Environmental effects on the socioeconomic aspects of a country constitute one of the most critical matters considered by its governing and policymaking body. In other words, environmental issues cannot be analyzed separately and independently of the broader political economy. Energy, water, and the environment are the concepts discussed invariably within the political economy framework. In recent years, West Asia has witnessed a surge in the trade of cutting-edge environmental technologies. In particular, Israel has distinguished itself through its robust technological advances coupled with its distinctive small, open economy model. In this regard, the 2020 Abraham Accords provided new cooperation opportunities for Israel and the Persian Gulf states. This study aims to determine what effects the political economy of the environment in Israel has had on its bilateral relations with the United Arab Emirates (UAE) and Bahrain within 2020–2023. Employing both quantitative and qualitative research methods coupled with library resources, this study explains the political economy of the environment in Israel and its effects on relations with the UAE and Bahrain. The research hypothesizes that Israel has been adopting certain strategies for improving the environmental status and investing in different environmental projects to normalize relations with the UAE and Bahrain and attract Arab capital.