Talks between Saudi Arabia and the US about the kingdom formally recognizing Israel have intensified, though there’s still plenty to negotiate and no guarantee of success, according to people familiar with the discussions.
Israeli assets rose after the Wall Street Journal, citing US officials, reported Washington and Riyadh had agreed on the broad outlines of a deal. The officials warned they faced long odds, but were hopeful they could decide on “finer details” within a year, the Journal reported.
Th details of any agreement must be decided by the two countries involved, a spokesperson for the US National Security Council said. Saudi Arabia’s Foreign Ministry did not respond to requests for comment.
“We are waiting for the Americans to give us a complete plan regarding Saudi normalization,” Tzachi Hanegbi, Israeli national security adviser, said to journalists on Monday. “Their main request is a defense pact with the US. The Americans have been totally transparent with us throughout. We expect to see a proper plan or proposal by the end of the year.”
Netanyahu Says Bet on Israel and Saudi Arabia Deepening Ties
Israeli Prime Minister Benjamin Netanyahu told Bloomberg on Sunday his country and Saudi Arabia would deepen economic and business ties even if they don’t formally recognize each other.
Still, a deal would have “enormous economic consequences for investors,” Netanyahu said. “If they had to bet on it, right now I’d bet on it. But I can’t guarantee it.”
The shekel strengthened and stocks in Tel Aviv advanced on the Journal report. A potential agreement could boost investor confidence in the country at a time when the government’s plans to overhaul the judiciary have triggered mass protests and a selloff in financial markets.
The currency gained as much as 0.8% to 3.69 per US dollar, while the equity benchmark rallied 1.4%.
Netanyahu, 73, has said closer relations would benefit Israel and Saudi Arabia economically and discourage Iran from meddling aggressively in the region, including by disrupting oil-shipping routes.
While Saudi Arabia and Iran restored diplomatic relations earlier this year in a deal that China helped broker, Riyadh still views Tehran with suspicion and as a geopolitical rival.
US President Joe Biden is also keen for Saudi Arabia to recognize Israel. He sent National Security Adviser Jake Sullivan to the kingdom last month, partly to discuss the issue with Crown Prince Mohammed bin Salman.
Riyadh has previously said an independent Palestinian state is a precondition. It has expressed frustration in recent months over Israel’s deteriorating relations with the Palestinians — typified by the recent raid on a refugee camp in the West Bank and incendiary comments by some far-right members of Netanyahu’s coalition.
Arab States Sour on Israel in Blow to US Aim of Saudi Peace Pact
Privately, the Saudis have asked for firm defense guarantees from the US, access to top-notch American weaponry and for the White House to allow it to enrich uranium domestically as part of a plan to build nuclear power plants.
Public opinion in the kingdom remains opposed to recognition of Israel.
While Israel’s signed historic diplomatic deals with the United Arab Emirates, Bahrain, Morocco and Sudan since 2020, Saudi Arabia is the biggest economy in the Middle East, with the government investing trillions of dollars to diversify from oil.
--With assistance from Andras Gergely, Jordan Fabian, Vivianne Rodrigues and Alisa Odenheimer.
(Updates with comment from US, Israeli officials.)
