Saudi Arabia would be willing to accept a political commitment from Israel to create a Palestinian state, rather than anything more binding, in a bid to get a defence pact with Washington approved before the U.S. presidential election, three sources said.

Saudi Crown Prince Mohammed bin Salman fist bumps U.S. President Joe Biden upon his arrival at Al Salman Palace, in Jeddah.

Months of U.S.-led diplomacy to get Saudi Arabia to normalise relations with Israel and recognise the country for the first time were shelved by Riyadh in October in the face of mounting Arab anger over the war in Gaza.

But Saudi Arabia is increasingly keen to shore up its security and ward off threats from rival Iran so the kingdom can forge ahead with its ambitious plan to transform its economy and attract huge foreign investment, two regional sources said.

To create some wiggle room in talks about recognising Israel and to get the U.S. pact back on track, Saudi officials have told their U.S. counterparts that Riyadh would not insist Israel take concrete steps to create a Palestinian state and would instead accept a political commitment to a two-state solution, two senior regional sources told Reuters.

Such a major regional deal, widely seen as a long-shot even before the Israel-Hamas war, would still face numerous political and diplomatic obstacles, not least the uncertainty over how the Gaza conflict will unfold.

A pact giving the world's biggest oil exporter U.S. military protection in exchange for normalisation with Israel would reshape the Middle East by uniting two long-time foes and binding Riyadh to Washington at a time when China is making inroads in the region.

A normalisation deal would also bolster Israel's defences against arch-rival Iran and give U.S. President Joe Biden a diplomatic victory to vaunt ahead of the Nov. 5 presidential election.

The Saudi officials have privately urged Washington to press Israel to end the Gaza war and commit to a "political horizon" for a Palestinian state, saying Riyadh would then normalise relations and help fund Gaza's reconstruction, one of the regional sources said.

"The message from the kingdom to America has been: 'Stop the war first, allow humanitarian aid and commit to a just and lasting solution to give the Palestinians a state'," said Abdelaziz al-Sagher, head of the Gulf Research Center think-tank in Jeddah, who is familiar with the ongoing discussions. "Without it, Saudi Arabia can't do anything."

The problem, though, is that Israeli Prime Minister Benjamin Netanyahu, who has spent much of his political career opposing Palestinian statehood, has rejected outright any U.S. and Arab aspirations for a Palestinian state once the Gaza war is over.

"Normalisation does require really - if not legally, at least politically - a commitment from the Israelis that they are open to a two-state solution," said one of the senior regional sources familiar with Saudi thinking.

"If Israel stopped its military offensive on Gaza - or at least declared a ceasefire - it would make it easier for Saudi Arabia to go ahead with the deal," the person said.

The Saudi government's communication office did not respond to requests for comment.

PATHWAY TO STATEHOOD

The diplomatic push by Riyadh is driven by a desire to nail down a deal while the U.S. Democrats are still in the White House and control the Senate, as well as growing concern about the military reach of Iran, which has proxies in Saudi Arabia's neighbours Iraq and Yemen, besides Lebanon, Syria and Gaza.

In the past, many Democratic lawmakers have resisted such pacts and denounced Riyadh for its military intervention in Yemen, propping up oil prices, and its role in the killing of Saudi journalist Jamal Khashoggi in 2018.

But with Biden keen on a deal, now might be the best opportunity to get an agreement through Congress, the sources familiar with Saudi thinking said.

The Saudi officials have not spelled out exactly what an acceptable "pathway" to a Palestinian state would involve, giving them leeway to strike a deal with Israel that does not involve any binding moves, the regional sources said.

There has also been no attempt to revive the policy long advocated by Saudi Arabia that offered Israel normal ties with the entire Arab world in return for its withdrawal from territories occupied in the 1967 war.

The Gulf Research Center's Sagher said, however, that Riyadh and other Arab diplomats have told U.S. Secretary of State Antony Blinken and other visiting U.S. officials that without concrete and serious U.S. pressure on Israel, Palestinian statehood would not happen.

A senior State Department official said Washington was continuing talks with Riyadh on the U.S.-Saudi elements of the normalisation deal - including nuclear cooperation and security guarantees - but everything rested on Israel coming into line on a pathway to Palestinian statehood and ending the war in Gaza.

