Bahrain Israel financial ties are small, with $8.5M in trade in early 2023, yet a fintech pact and Islamic finance bodies make Manama a formal channel.
Bahrain and Israel have thin trade but real financial plumbing. Israel and Bahrain traded only $8.5 million in the first seven months of 2023, against $1.85 billion with the United Arab Emirates, according to AGBI. Yet Israel's securities regulator signed a fintech liaison agreement with Bahrain's central bank that year, and Manama hosts the Islamic finance standard setter AAOIFI.
How large is Bahrain-Israel trade?
Israeli exports to Bahrain reached $3.8 million in 2021, while imports from Bahrain amounted to $3.5 million, according to i24NEWS.
Zayed bin Rashid al-Zayani, Bahrain's Minister of Industry, Commerce and Tourism, told Israel Hayom in 2022 that Bahrain exports aluminum and steel to Israel and imports mainly high-tech components. He said the two governments had signed 38 agreements and memoranda of understanding by then.
| Period | Measure | Figure | Source |
|---|---|---|---|
| 2021 | Israeli exports to Bahrain | $3.8 million | i24NEWS |
| 2021 | Israeli imports from Bahrain | $3.5 million | i24NEWS |
| January to July 2023 | Israel-Bahrain trade | $8.5 million | AGBI |
| January to July 2023 | Israel-UAE trade | $1.85 billion | AGBI |
Dividing AGBI's two 2023 figures, Bahrain's trade with Israel was less than half of one percent of the UAE's.
What financial agreements exist between Bahrain and Israel?
The Israel Securities Authority signed a fintech liaison agreement with the Central Bank of Bahrain in the week of September 4, 2023, according to AGBI.
Israel opened its new embassy in Manama that Monday. Israeli Foreign Minister Eli Cohen said at the ceremony that he and his Bahraini counterpart agreed to work on direct flights, tourism, trade volume and investment, Gulf News reported.
A free trade agreement remains a stated goal. Israel's Economy Ministry said in 2022 that the first round of free trade talks had finished in Manama, according to i24NEWS. A signed agreement is not confirmed in the sources reviewed for this page.
What happened to Bahrain-Israel economic ties after October 7?
Bahrain's lower house of parliament announced on November 2, 2023 that economic relations with Israel were halted and that the two ambassadors had left their posts, according to Arab News.
The chamber has no executive powers, and Israel's Foreign Ministry replied that relations with Bahrain were stable and that no decision had been received, according to reports carried by Gulf Today. L'Orient-Le Jour reported that the Bahraini government had not confirmed the decision and that the parliamentary vote would not bind the country.
Nearly a year later, Bahrain's Foreign Minister Abdullatif bin Rashid Al Zayani received the credentials of Israeli Ambassador Shmuel Revel in Manama, according to JNS and The Media Line. Revel succeeded Eitan Na'eh, who left after Bahrain recalled its own ambassador in November 2023, The Media Line reported.
What is the timeline of Bahrain-Israel relations?
The timeline of Bahrain-Israel relations runs from the September 2020 Abraham Accords to a 2024 ambassadorial reset, with a 2023 break in between.
| Date | Event | Source |
|---|---|---|
| September 2020 | Bahrain and the UAE sign the Abraham Accords with Israel | AGBI |
| February 2022 | Israel and Bahrain sign a security cooperation agreement | Middle East Eye |
| 2022 | First round of free trade talks finishes in Manama | i24NEWS |
| September 4, 2023 | Israel opens its new embassy in Manama; fintech liaison agreement signed that week | Gulf News, AGBI |
| November 2, 2023 | Bahrain's lower house announces a halt to economic relations | Arab News |
| 2024 | Bahrain receives the credentials of Israeli Ambassador Shmuel Revel | JNS, The Media Line |
Why does Bahrain matter for Islamic finance?
Bahrain matters for Islamic finance because AAOIFI, the Accounting and Auditing Organization for Islamic Financial Institutions, is headquartered in Manama and counts members from more than 45 countries.
Oxford Business Group reported in 2019 that Bahrain is home to four international Islamic finance governing bodies. It reported in 2016 that Bahrain's central bank was the first in the world allowed to develop and issue sukuk, which are Islamic bonds.
