Israel and Saudi Arabia: no longer enemies but not quite friends

Once-clandestine ties are increasingly visible as rivalries cautiously give way to pragmatic economic and security ties.

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(Bloomberg) – Israel’s longest-serving prime minister appears on Saudi state television from Tel Aviv. An Israeli-American proclaims himself “chief rabbi of Saudi Arabia” after arriving on a tourist visa. A prominent Saudi family invests in two Israeli companies and makes no secret of it.

All of these recent events would have been unthinkable not so long ago. But the previously clandestine ties between Saudi Arabia and Israel are becoming more visible as some of the Middle East’s deep 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-dependent economy, while Israel is keen to build on diplomatic breakthroughs in 2020 with smaller Gulf countries.

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“We don’t see Israel as an enemy, but rather as a potential ally,” Prince Mohammed said earlier this year in a stark reassessment of one of the region’s most significant 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 idea of ​​doing business with Israel was anathema. Even today, polls show that a large majority in the Gulf opposes accepting Israel as another country, suggesting that the developments have more to do with the agenda of autocratic ruling elites than a radical change in Arab opinions.

“It’s more of a thawing of relations than a warming of relations,” said Abdulaziz Alghashian, a scholar who studies Saudi foreign policy toward Israel. “It’s still quite important.”

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Israelis travel more easily to the kingdom using third-country passports, a few pass their belongings through foreign entities and even discuss them in public.

Money flow

Qualitest is an Israeli software engineering and testing company acquired by international investors in 2019. It does not operate directly in Saudi Arabia, said Shai Liberman, managing director for Europe, Israel and the Middle East, but sells its product to other companies who then use it in the kingdom.

Investment also goes in the opposite direction. 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.

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Israel and the Gulf countries have established largely hidden security ties over common concerns, especially Iran. But it is mainly the strong economic motivation that fuels the more visible relationship now that Prince Mohammed is trying to reduce Saudi dependence on oil and develop cutting-edge industries.

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“We love Israel’s innovation and technology culture, and we try to find ways to capitalize on it,” said Muhammad Asif Seemab, managing director of Mithaq Capital.

Riyadh officials are also helping to reframe the broader debate around Israel.

Former Israeli Prime Minister Benjamin Netanyahu was interviewed on Saudi TV channel Al Arabiya, sitting in front of a map in Hebrew and warning of the danger of a possible nuclear deal with Iran. Less well known is Jacob Herzog, the rabbi who was allowed to care for a small Jewish community of foreign workers in the Saudi capital.

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Coveted award

When the United Arab Emirates and Bahrain signed US-brokered normalization pacts with Israel in 2020, known as the Abraham Accords, there was speculation that Saudi Arabia would follow.

For Israeli leaders, receiving recognition from Saudi Arabia – the region’s geopolitical heavyweight – would be a coveted prize, and that is unlikely to change regardless of what government is installed after elections later this year.

They did not understand this, in part because the religious and regional importance of the kingdom dictated different political considerations from those of smaller neighbors. An Israeli business owner visiting Riyadh still cannot make a direct phone call to Tel Aviv, let alone a money transfer.

Jason Greenblatt, who was special envoy for the Middle East under former US President Donald Trump and one of the architects of the deals, said Saudi leaders “recognize that Israel can be a huge boon to the region” even if he is not yet ready to do so. sign any type of standardization agreement.

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Greenblatt is raising funds for a blockchain and crypto technology investment vehicle, and said it was one of his “aspirations” to facilitate Saudi investment in Israel, although he admits it will take time.

A Washington Institute for Near East Policy poll suggests growing disappointment with what the Abraham Accords have brought, with only 19% to 25% of respondents seeing them positively in Saudi Arabia, the United Arab Emirates and Bahrain. Still, their existence appears to have encouraged acceptance of unofficial ties to Israel among some in the Gulf, the institute said.

Others continue to express their disapproval. In July, an imam at Mecca’s Grand Mosque included a plea against “usurping and occupying Jews” while leading Friday prayers. And when an Israeli journalist who traveled to Saudi Arabia during a visit by President Joe Biden in July found a way into the holy city that is off-limits to non-Muslims, condemnation was swift.

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In this mixed atmosphere, Saudi officials maintain that a resolution between Israelis and Palestinians remains at the heart of their policy.

Normalization is “a borderline offensive that we have to keep talking about” and not a political goal in itself, Princess Reema bint Bandar, Saudi Arabia’s ambassador to the United States, said in June.

It would be counterproductive for Israel to push the Saudis too hard, said Yoel Guzansky, senior Gulf policy researcher at the Israel 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 hurdle, Alghashian said, as Saudi leaders believe Biden is unlikely to muster the will to offer the sweeteners they would like, including security guarantees.

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Yet US entrepreneur Bruce Gurfein is among those betting that even the current gradual opening will be good for business.

Gurfein, who is 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 he spanned a week, meeting business people along the way. He works 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 of a high-tech region on the Red Sea coast a 40-minute drive from Israel, could also fuel the collaboration.

On a popular Arabic podcast, Saudi political sociologist Khalid AlDakhil recently laid out his ideas for strengthening the kingdom, touching on nuclear power and the military – and a possible partner, if the rewards are worth it.

“We honestly have to learn from the Israelis,” he said.



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