"U.S. diplomatic efforts are currently focused on the immediate crisis," a White House National Security Council spokesperson said when asked about the status of normalisation.

"But we remain committed to the long-term goal of a more stable, prosperous, and integrated Middle East region, including through normalisation and advancement of a two-state solution."

Blinken is due to return to the region in the coming days.

A senior Israeli official, speaking to Reuters on condition of anonymity, said there was "zero chance" Netanyahu would talk about a Palestinian state. "But that doesn't mean the Saudis can't talk about it, or anyone else," the official said.

"As Israel has made clear, the Palestinians will not have sovereignty in terms of being able to have an army or to enter treaties with Iran or to threaten Israel in any way."

Netanyahu said in a statement last month that Israel must have security control over all the territory west of the Jordan River under any arrangement in the foreseeable future.

In a possible sign of the sensitivity of the issue of statehood within the Israeli government, the official said the normalisation talks were being handled exclusively by Netanyahu and his top confident, Strategic Affairs Minister Ron Dermer.

TOUGH DECISIONS

A U.S. source said Washington believed Riyadh's strong desire to secure U.S. defence guarantees meant the kingdom would be willing to show some flexibility on what would constitute an Israeli commitment to a pathway to Palestinian statehood.

One step in this direction could be Netanyahu dropping his opposition to the Palestinian Authority playing a significant role in post-war Gaza, the source said.

Establishing relations with the Arab world's Sunni Muslim heavyweight would be Netanyahu's biggest diplomatic success, while for Palestinians, normalisation would put aspirations for statehood back on the map with full Arab backing.

"For the first time, I feel that there is a unified, unanimous, and sincere Arab agreement on the two-state solution to resolve the conflict," said Mohammed Dahlan, former security chief from the Palestinian Fatah faction, who is now based in the United Arab Emirates (UAE).

"The question is whether the United States is serious and capable of weighing in on Netanyahu to achieve that goal."

The Biden administration believes Netanyahu is willing to keep Israeli-Saudi normalization prospects alive but he has shown no sign of softening his resistance to Palestinian concessions, in part because of the potential for destabilising his far-right coalition, the U.S. source said.

On his trip to the Middle East last month, Blinken used the demand for a pathway to statehood – which was conveyed during meetings in Turkey, Jordan, Qatar, the UAE and Saudi Arabia - to present a united regional position to Israel.

He told reporters Israel would have to make tough decisions to ensure its long-term security and integration in the region.

With a new proposal for a three-stage ceasefire and release of hostages in Gaza under discussion, a pause in hostilities might give de facto Saudi ruler Crown Prince Mohammed bin Salman the opportunity to strike a deal.

"Biden is extremely keen on the agreement. Saudi Arabia is extremely keen on the agreement," said one of the senior regional sources close to Saudi thinking. "These two parties recognise that time is very tight and they need to do it soon, but the Israelis are making it difficult."

CLOCK TICKING

If Washington met Riyadh's demands for the defence pact, assistance with Saudi's nuclear programme, and extracted an acceptable compromise formula on statehood from Netanyahu, the crown prince might grab the opportunity, the person said.

He said there was no doubt the Gaza war had complicated and delayed the process, but Riyadh's main objective was the defence agreement and everything else, be it normalisation with Israel or any other issue, was basically to enable a deal.

Although Saudi Arabia and Iran ended their diplomatic rift in a rapprochement sponsored by China last year, Riyadh is determined to avoid a repeat of the Sept. 14, 2019 strikes on its oil facilities, the two regional sources said.

Riyadh and Washington blamed Tehran for the attack. Iran has denied having any role.

Washington and Riyadh agreed to start discussions about a defence pact and Israeli normalisation during Biden's visit to the kingdom in 2022 to repair strained ties over Khashoggi and the U.S. decision to end military assistance to Riyadh in its war against the Houthis in Yemen.

Biden blamed the crown prince for the killing. He has denied any involvement.

Energy and security interests, however, prompted Biden and his aides to recalibrate the 80-year U.S.-Saudi strategic partnership, which was founded on a simple equation: American demand for Saudi oil and Saudi demand for American weapons.