No source reviewed documents an Israeli company working under AAOIFI standards in Bahrain. The link between Israeli fintech and Manama's Islamic finance institutions is therefore a possible route, not an observed flow.
How does Bahrain compare with the UAE and Saudi Arabia?
Bahrain is a regulatory and diplomatic channel for Israel, not a volume market, with trade at a fraction of the UAE's. i24NEWS reported in 2022 that Jerusalem's relations with Manama have been warmer and closer than with Abu Dhabi, even though the trade is far smaller.
For the larger Gulf relationships, Olam covers the UAE-Israel cyber and AI corridor, the Mumtalakat sovereign wealth fund profile and the Saudi-Israeli normalization tracker.
Who are the officials shaping Bahrain-Israel ties?
Six named officials appear most in the public record of Bahrain-Israel ties, according to the sources reviewed.
- Crown Prince Salman bin Hamad Al Khalifa, Bahrain's prime minister, met Israeli Foreign Minister Eli Cohen in Manama on September 4, 2023, according to Gulf News.
- Khaled Yousef Al Jalahma was Bahrain's ambassador to Israel in 2023, AGBI reported.
- Abdullatif bin Rashid Al Zayani is Bahrain's foreign minister, according to JNS.
- Zayed bin Rashid al-Zayani is Bahrain's Minister of Industry, Commerce and Tourism, according to Israel Hayom.
- Shmuel Revel is Israel's ambassador to Bahrain and previously headed Israel's Trade Representation Office in Doha, JNS reported.
What are the risks for Israeli firms working through Bahrain?
The main risk for Israeli firms in Bahrain is political reversibility, because the November 2023 parliamentary statement showed that Bahraini lawmakers can publicly call for halting economic relations while the governments describe ties as stable.
The Media Line reported that Bahrain, home to the US Navy's 5th Fleet, has sought to balance its relationship with Israel against regional sensitivities and strong domestic support for the Palestinian cause.
Olam's reading is that a plan built on regulator contact is less exposed to those swings than a plan built on commercial volume. That is an inference from the sources above, not a documented pattern. Israeli firms should record which Bahraini regulator approved each step, so a political shift does not leave the activity unsupported.
Frequently asked questions about Bahrain-Israel financial ties
Did Bahrain end its ties with Israel?
Bahrain's government did not announce a rupture, although its lower house announced a halt to economic relations on November 2, 2023, and Bahrain received a new Israeli ambassador in 2024, according to Arab News, JNS and The Media Line.
Is there a Bahrain-Israel free trade agreement?
A signed Bahrain-Israel free trade agreement is not confirmed in the sources reviewed, and the first round of talks finished in Manama in 2022, according to i24NEWS.
When did Bahrain join the Abraham Accords?
Bahrain signed the Abraham Accords with Israel in September 2020 alongside the United Arab Emirates, according to AGBI.
What should Israeli financial firms do with Bahrain?
Israeli financial firms should treat Bahrain as a regulator-to-regulator and Islamic finance entry point, and size revenue plans to the trade data rather than to the headline Accords.
- Ask the Israel Securities Authority what the 2023 fintech liaison agreement with the Central Bank of Bahrain covers before planning a Bahrain filing.
- If a product is sharia-adjacent, review the AAOIFI standards that apply in Bahrain.
- Model Bahrain revenue against the early 2023 trade level of $8.5 million, not the UAE's $1.85 billion.
- Confirm with Israel's Foreign Ministry that the planned activity fits current economic relations, because the 2023 parliamentary statement and the 2024 ambassadorial reset point in different directions.
These are planning steps, not investment or legal advice.
Bahrain's value to Israel is formal channels, not volume: one fintech agreement, one embassy, one Islamic finance hub, and trade that stayed in single-digit millions through early 2023, with a 2023 break and a 2024 reset. The decision for a financial firm is whether it needs that channel, since the numbers do not support Bahrain as a revenue market and the political record shows the channel can narrow.
How we report: Olam stories draw on public filings, company disclosures and named sources, checked by our editors. Read our methodology · Corrections
