Analysis-US sees big gains if Mideast mega-deal sealed – but at what price?

By Matt Spetalnick and Steve Holland

WASHINGTON (Reuters) – The Biden administration is pressing ahead with a concerted effort to strike a “grand bargain” in the Middle East that includes normalization of relations between Israel and Saudi Arabia, calculating that the U.S. could reap big rewards if it can overcome steep obstacles.

President Joe Biden’s aides have made this diplomatic push a foreign policy priority despite varying degrees of skepticism by experts on whether the timing, conditions and current regional leadership are right for a mega-deal that could reshape the geopolitics of the Middle East.

This marks a dramatic reversal for a president who had spent much of his term shying away from deeper diplomatic involvement in the region’s troubles, raising questions about why he has committed to such a challenging goal, what he stands to gain and whether he might end up paying too high a price.

A bid to broker relations between longtime foes Israel and Saudi Arabia is the centerpiece of complex negotiations that involve discussions of U.S. security guarantees and civilian nuclear help sought by Riyadh as well as Israeli concessions to the Palestinians, according to people familiar with matter.

While U.S. officials insist any breakthrough is far away, they privately tout the potential benefits, including removing a possible flashpoint in the Arab-Israeli conflict, strengthening the regional bulwark against Iran and countering China’s inroads in the Gulf. Biden would also score a foreign policy win as he seeks re-election in November 2024.

“There’s a lot that could go wrong, but if it happens it could be a crowning foreign policy achievement,” said Jonathan Panikoff, the U.S. government’s former deputy national intelligence officer on the Middle East, now at the Atlantic Council.

WINDOW OF OPPORTUNITY?

Though the timetable remains uncertain, Biden’s aides believe there may be a critical window to craft a deal before the presidential campaign consumes his agenda, sources say.

But U.S. officials acknowledge there are so many stumbling blocks that they have no guarantee of success. Israel-Saudi negotiations have been conducted with Biden’s emissaries as go-betweens.

“We are actively talking,” one U.S. official said on condition of anonymity. “But there’s not even a set of principles on what an agreement would look like right now.”

Even so, Biden’s aides have begun briefing key lawmakers, say people familiar with the discussions. The focus is on Biden’s fellow Democrats who have condemned Saudi Arabia over human rights but whose support would be needed if any agreement requires congressional approval.

The confluence of elements driving the administration includes a sense of urgency over China’s effort to gain a strategic foothold in Saudi Arabia and other Gulf states and a U.S. desire to heal ties with Riyadh, which Biden once vowed to make a “pariah.”

Bringing together military powerhouses Israel and Saudi Arabia could help formalize cooperation against Iran, a mutual foe Washington wants to contain.

The administration is also looking to reassert regional leadership to keep Saudi Arabia and other Gulf oil states from drifting further away from efforts to isolate energy-producing Russia over the war in Ukraine, according to people familiar with the matter.

In addition, normalization would appeal to pro-Israel voters in the election and make it harder for Republicans to attack him over fraught relations with Israeli Prime Minister Benjamin Netanyahu.

Though foreign policy rarely sways U.S. elections, Biden, facing a re-election fight against Republican former president Donald Trump, may be thinking of his legacy.

“It would be a big deal but the question is how much Biden is willing to pay for it,” said Aaron David Miller, a former Middle East negotiator now at the Carnegie Endowment for International Peace.

SAUDI DEMANDS

Among the challenges would be satisfying Crown Prince Mohammed bin Salman, the Saudi de-facto ruler known as MbS.

He is reported to be seeking a NATO-style treaty requiring the U.S. to defend the kingdom if attacked, and also wants advanced weapons and assistance for a civilian nuclear program.

From the Israelis, the Saudis demand significant concessions to the Palestinians to keep alive prospects for statehood, something Biden is also pushing for but which Netanyahu’s far-right government has shown little willingness to grant.

An upgraded U.S.-Saudi relationship would face resistance in Congress, where many are critical of MbS over the 2018 killing of journalist Jamal Khashoggi and Riyadh’s intervention in Yemen.

“I am certainly very wary of a defense treaty that binds the United States to come to the defense of a Saudi government that has proved to act incredibly irresponsibly in the region,” Senator Chris Murphy told Reuters.

Murphy, a Democrat on the Senate Foreign Relations Committee, said he favors Israeli-Saudi normalization and is open to reviewing any broader agreement but would not be easily convinced.

However, Jared Kushner, who under Trump spearheaded three Arab-Israeli deals known as the Abraham Accords, has urged his father-in-law to consider supporting Biden’s effort as vindication for Trump’s Middle East record, according to a person familiar with the discussions.

For Netanyahu, diplomatic relations with Saudi Arabia, custodian of Islam’s two holiest shrines, would be a long-sought prize that could encourage other Muslim states to follow suit and also pave the way for expanding Israel’s economic integration in the broader Middle East.

But Netanyahu’s coalition would likely resist anything more than modest gestures to Palestinians, which could trip up any normalization deal.

Biden’s talks with Netanyahu at the U.N. General Assembly on Wednesday could provide an indication of how far he is prepared to go.

Like MbS, Netanyahu has done little to dispel the impression he might prefer to deal with a second Trump presidency, raising the possibility they could wait for the election outcome.

If the clock runs out, the administration may have to settle for a more limited deal or else try to agree on the outlines of a future accord, experts say.

The idea would then be to iron out details later if Biden wins a second term.

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