New peace agreement between Israel and Saudi Arabia

A new peace agreement between Israel and Saudi Arabia could have profound geopolitical and economic impacts on the Middle East region. Israel formalizing relations with the kingdom, the birthplace of Islam and home to its two holiest sites, would be an historic breakthrough. It would likely lead to normalization between Israel and the broader Muslim world, reshaping regional dynamics. There are compelling strategic interests for the US, Israel and Saudi Arabia to pursue this diplomacy.

For the US, a Saudi-Israeli peace deal could significantly advance American goals in the Middle East. It would expand the momentum of the Abraham Accords, bringing a major Sunni Arab state into formal relations with Israel. This would further integrate Israel into the region, building on existing ties. It would also strengthen the US-led regional alliance against Iran. With their shared hostility towards Iran’s regional agenda, Saudi Arabia and Israel could collaborate more closely on intelligence and security matters.

Economically, a Saudi-Israeli peace agreement could unlock significant new opportunities. Expanded trade, investment flows and commercial partnerships would benefit major sectors in both countries. Saudi Arabia’s push to diversify its economy beyond oil would get a boost from Israeli innovation and technology. Israel would gain greater access to Saudi capital and the Gulf market. Enhanced Saudi-Israeli business ties could also curb growing Chinese inroads in the region. Constraining Chinese penetration of strategic Middle East economies is an American priority.

For a Saudi-Israeli breakthrough to occur, American diplomacy will be crucial. The US has unique leverage as Saudi Arabia’s main security guarantor and Israel’s closest ally. An American blueprint outlining potential compromises and concessions could catalyze progress.

The Biden administration is exploring a possible grand bargain whereby Saudi Arabia normalizes ties with Israel in return for a mutual security pact with the US and Israeli flexibility on the Palestinian issue. A US security umbrella would meet a key Saudi goal of deterring regional foe Iran.

In turn, the US and Saudi Arabia would likely ask Israel to refrain from annexing the West Bank and agree to new peace efforts with the Palestinians. Preserving the possibility of a two-state solution remains fundamental to American policy. Progress on the Palestinian front would also make a Saudi-Israeli deal more palatable to the Arab street.

Prime Minister Netanyahu’s new right-wing government presents complications. Its extremist elements oppose concessions to the Palestinians and favor maximalist territorial ambitions. However, the monumental prize of peace with Saudi Arabia could motivate even ideological members of Netanyahu’s coalition to recalibrate.

Overall, a US-brokered grand bargain has intriguing potential. But negotiations would be enormously complex, needing to balance many equities. And doubts exist whether political will is sufficient on all sides. Saudi Arabia downgrading ties with China could be a sticking point. Trust between the parties remains limited.

Nonetheless, the strategic and economic benefits of a Saudi-Israeli breakthrough warrant careful exploration by the Biden administration. At minimum, keeping the possibility alive could constrain unilateral moves by any party that would slam the door shut. Mobilizing international engagement may also be the best lever to temper the Israeli government’s hardline domestic agenda.

With deft statecraft and political courage, President Biden could orchestrate a geopolitical reshaping of the Middle East and deliver an enduring foreign policy achievement. But it will require overcoming daunting obstacles. The coming months will test American diplomatic imagination and skill in navigating this intricate arena.

By: Samuel shay