which when another Government comes and we try to restart them, they will impose other conditions on us to protect their industry and their products.”.

Telecommunications

Telecommunications.

iStock

Defense technology transfer

One of the points that generates the most concern, It is the issue of imports of Israeli high-tech products to Colombia. According to the analysis of the president of Analdex, Javier Díaz, one of the most affected lines is Defense.

(Read: Conflict in the Middle East: Iran launched missiles against Israeli territory)

In this case, when comparing this type of purchases by Colombia, between 2022 and 2023, Imports fell 84.8%. It was due to going from US$63.8 million in 2022 to US$9.7 million in 2023. In addition, in 2024 imports of products such as telecommunications devices have fallen by 49.2% and electromedical instruments and devices by 37%. .

Likewise, Laura Lizarazo added that one of the signs of tension is Israel’s decision to suspend the export of military equipment, technology and telecommunications for security and defense, which are the main items imported from that market. It is worth noting that this figure represents almost 20% of the external purchases that Colombia makes in that category.

(See more: Hezbollah denies Israel’s reasons for invading Lebanon)

Finally, Villamarín highlighted that in this aspect Israel will not have any impact, but on the contrary the direct impact is for Colombia. “The country loses the reception of technology, the training of people, the assistance of young people, the acquisition of equipment and technological processes that we do not have here, and also the training of our future scientists and technologists.”, he pointed out.

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