The Historic Strategic Benefits, and Steep Cost, of Israel-Saudi Normalization

Legendary US Secretary of State Henry Kissinger once quipped that Israel does not have a foreign policy, just domestic policy. In fact, countries are often driven by domestic interests. While Israel, the United States, and Saudi Arabia all portray the emerging normalization agreement as a security interest linked primarily to foreign policy considerations, in practice, domestic interests, which will be heavily influenced by the Palestinian issue, will determine the fate of the agreement. For Israel, normalization with Saudi Arabia and closer security ties between Riyadh and Washington offer important strategic benefits, notwithstanding the steep price.

The Emerging Agreement: Security and the Palestinian Issue

The security component includes three Saudi demands of the United States:

1. A US-Saudi defense pact: This is a highly significant demand that would empower Saudi Arabia, increase its regional influence, and deter Iran. However, such an alliance could drag the US into conflict with Iran, thereby pulling the US away from its stated policy, which dictates focusing on Great Power rivalries with China and Russia. Moreover, a defense pact would need a broad bipartisan support in the Senate to be approved by a 67-member majority.
2. Approval for a nuclear fuel cycle on Saudi soil: Allowing uranium enrichment in Saudi Arabia does not mean approving a military nuclear program or construction of a nuclear reactor. The Saudis are asking for something else: Riyadh wants to control the production of nuclear fuel – that is, to obtain critical knowledge necessary to a military nuclear project. This is exactly the capability that Iran sought for many years and was in fact permitted by the 2015 nuclear deal (and why Israel opposed the agreement). Indeed, Iran has recently attained this capability.
3. Approval of the sale of advanced US weapon systems: Presumably the US would not sell Riyadh weapon systems that are more advanced than those it sells Israel, but Saudi Arabia would receive weapons that give it a significant relative edge over its rivals and would enjoy a certain level of parity with Israel.

The Palestinian Component: From Symbolic Elements to a New Interim Agreement

1. Symbolic announcements and actions, including: an Israeli declaration that it is committed to a two-state solution and/or the Palestinian right of self-determination; a US consulate in East Jerusalem and a Palestinian consulate in Washington; an upgraded Palestinian status at the United Nations; and removal of the PLO from the list of terrorist organizations.
2. Accelerated development of the Palestinian economy, including: development of the gas field off the Gaza coast, construction of a seaport and an airport in the Palestinian territories, eased restrictions on the clearance revenues held by Israel, new road infrastructure in the West Bank, joint Israeli-Palestinian industrial zones, and perhaps a revamping of the fundamental principles underlying the Palestinian economy (the Paris Protocol).
3. End of unilateral Israeli activity: Israel commits not to annex territory in the West Bank, to freeze settlement construction, and not to establish new outposts. Similarly, it would commit to refrain, as far as possible, from entering Area A, which is under PA control.
4. Transfer of territory to PA control: The PA wants part of Area C, which is under full Israeli control, transferred to Area B, where the PA has control over civilian affairs. Similarly, PA could gain full control over some territory that is currently only under its civilian authority, turning it from Area B to Area A.
5. A defined future political process that leads to the separation of the State of Israel from the Palestinian Authority: in other words: a new interim agreement and a new roadmap. Clearly, the first step would be limited, given the composition of the current Israeli government. Subsequent, agreed-upon measures would lead to the establishment of a politically independent Palestinian entity. As with the Oslo Accords, this will be a gradual process that entails an interim agreement. The PA has long opposed the idea, but perhaps its prior firm opposition has dissipated.

According to Riyadh and Washington, the Palestinian element in the normalization agreement comprises measures intended to advance the establishment of a Palestinian state. Unlike with the agreement between Israel and the United Arab Emirates, a promise not to annex territory will not satisfy the Kingdom or the US Congress. Under current conditions no one is talking about “a Palestinian state within the 1967 borders with East Jerusalem as its capital,” as called for by the Arab Peace Initiative. Still, all parties will likely select a mix of elements that all can accept. The more such elements there are, the easier it will be to garner approval for the deal in Saudi Arabia and the United States, compared to Israel.