But the clock may be ticking down on achieving a mega-deal.

The deeper the U.S. moves into the presidential election campaign, the U.S. source said, the harder it will be for the Biden administration to gain traction for any U.S.-Saudi security pact in Congress.

U.S. officials hope that tying U.S. defence guarantees to normalisation could help gain congressional support.

However, Netanyahu may prefer to wait for the outcome of the election, in which former President Donald Trump, who had warm ties with the Israeli leader and the Saudi crown prince, is favoured to be Biden's Republican opponent, some analysts say.

A second Trump presidency would be widely expected to back Israeli-Saudi normalisation, though it is uncertain how it might stand on enhanced U.S.-Saudi defence ties, the analysts said.

Gaza war gives new urgency to US push for Israel-Saudi ties

The Biden administration is reviving talks to broker ties between Israel and Saudi Arabia, part of efforts to lay the groundwork for stability and security in the Gaza Strip if Hamas can be defeated.

It’s a complicated game of geopolitical chess, but one that has taken on new urgency amid mounting international pressure to end the war in Gaza, and to forge a path to relative peace in the Middle East.

If executed, a Saudi-Israel pact could give President Biden a signature foreign policy win before the November election. Such a deal could also help push back on critics who blame Biden for the world spiraling into chaos.

The president could also see Republicans rally around securing Israeli-Saudi normalization — who view it as a major counter to threats from Iran — as a counterweight to Riyadh’s skeptics in the Democratic party.

“I will do all I can as a Republican to help President Biden to bring about normalization between Saudi Arabia and Israel,” Sen. Lindsey Graham (R-S.C.) said on the Senate floor in mid-January, following a trip to both Jerusalem and Riyadh.

While Hamas’s Oct. 7 terrorist attacks against Israel upended years of work paving the way to a breakthrough in ties between Jerusalem and Riyadh, Biden officials last month laid out their view that normalization efforts could pave the way to a Palestinian State.

“The basic recipe, which is peace between Israel and its Arab neighbors, a two-state solution with Israel’s security guaranteed, these pieces are not operating in completely separate spheres; they are linked and connected,” national security adviser Jake Sullivan said at the World Economic Forum in Davos.

“They were before October 7. They remain linked today. And they are something that we’re going to have to continue to work on.”

Saudi Arabia had stepped back from the talks immediately following Hamas’s attack and Israel’s retaliatory war in Gaza. But Secretary of State Antony Blinken, following a trip to Saudi Arabia in early January, said that Saudi Crown Prince Mohammed bin Salman told him that normalization is not dead.

“He and virtually every other leader I talked to supports moving forward with integration, normalization, whatever you want to call it,” Blinken said in an interview with NBC. “But of course, the conflict in Gaza needs to end, and there has to be a pathway for Palestinian rights.”

Because Democrats are the biggest hurdle on the U.S. side of the talks, due to Saudi Arabia’s steep demands, experts say Biden is best positioned to push through a deal.

“The basic point is, if any of this needs Senate approval, it’s much less likely even a substantial number of Senate Democrats would support this in a Republican administration, but many would support it even if they have to hold their nose in a Democratic administration,” said Robert Satloff, executive director of the Washington Institute for Near East Policy.

“That’s the basic logic that underpins the idea that this works in a Democratic White House.”

Senators reportedly engaged with Saudi officials in Alula, Saudi Arabia, in January, about achieving a mutual defense pact, although there are still Democratic skeptics in Congress.

While Senate Democrats support Israel and Saudi peace, Riyadh’s demands on Washington give them pause. These demands include a mutual defense treaty similar in strength to NATO’s Article 5, protection for weapons sales to Riyadh from being held up by Congress or other oversight measures and U.S. help in developing a civil-nuclear program.

“I think we want a situation where we have more flexibility in the region than more commitments,” Sen. Jack Reed (D-R.I.), chair of the Senate Armed Services Committee, told The Hill when asked about a security treaty with Saudi Arabia. He added he would have to look at any proposal “very carefully.”

Before Oct. 7, supporters of a Palestinian state feared being left behind in a deal between Israel and Saudi Arabia. Salman held back from saying a Palestinian state was necessary to break through ties with Israel, during an interview with Fox News in September.

