Neri 0:04

Shalom and welcome to the Israel Policy Pod. I'm Neri Zilber, a journalist based in Tel Aviv and a policy advisor to Israel Policy Forum. Happy Jewish New Year to everyone. We're properly in the midst of the Jewish high holidays here in Israel, and the election campaign is rumbling in the background with a month still to go. So I thought it would be the perfect week to take a wider look at what's happening right now across the Middle East with an emphasis on the all-important kingdom of Saudi Arabia, as well as the chances for Israel's Saudi normalization in the future. Maybe. To help us out with all of this, I'm delighted to have on with us Ambassador Michael Ratney, who for over three decades served as a distinguished U.S. diplomat, most recently as the U.S. Ambassador to the Kingdom of Saudi Arabia from April 2023 to January 2025. Ratney also previously served as the U.S. Consul General in Jerusalem, the chargé des affaires of the U.S. Embassy to Israel, the U.S. Special Envoy for Syria, and in many other postings across Baghdad, Beirut, Casablanca, Doha, Mexico City, Tunis, Bridgetown, and back in Washington, D.C. We're all also thrilled that Michael is now currently a distinguished policy fellow here at Israel Policy Forum, as well as serving as a senior advisor at the Center for Strategic and International Studies. I was really curious to get Ratney's take on what exactly is happening right now between Saudi Arabia and the Houthi rebels in Yemen, remember them, uh, and why Donald Trump almost got involved this past weekend in this ongoing conflict. Uh and later on, Michael and I uh also talk about how close Israel-Saudi normalization actually was before the events of October 7th, 2023, and what needs to happen to get such a deal over the line uh moving forward. This was a fantastic conversation with Ambassador Ratney that went in all kinds of unexpected directions. But before all that, let's do a little reporter's notebook segment where I take you behind the scenes and on the ground into the stories that are shaping current events and the big policy moves here in Israel and beyond. So uh we're recording this on Wednesday evening Tel Aviv time with just over 30 days until election day on October 27th, or uh D-Day, as I like to call it. Uh, and how are things looking ahead of D-Day, you might ask? The short answer is that the polls have begun tightening, tightening. That's a term that I took from the election pros, I think. Election pros like to say tightening, so we're gonna go with tightening. Uh, but basically, big picture, the four main anti-Netanyahoo opposition parties uh had been polling in the high 50s for a long while. Uh, and on a good day, uh, we're even within sight of a 61-seat absolute majority in the 120-seat Knesset. Uh, but now in some polls, uh the opposition is almost tied in the mid to low 50s with the far right and religious parties that make up the Netanyahu bloc, along with Hisli Kud Party, of course. Uh but in one poll, uh one recent poll, which uh Donald Trump tweeted out this morning, the Netanyahu Bloc actually led the opposition 54 seats to 52. That's a change, with Netanyahu Bloch holding a slim lead over the uh the opposition parties. So, what does this all mean? Uh I'd argue not what it seems. So uh don't worry just yet. Not all is lost. Uh, and there are a few reasons for this quote unquote tightening in the polls, uh, or in at least some of the polls, first reason. Uh a few of the smaller right-wing parties at the very bottom of the electoral slate are all hovering just above the electoral threshold. So a lot of their support also is coming from uh, you guessed it, then Yahoo's Likud party itself. So that's where they're drawing the support to get them over the threshold, 3.25% of total votes to make it into the next Knesset. So uh this is a double-jessed sword for BB with him bleeding support and bleeding votes to these smaller right-wing parties, but it actually gets them over the line. But it's definitely bad news for the opposition if all these smaller right-wing parties actually make it in after October 27th. So uh the bottom line is that it's a very close issue with these smaller right-wing parties and the threshold uh that could easily change uh on election day itself, and they could easily make it well, below the threshold and not above the threshold according to the polls. That's why the margins are always quite fine and quite thin in an Israeli election campaign. But the second reason for the tightening in the polls, uh, the Arab Israeli parties have increased their vote share and therefore diluting in relative terms all the other parties that are running, uh including the opposition parties. So the Arab Israeli parties are now polling at around 11 to 13 seats, uh, depending on the poll, which is a lot. And they also have a lot of space uh and spare capacity to increase uh their share of the vote uh depending on Arab turnout numbers on election day. So basically you have a situation where in some polls, the Netanyahu bloc is stuck on 50 seats total, but the opposition also uh goes down in its overall poll numbers. Uh in other words, no votes are actually being moved or lost from either side and between either side, uh, to the best of our understanding. It's just an issue of uh Arab-Israeli votes actually diluting uh the broader, the broader electoral map. So uh I'll say this, uh, despite what Donald Trump may think, Bibi Netanyahu isn't in the lead in this election, uh, no matter that recent poll, uh, Bibi is still nowhere near a 61-seat majority, uh, and he has no clear path to actually winning this thing, according to the polls, we should add. And the opposition, if you combine them with the Arab-Israeli parties, which which you should, uh, the opposition is well over 60 seats consistently, uh, well over the majority needed in theory to uh to form a government here in Israel. But the problem, as I'm sure you're all aware, is that most, not all, but most of the opposition leaders are, at least for now, saying that they don't want to quote unquote use the Arab-Israeli parties in Knesset to actually form uh a coalition, which means that they, the opposition, don't have a very clear path either to form a government. Um, again, if the polls turn out to be somewhat accurate. Confused? Good. Good. Welcome to an Israeli election campaign. Try covering it for a living, and there's still one more month to go. So, with all that, let's get to Ambassador Michael Raddy. Hi, Michael, welcome to the Israel Policy Pod. Thanks, Neri.

