Saudi Arabia-Israel deal could dramatically reshape the Middle East

Anticipation and rumors are growing about the potential normalization of relations between Saudi Arabia and Israel – two of America’s most important allies in the Middle East whose ties have never formally existed. 

Saudi Arabia doesn’t recognize Israel as a state and has refused to do so since the latter’s independence in 1948. But after decades of tension, recent years saw discrete but growing cooperation between the two. 

The shared threat perception of Iran, a longtime common adversary, has brought the two closer together in terms of coordination and intelligence sharing, according to numerous reports and admissions by Israeli officials.

Saudi Arabia has also allowed Israeli airlines to fly over its territory in recent years, and Israel officials reported that Saudi Arabia received help from Israeli cybersecurity firms to fend off certain cyberattacks. The rise of non-state actors and the perceived threat of political Islamists, particularly in the wake of the Arab Spring, also contributed to a sense of shared interests among Gulf states and Israel.

And just on Tuesday, the Wall Street Journal reported that Riyadh is offering to restart its funding of the Palestinian Authority in order to gain its leader Mahmoud Abbas’ support for open relations with Israel.

A deal between Israel and Saudi Arabia could dramatically reshape the geopolitics of the Middle East.

But major barriers remain in the way of official normalization, which is a major goal of the Biden administration’s foreign policy and one his team is trying to achieve during the president’s current term. 

One is the issue of Palestinian statehood, and another is the raft of demands that Saudi Arabia has of the U.S., including demands for U.S. security guarantees and support for its own civilian nuclear program. And Israel, currently led by the most right-wing government in its history, is very unlikely to want to meet Saudi demands for concessions to the Palestinians. 

“I think there is finally a lot of momentum from the Biden administration to push normalization forward, but there are very clear challenges that won’t be easily bridged,” Sanam Vakil, director of the Middle East and North Africa program at Chatham House, told CNBC.

“If something is going to develop, it would most likely require broader discussions on Palestine, and in the current climate in Israel, I think that is impossible to achieve,” she said.

Saudi Arabia is home to Islam’s holiest sites, Mecca and Medina, giving it a crucial role in the Muslim world where Palestinian statehood is deeply cared about. Israel’s current government led by Benjamin Netanyahu has no intention of giving major concessions to the Palestinians; Netanyahu in early August told Bloomberg TV that any minor gestures on his part toward Palestinians would essentially be “just a box you have to check to say that you’re doing it.”

“It’s questionable that there is any potential governing coalition in the Knesset that would be ready, able, and willing to do that, even to secure one of the most significant diplomatic achievements in the country’s history,” Hussein Ibish, a senior resident scholar at the Arab Gulf States Institute in Washington, wrote in an article for the think tank. 

The United Nations classifies Israel as an occupier state over the Palestinian territories, whose occupations and annexations following the 1967 Six-Day War remain in violation of international law.

Whether or not Saudi Crown Prince Mohammed bin Salman feels a personal conviction to keep making demands of Israel on behalf of the Palestinians, the perception of his efforts on the Arab street are important for his leadership, Vakil said.

“Concessions on Palestine will also be important to Mohammed bin Salman, whose leadership is not just predicated on the transformation of Saudi Arabia, but having broader regional and international influence,” she said. “Abandoning the Palestinian cause completely would not go well in the region, and he does have a broader constituency to think about.”

Another big challenge is what Saudi Arabia is demanding of Washington. Riyadh wants a security guarantee from the U.S. in the face of potential threats or attacks, and it also wants more access to advanced U.S. weapons as well as help with a civilian nuclear program.

Such demands will likely face resistance from many members of Congress, particularly progressive left-wing Democrats and hard-right Republicans who both want less American involvement in foreign affairs. But even if a security guarantee and more advanced weapons access demands are met, U.S. backing for a Saudi nuclear program is likely more challenging. 

The Saudis don’t want to have to abide by the U.S. government’s Section 123 agreement, often dubbed the “gold standard” of civilian nuclear partnerships. Washington already has such an agreement with the United Arab Emirates, which launched the Arab world’s first nuclear energy program in 2020. The 123 agreement prevents countries from developing dual-use technology by barring uranium enrichment and fuel reprocessing.

The Saudis have made clear that this is not the agreement they want. And that worries many lawmakers and non-proliferation experts, particularly given Saudi Arabia’s role in the Yemen war, now in its eighth year. Any deal on this is also complicated by the fact that Saudi Arabia has its own natural supplies of uranium and intends to mine them itself. 

“If we see Riyadh climb down from those demands, then I think normalization becomes significantly more likely,” said Ryan Bohl, senior Middle East and North Africa analyst at Rane. 

Importantly, time is running out to hash out a deal before the Biden administration is consumed by its re-election campaign.

Riyadh may have an interest in dragging things out, as that could pressure the Biden administration to offer more concessions in order to push something through before the election. Or, should Biden lose, it sets up a possible negotiating framework for the next administration, said Bohl.

Normalization with Israel would allow Saudi Arabia “a strategic breakthrough with a regional military and technological powerhouse that will be key to its security as the United States continues to retrench from the region,” Bohl said. 

“In other words, I think Saudi Arabia and Israel will keep trying to find a path towards normalization, but it will remain to be seen as to when either side is able to tame their domestic political barriers that make a full-scale breakthrough possible.”