Israel and Saudi Arabia: No Longer Enemies But Not Quite Friends
(Bloomberg) — Israel’s longest-serving prime minister pops up on Saudi state-run television from Tel Aviv. An Israeli-American declares himself the “chief rabbi of Saudi Arabia” after arriving on a tourist visa. A prominent Saudi family invests in two Israeli companies and doesn’t bother to hide it.
All these recent events would have been unthinkable not long ago. But previously clandestine links between Saudi Arabia and Israel are increasingly visible as some of the Middle East’s deep-seated rivalries cautiously give way to pragmatic economic and security ties. Saudi crown prince and de facto leader Mohammed bin Salman is seeking to accelerate his plans to overhaul an oil-reliant economy, while Israel is keen to build on 2020’s diplomatic breakthroughs with smaller Gulf nations.
“We do not view Israel as an enemy, but rather as a potential ally,” Prince Mohammed said earlier this year in a striking reassessment of one of the region’s most consequential fault-lines.
For decades after Israel’s founding in 1948, Saudi Arabia and its Persian Gulf neighbors shunned the Jewish state in solidarity with the Palestinians expelled to create it. The thought of doing business with Israel was anathema. Even today, polling shows a vast majority in the Gulf oppose accepting Israel as just another country, suggesting developments have more to do with the agenda of autocratic ruling elites than a sea-change in Arab views.
“It’s more of a thawing of relations rather than a warming of relations,” said Abdulaziz Alghashian, a researcher who studies Saudi foreign policy toward Israel. “It’s still nevertheless pretty significant.”
Israelis are traveling to the kingdom with greater ease using third-country passports, a few routing their business through overseas entities and even discussing it in public.
Qualitest is an Israeli engineering and software-testing company acquired by international investors in 2019. It doesn’t operate directly in Saudi Arabia, said Shai Liberman, managing director for Europe, Israel and the Middle East, but sells its product to other firms who then use it in the kingdom.
Investment is heading in the opposite direction, too. Mithaq Capital SPC — controlled by the Alrajhi family, Saudi banking scions — is now the largest shareholder in two Israeli companies: mobility intelligence firm Otonomo Technologies Ltd, and London-listed digital advertiser Tremor International Ltd.
Israel and Gulf nations established largely hidden security ties over shared concerns, especially Iran. But it’s primarily the strong economic motivation that’s driving more visible relations now as Prince Mohammed tries to lessen Saudi reliance on oil and develop advanced industries.
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“We like the innovation and the technology culture that Israel has, and we try to find ways to benefit from that,” said Muhammad Asif Seemab, managing director of Mithaq Capital.
Officials in Riyadh are also allowing the wider debate around Israel to be re-framed.
Former Israeli Prime Minister Benjamin Netanyahu was interviewed on Saudi television channel Al Arabiya, sitting in front of a Hebrew-language map and warning of the danger of a potential nuclear deal with Iran. Less well known is Jacob Herzog, the rabbi who’s been allowed to minister to a tiny Jewish community of foreign workers in the Saudi capital.
When the UAE and Bahrain in 2020 signed US-brokered normalization pacts with Israel, which became known as the Abraham Accords, there was speculation Saudi Arabia would follow.
For Israeli leaders, receiving recognition from Saudi Arabia — the region’s geopolitical heavyweight — would be a coveted prize, and that’s unlikely to change no matter what government is installed after elections later this year.
They didn’t get it, partly because the kingdom’s religious and regional prominence dictates different political considerations than those of smaller neighbors. An Israeli business owner visiting Riyadh still can’t make a direct phone call to Tel Aviv, let alone a money transfer.
Jason Greenblatt, who was a special envoy for the Middle East under former US President Donald Trump and one of the accords’ architects, said the Saudi leadership “recognizes that Israel can be a huge benefit to the region” even if it’s not yet ready to sign any kind of normalization agreement.
Greenblatt is raising funds for a blockchain and crypto technology investment vehicle, and said it’s an “aspiration” of his to facilitate Saudi investment into Israel, though he concedes that will take time.
Polling by the Washington Institute for Near East Policy suggests growing disappointment with what the Abraham Accords have delivered, with only 19% to 25% of respondents seeing them positively across Saudi Arabia, the UAE and Bahrain. Yet their existence appears to have encouraged acceptance of unofficial ties with Israel among some in the Gulf, the institute said.
Others continue to voice their disapproval. In July, an imam of Mecca’s grand mosque included a supplication against “the usurping, occupying Jews” while leading Friday prayers. And when an Israeli journalist who traveled to Saudi Arabia during a July visit by President Joe Biden found a way into the holy city that’s off-limits to non-Muslims, condemnation was swift.
In this mixed atmosphere, Saudi officials maintain that a resolution between Israelis and Palestinians remains at the core of their policy.
Normalization is “borderline offensive to keep talking about” and isn’t a policy goal in and of itself, Princess Reema bint Bandar, Saudi Arabia’s ambassador to the US, said in June.
It would be counterproductive for Israel to push the Saudis too hard, said Yoel Guzansky, a senior research fellow in Gulf politics at Israel’s Institute for National Security Studies. “Why go too fast?” he said. “You can actually cause damage to the relationship.”
The US political landscape is another obstacle, said Alghashian, as Saudi leaders assess Biden is unlikely to muster the will to offer sweeteners they’d want, including security guarantees.
Still, American entrepreneur Bruce Gurfein is among those betting even the current gradual opening will be good for business.
Gurfein, who’s Jewish and has family in Israel, recently drove a White Nissan Armada from his base in Dubai through Saudi Arabia to Jerusalem — a 26-hour road-trip that he spread out over a week, meeting businesspeople along the way. He’s working on a business accelerator called Future Gig, connecting Israeli startups to the Saudi market and vice versa, with a focus on renewable energy, water scarcity and desert agriculture.
Neom, the crown prince’s vision for a high-tech region on the Red Sea coast a 40-minute drive from Israel, could also fuel collaboration.
On a popular Arabic podcast, Saudi political sociologist Khalid AlDakhil recently laid out his ideas for strengthening the kingdom, touching on nuclear energy and the military — and a possible partner, if the rewards are worth it.
“We honestly need to learn from the Israelis,” he said.