But amid the devastation in Gaza wrought by Israel’s war against Hamas, the Biden administration, Democrats and Saudi Arabia say a pathway to a Palestinian state must be included in any deal.

“What the Saudis will require on the Palestinian issue is clearly much more today than on Oct. 6,” said Satloff, who has engaged with the Saudis over efforts to broker ties with Israel. “And it’s not clear the Israelis are prepared to do whatever the Saudis are asking them directly, or through the Americans.”

Supporters of a deal say that fitting together all these different puzzle pieces is an enormous challenge, but possible.

“We’re going to try,” Sen. Ben Cardin (D-Md.), chair of the Senate Foreign Relations Committee, said when asked about breaking through ties by November.

“Everything has to be lined up, and it starts with security in the Middle East, so there’s no further risk factor from Hamas and a clear pathway toward two states. They’re the two building blocks to normalization in the region.”

Saudi Arabia says its most immediate priorities are implementing a cease-fire in Gaza, scaling up humanitarian aid for Palestinians there and having Hamas release more than 100 hostages it kidnapped on Oct. 7.

“That should be followed by a return to a peace process that provides a clear and irreversible pathway to Palestinian statehood,” said Fahad Nazer, spokesperson for the Saudi Embassy in Washington D.C.

But Israeli Prime Minister Benjamin Netanyahu has rejected calls for a Palestinian state or ending Israel’s military operation without “total victory” over Hamas.

But Democratic senators think the longtime Israeli leader understands the enormous value of normalized relations with Saudi Arabia: unlocking greater integration with Gulf and Arab nations and countering threats from Iran and its proxy groups across the region.

“I think that if there is a possibility of normalization and there’s real security for Israel, attitudes change in Israel,” Cardin said.

Still, Netanyahu faces significant challenges among the Israeli public, who are in a state of trauma over Hamas’s Oct. 7 attack, living under rocket fire, mourning the 1,200 people massacred that day, and in anguish for the more than 100 men, women, children and elderly still held by Hamas in Gaza.

Natan Sachs, director of the Center for Middle East Policy at the Brookings Institution, said that Israeli-Saudi normalization is likely the one issue on which Israeli voters would allow any concessions related to the Palestinians. But he noted there can be a wide gap between efforts to move toward a Palestinian state and its actual establishment.

“Saudi Arabia could play an important, constructive role toward trying to steer things toward a less awful trajectory,” Sachs said.

Part of that includes Saudi Arabia exercising influence over the Palestinian Authority, the beleaguered government body in the West Bank that the U.S. has suggested could be reformed and tasked with governing postwar Gaza.

“There’s a variety of different things the Saudis can do, to participate in trying to stabilize the Palestinian political arena, help reconstitute the Gaza strip, rebuild the Gaza Strip in the context toward Palestinian independence down the road. I think that would be a tangible step,” Sachs said.

Still, he said the chances are low of achieving normalization before November.

“The proposition of normalization is very hard. If the U.S. would really undertake a defense pact and … support a civilian nuclear program — these are very controversial things in the United States, and a nuclear program in Saudi Arabia is also controversial in Israel,” he said.

“Nevertheless, there’s a great deal of upside, certainly around the current mess in the Middle East and great power competitions,” he said, referring to threats posed by Russia and China.

Sen. Chris Coons (D-Del.), a senior member of the Senate Foreign Relations Committee, said he sees a narrow window of opportunity but believes normalization would take extraordinary U.S. effort.

“The challenge here is that there is no prospect for an end to the Arab-Israeli conflict and normalization with the war in Gaza and the humanitarian crisis in Gaza at the tempo and scale it is, and it would require a significant engagement from the United States to deliver on some substantial security guarantees,” he said.

Asked whether Netanyahu presented an obstacle to a deal — given the Israeli leader’s rhetoric rejecting a Palestinian state, a cease–fire with Hamas, or Israeli military withdrawals from Gaza — Coons dismissed this with a wave of his hand.

“As I said directly to the prime minister, ‘You’ve been telling us for years that the principal threat to Israel and the region is Iran. You have an opportunity here to produce a regional security and economic and political alliance against Iran and in favor of peace and stability. Sir, you should take it.’”