What the War in Gaza Means for Saudi Arabia? #ForeignAffairs

Hamas is going to be able to claim very few victories in its war with Israel, but one that it has already notched is an abrupt halt in the momentum toward a U.S.-brokered deal between Israel and Saudi Arabia, Foreign Affairs reports. The Israeli-Saudi agreement would have broken historic ground, normalizing relations between the two countries, bringing Saudi Arabia more firmly into the U.S. security fold, and eliciting Israeli commitments on the Palestinian issue. In fact, fears of an Israeli-Saudi rapprochement may have been one of the key drivers of Hamas’s October 7 attack. The war leaves Saudi Crown Prince Mohammed bin Salman in a difficult position, at least in the short term. He craves regional stability, which would make it easier for him to pursue his goal of diversifying Saudi Arabia’s economy and reducing its reliance on oil exports. The horrific violence and threat of a wider escalation threaten his progress on this front. MBS is now also facing competing pressures at home and abroad, with U.S. and European leaders calling for Saudi Arabia to take a leading role in a post-Hamas Gaza and with regional and domestic groups urging Riyadh to more actively support the Palestinians in their hour of need. Both sides in the tug-of-war on Riyadh will likely be disappointed. Saudi Arabia has neither the ability nor the desire to put boots on the ground in a postwar Gaza or to massively finance Gaza’s reconstruction. Nor has it demonstrated any willingness to wield the tools at its disposal, such as its ability to cut oil output or exports to put pressure on Israel and the United States. Although an Israeli-Saudi deal is off the table for now, the incentives that brought Saudi Arabia to consider recognizing Israel have not gone away. MBS’s ambitious economic goals for Saudi Arabia can be achieved only in a stable Middle East and with strong ties to the United States. This long-term agenda will shape his course of action in the current conflict. Ahead of Hamas’s surprise assault on Israel, the Biden administration had made notable strides in its efforts to broker Saudi recognition of Israel. There were significant obstacles in the way of a deal—namely, the divergent interests of the three parties. The Saudis were demanding tangible Israeli moves to improve the political prospects of the Palestinian Authority, at least opening up the possibility of negotiations toward a two-state solution. Given the far-right composition of the Israeli government, such steps were unlikely. Riyadh’s demands of the United States were also a reach, including a formal security guarantee and assistance in building a Saudi civilian nuclear infrastructure without the safeguards that Washington has required of previous partners. Nevertheless, there was a sense of progress. Less than three weeks before Hamas’s attack, MBS told Fox News that “every day we get closer” in the negotiations. That may have been so, but the Palestinian issue was always going to pose an obstacle. Although the taboo in the Gulf states against relations with Israel has fallen away in recent years, Arab publics still care about the Palestinian cause. As a result, Arab leaders have to at least appear to do the same. Even before the war, Saudi Arabia signaled that Israel would have to do something substantial on the Palestinian issue as a prerequisite for normalization. In August, as discussions with Israel were progressing, Saudi Arabia appointed its first ambassador to the Palestinians, a gesture that was interpreted by many as a demonstration of Riyadh’s commitment to pushing for Israeli guarantees on the Palestinians’ behalf. To achieve a rapprochement with Riyadh, Israel would need to do more than it had in the lead-up to the Abraham Accords, a 2020–21 series of normalization agreements between Israel and Bahrain, Morocco, Sudan, and the United Arab Emirates. As part of those deals, Israel had agreed to drop plans it had floated to annex 30 percent of the West Bank, extending its sovereignty over territory it currently occupies—a move that would have effectively killed the prospect of a two-state solution. MBS’s aggressive international stance backfired in many ways, failing to harm his enemies while alienating international supporters, including U.S. President Joe Biden, who as a presidential candidate in 2020 promised to make Riyadh an international “pariah.” In the wake of this backlash, Riyadh has in the last few years changed its regional approach, emphasizing dialogue and seeking stability. A cease-fire with the Houthis in Yemen has essentially endured for over a year and a half. The Saudi-led boycott of Qatar ended in early 2021. Most significantly, Saudi Arabia reached out to China to mediate a resumption of diplomatic relations with Iran this year. All of this was done in the name of MBS’s economic reform program, Vision 2030, which aims to diversify the Saudi economy and reduce its dependence on oil exports. Riyadh has emphasized the need for regional stability to foster the foreign investment, regional integration, and economic development that it aspires to. It was in this context that the U.S. mediation between Israel and Saudi Arabia proceeded. Saudi hopes for regional stability in the pursuit of economic development were shattered on October 7. Riyadh has little love for Hamas, which created the crisis. The Saudis feared and opposed the political gains made by Muslim Brotherhood affiliates in Egypt, Tunisia, and elsewhere during the Arab Spring; Hamas is the Palestinian branch of the Brotherhood. On the other hand, the Saudis cannot be seen as standing aside (or worse yet, continuing to negotiate with Israel) as the Israelis pummel Palestinians in Gaza. Riyadh has an interest in ending the fighting and making progress toward a peaceful settlement of the Israeli-Palestinian issue but has few levers that it can or will use to advance that goal right now. It is possible that Saudi Arabia would be willing to play a financial role in a UN-approved transitional administration that leads to the return of Palestinian Authority control in Gaza. But that role would not resemble past Saudi aid deals, which amounted to cash dumps on favored clients. Riyadh has made clear in recent negotiations with cash-strapped Egypt that it prefers investment opportunities, not cash transfers. Its approach to Gaza will be similar, unless the United States is willing to sweeten the deal with the kind of diplomatic windfalls Riyadh was seeking from Washington in exchange for a rapprochement with Israel. After the 1973 Arab-Israeli War, also known as the Yom Kippur War, Saudi Arabia and other Arab oil producers imposed an oil embargo on the United States to punish Washington for its support for Israel. The embargo and accompanying cuts in oil production by the Saudis and others caused oil prices to quadruple—a period evoked in the United States by the image of long lines at gas stations. The World Bank, the International Energy Agency, and financial leaders including the chief executive of JPMorgan Chase, Jamie Dimon, are among those warning that a new oil crisis echoing the shock of 1973–74 could be on the horizon.