The oncoming Saudi-Israeli normalization: Obstacles, opportunities, and the US role

A version of this article was originally published on the Substack “Thinking Middle East.”

The normalization of relations between Saudi Arabia and Israel is looking increasingly likely, even if it does not take place in the immediate future. For Israel, normalizing relations with as many Arab states as possible — especially if it does not have to give up much in exchange — has always been a strategic goal. For the new Saudi Arabia and the full implementation of its Vision 2030, those ambitious goals strongly suggest opening up to the Israeli economy. 

These two powers have grown increasingly independent and if normalization will happen, it will be driven by their strategic choices and not "Made in the USA." Of course, both sides want to triangulate with Washington and get as much as they can in the process; and Washington has a strategic interest to be part of the deal looking out, rather than on the outside looking in. 

But the obstacles to rapid progress on all three sides of this triangle are steep: any deal would require — for the Saudis, and especially for King Salman — a fairly significant concession for the Palestinians, and no such concession is conceivable with today’s extreme right-wing Israeli government. U.S.-Saudi relations during this administration started as hostile and have improved to near workable, but the level of mistrust still makes rapid progress difficult. And U.S. administration relations with the current Israeli government are also facing a high degree of uncertainty and instability. 

While one could imagine, with exceptional effort from all three sides, maybe an outline or framework agreement in the months that remain before the presidential election season in the U.S. really takes over, a full agreement still seems unlikely in this timeframe. But in a 2025 timeframe, such an agreement looks more likely. On the Israeli side, given the instability of Israeli politics, there would probably be a different government in place. And in Washington, either Joe Biden would have won re-election and his second term administration would have the time and bandwidth to complete such a deal, or Donald Trump or another Republican would be in the White House — a Republican administration would chase this goal even more vigorously than a Democratic one. In Riyadh, little would have changed, with the exception that King Salman may have passed or abdicated, freeing the crown prince’s hand further in pursuing a normalization agreement. 

The US broker

As mentioned above, the deal is likely coming because that is the interest and apparent choice of both regional states. But both actors would prefer to make the deal under American auspices because the United States remains the unrivaled strategic partner of choice. This is partly because, despite their independent-mindedness vis-à-vis their reaction to the Russian war on Ukraine or with regard to relations with China or oil prices, etc., both still consider themselves strategic partners of the U.S., and are tied closely to the U.S. in terms of their military and security relations, their educational and cultural orientation, and much of their business and investment relations. All three also share a common regional adversary in Iran.

The U.S. is correct to consider that achieving Saudi-Israeli normalization, and under American auspices, would be a major geopolitical and geoeconomic win for the U.S. Its interests and policies have always been stymied by the long-standing reality that its main partners in the region have refused to talk or cooperate with each other. Also, bringing the U.S. back to broker a major regional breakthrough that this would be, would help overshadow the Chinese role in the brokering of the Saudi-Iran agreement in March of this year. It is also important to consider that if the U.S. does not step forward to broker this breakthrough, the U.S. would find itself on the outside of a major regional deal, and/or China might find a way to play itself into this process.

Saudi priorities

For the Saudi leadership, the calculus for normalization is not hard to fathom. They have already switched to a policy of normalizing relations with all actors in the region. They re-normalized relations with their arch-nemesis Iran, welcomed Syrian president Bashar al-Assad back into the Arab League, and rebuilt warm relations with arch-foe President Recep Tayyip Erdoğan of Turkey; normalizing with Israel is part of that pattern. And that pattern is driven by the priority of rapidly growing, diversifying and modernizing the Saudi economy and society, to avoid the fate of a has-been post-oil state, and rather become an increasingly central player in the global economy of the 21st century — it is already a member of the G-20, and was just invited to join BRICS+.

Opening up to the Israeli economy, one of the most dynamic, tech-savvy, and innovative in the region, is full of economic potential. Also, looking at the geography of Saudi Arabia’s development plans, especially looking at the location of the flagship city NEOM, one can see that opening Saudi Arabia in terms of trade, transit and tourism, in the upper reaches of the Red Sea would benefit greatly from an opening up to Palestine and Israel and through to the Mediterranean Sea. Strengthening security cooperation, some of which has already been taking place under the table, is also an important benefit.

Additionally, it is important to note that in the growing competition between Saudi Arabia and the UAE for economic supremacy in the Arabian Peninsula, Riyadh does not have an interest in allowing the UAE to monopolize the economic, tech, and investment benefits of doing business with Israel without Riyadh getting into the game as well. Politically, Riyadh is also aware — like Abu Dhabi was — that normalizing relations with Israel would enhance long-term goodwill and influence in Washington. 

In this vein, Saudi Arabia has an interest in achieving such a deal during a Democratic administration, in order to secure the long-term support of Democrats, who have been sour on the Saudis for the past several years. Saudi Arabia enjoyed good relations with the last Republican president and the party he still leads; achieving a breakthrough with Democrats would ensure a more stable bipartisan set of relations for the Saudis in Washington. 

The US-Saudi track

For the U.S., brokering such a breakthrough among its key partners in the region would be a geopolitical victory, and one that might count for a point or two in the upcoming presidential elections. The U.S. is also keen to work with its partners in the region, as well as others further afield, like India, to build critical tech, trade, and energy partnerships that would weave these economies and countries more closely into the American and Western web, and avoid further drift into the Chinese orbit. 