How Critical is Normalization?

With such far-reaching demands, what drives the respective parties to pay the price? 

Saudi Arabia does not need a normalization agreement with Israel. It already enjoys a robust economy and improved relations with Iran, the increased global demand for oil due to the war in Europe, and a strengthened standing in the Muslim world in general, and the Arab world in particular. Domestically, however, the situation is more complex. Crown Prince Mohammed bin Salman is hard pressed to promote his Vision 2030, and he must bolster his status before he is crowned king. Therefore, he would likely portray a US-Saudi defense pact as the Arab world’s winning card in the rivalry with Iran, and US approval to enrich uranium as symbolic recognition of Saudi Arabia’s standing as a world power. Likewise, he will restore the Saudi honor injured by erstwhile comments by President Biden and their cold meeting in Jeddah a year ago. In this sensitive situation, bin Salman cannot “abandon” the Palestinians, and thus despite his preference to skirt the issue, he insists on a Palestinian component in the agreement. Without it, he would lose legitimacy among the Saudi people and be seen as betraying the Arab Initiative that his uncle, Crown Price Abdullah, unveiled some 20 years ago. And since he also understands that this is perhaps the last chance to resolve the Palestinian issue as part of a broad peace agreement between Israel and Arab states, he will insist that Israel give something in exchange. 

The United States is currently on an auspicious international path. It has focused its attention on the competition with China and Russia, both of which seem to have recalled their goal of achieving global hegemony. The US leads the world in the artificial intelligence revolution and in the global microchip war, and is starting to enjoy the first fruits of the resource-rich CHIPS and Science Act passed last year. However, in an election year, Biden needs a dramatic achievement to ensure a second term, and foreign policy that ushers in a historic peace in the Middle East might be that winning move. Under these circumstances, Biden could present voters with a prize achievement: China rebuffed, progress on the Palestinian front, normalization between Israel and the leading Arab state – all while helping Israel extricate itself from its internal crisis. A significant Palestinian element in the agreement would allow Democratic Senators to vote in favor. Republican Senators will support what Israel sees as important – but only until March 2024. Thereafter, any Republican presidential candidate will likely ask that they not do anything to help the incumbent, and they may opt to wait until after the election to ratify any deal.

Israel, especially in its current challenging situation, needs normalization with Saudi Arabia. Israel is in the throes of a severe domestic crisis, and its security balance, while still positive, is increasingly undermined. Although an all-out multi-arena war is not imminent, time is not on Israel’s side. The economy has suffered, IDF fitness has been hurt, and the people’s army model is threatened if the law granting a blanket draft exemption to the ultra-Orthodox is passed. 

Prime Minister Netanyahu, who has a wealth of political and diplomatic experience, knows that Israel needs an escape strategy from its current destructive path, and normalization with Saudi Arabia could be the strategic escape route Israel needs. The agreement would bring peace with the Arab world, since others would follow the largest and most important Arab country with their own peace deals with Israel. It would also signal peace with the Muslim world, since Saudi Arabia enjoys a special role as the guardian of the holy places and the birthplace of Islam. 

In conclusion, the emerging normalization agreement between Israel and Saudi Arabia entails weighty security components. Approving uranium enrichment on Saudi soil will end the Middle East taboo on the nuclear issue and invite a regional nuclear arms race. Many believe that this price is too steep. Nonetheless, the State of Israel will enjoy significant strategic benefits if normalization includes a meaningful Palestinian component that reduces the danger of Israel sliding toward a single, binational state, and if Iran’s freedom of operation across the Middle East is thwarted by a US-Saudi defense pact. Above all, if a normalization agreement restores stability and puts an end to the chaos that threatens Israel’s future, Israel will benefit highly. Thus notwithstanding the risks, the agreement is a positive, historic development that arrives in the nick of time.

The author is the Managing Director of the Institute for National Security Studies