On the U.S.-Saudi negotiation track vis-à-vis this potential breakthrough, the two sides are trying to work through mainly bilateral issues related to stronger military cooperation, and partnership in the Saudi nuclear sector. U.S.-Saudi military relations are already wide and deep and there are many ways that they can be strengthened further. But the sticking points in this area are mainly two: Riyadh is no longer clear what U.S. policy in terms of Gulf defense is. The Carter doctrine appears dead and buried, and the latest Iranian-backed attacks on Saudi during the Trump administration, and on the UAE and Saudi during the Biden administration, drew no significant American response. Riyadh is indeed seeking some kind of security guarantee that would clarify when and how the U.S. would actually join in the defense of the kingdom if externally attacked. 

Of course, Riyadh’s opening position is asking for a full mutual defense treaty, but both sides probably realize that is not possible; but exploring giving Saudi Arabia non-NATO ally status, and clarity over when and how the US would join in Saudi’s defense would probably be workable. Riyadh would also seek a raft of future-generation arms deals, and some form of assurances that these will not be held up in Congress. Of course, the U.S. would and should have conditions of its own relating to how Saudi would cooperate in U.S. defense and security priorities in the region, and putting guardrails on Saudi Arabia’s relations with China and Russia, especially as regards critical military, tech, or intelligence matters. The U.S. would probably also seek more tilt from Riyadh toward the U.S. and away from Russia and China in general. 

On the nuclear file, Saudi wants to build 17 civilian nuclear reactors as part of its energy diversification and Vision 2030 and beyond. Of course, the U.S. has an interest to be in the driving seat of that project, rather than ceding it to other powers, whether China, Russia, or France and South Korea. The sticking point is Saudi Arabia’s insistence on domestic enrichment. Of course, the U.S. is in a weak position here. The U.S. has covered for Israel’s enrichment and nuclear weapons program for decades now, ceding any credibility on the issue. Israel’s nuclear weapons capacity, is of course, one major reason that Iran feels it needs a bomb of its own. And that in turn explains why Riyadh feels that it needs the option itself in such an uncertain future vis-à-vis Iran. 

Uncorking that bottle is going to be hard. One pathway has been to try to block Iran’s path to a bomb; so far, that has not borne fruit. Another approach might be to come clean on the region’s nuclear realities and work, at least, for a region-wide standard of abiding by International Atomic Energy Agency standards. More unrealistic, but eventually more stabilizing, goals might include an enrichment-free Middle East and North Africa region, if not eventually a nuclear-weapons-free one. 

The Saudi-Israel track, and the Palestinian plight

On the Saudi-Israeli track, while normalization is sought by both, there seems to be little clarity on what this extreme right-wing government could offer on the Palestinian issue to Saudi Arabia — the central player in both the Arab and Islamic worlds, and the site of the two holy mosques. The UAE got a suspension of annexation; Saudi Arabia would at least have to ask for a permanent settlement freeze, the dismantling of some illegal outposts and settlements, and an official commitment to a two-state solution — the right formula may look quite like the 2002 Arab Peace Initiative introduced by Saudi Arabia. Such requests could not be delivered by the current government, which might precipitate its collapse and the formation of a new one — which would not be a bad thing, and would make an eventual deal more likely.

In all cases, even with minor concessions and more lip service to a "two-state solution," the Palestinians after another Abraham Accord are likely to find themselves with even less leverage and fewer options than before. And the Israeli right wing would be correctly confirmed in its view that it can maintain its colonization of the West Bank and sustain what is effectively an apartheid-like system without major consequences. 

Negotiations toward a Saudi-Israeli deal might be the last opportunity to put the downward-spiraling Israeli-Palestinian situation on a different and more hopeful path. This is not only important for the Palestinians and Israelis, who both need a more viable long-term future, but for the region as a whole. The negative externalities vis-à-vis the broader region of not resolving the Palestinian issue are deep. As many Arab states did in the past, Iran today is leveraging the legitimate Palestinian issue to legitimize its proxy presence in Lebanon and Syria, and to continue to exploit a key injustice that is being baked into the emerging Arab-Israeli order. Of course, radical Islamist groups from ISIS to al-Qaeda, as well as more mainstream ones, seek to exploit this weakness as well. While bilateral Abraham Accords have created new areas of cooperation where once there were none, proceeding with these bilateral agreements without addressing the plight of the Palestinians will continue to fuel an unstable and conflict-prone region, which runs counter to the logic of regional cooperation and integration that these agreements are trying to foster.

In closing

Saudi Arabia and Israel are moving toward normalization. It’s unlikely to happen in the short term, but more likely around the 2025 timeframe. They and the U.S. have an interest in the U.S. being the global broker of this event. Such an agreement will be transformative in terms of the economic, political, and security relations of the region. While there are many issues that would have to be worked through before such a deal is possible, one of the most important stakeholders in such a deal are those with no seat at the table: the Palestinians. The Americans and the Saudis, at least, and thoughtful Israelis as well, have an interest in using the leverage of this potential deal to rescue the Palestinian-Israeli situation from the dangerously desperate and dead-end state that it is currently in, and put it back on a path where a two-state solution is imaginable again. 

Paul Salem is president and CEO of the Middle East Institute. He focuses on issues of political change, transition, and conflict as well as the regional and international relations of the Middle East.

Photo by JONATHAN ERNST/POOL/AFP via Getty Images