SPEAKER_04 7:22

I've been uh I've been wondering when my invitation would come.

Neri 7:25

Uh well, uh, I've been wanting to have you on for a long time. I don't want to say as long back as as we know each other. I believe it's been probably over 10 years, maybe 12 years, since we were drinking uh an espresso in the gardens of the consulate in Jerusalem when you when you were That's right. Yeah, I remember that very, very well, uh, that meeting. Uh so I didn't have a podcast back then. Uh I do have one now. Uh so I've been meaning to have you on for for a while. You're actually the second person to to tell me that in the past hour. So so people are looking for for invites. I guess that's a good sign. Um but I really wanted to have you on this week to talk about Saudi Arabia uh in two senses. Uh, number one, um, dealing with the current moment and the escalating conflict uh between Saudi and the Houthis, uh, and the possibility of the US potentially intervening, uh, as was apparently imminent uh this past weekend, if if our friends at the New York Times uh are accurate, which I believe they are. Uh and then later on we'll get into the whole issue of Israel's Saudi normalization, uh, how real it was in the past, and how real it may be uh in the future as well. So let's start with the current moment. Uh here in Israel, uh we like to talk about uh the Seven Front War over the past three years, uh, all across the Middle East, uh, but Saudi uh may be facing a three-front war right now. So you have since July the Houthis firing uh missiles and drones uh from Yemen from Saudi's south uh and blockading Red Sea ports. Uh you have Shiite militias in Iraq to Saudi's north, uh hitting critical energy infrastructure inside Saudi Arabia, uh, and obviously Iran from the east, also sometimes firing missiles uh at the kingdom. So I guess first question to you, Radni, uh, how dangerous, complicated, challenging is really the current moment for the kingdom?

SPEAKER_04 9:14

I would say all of the above. Dangerous, challenging. Uh, the other word I would add is totally predictable. The uh, you know, when this war started, and you know, I make this point all the time, like none of the none of the Gulf countries, certainly not the Saudis, have any affection for Iran, but they didn't want this war for a lot of reasons. And everything that's happened since February 27th, I think everyone in the Gulf could have predicted every single thing. Uh, that includes closing the Strait of Hormuz, it includes Iranian attacks on energy infrastructure. Um, and it includes activating these Iranian proxies, and the Houthis kind of foremost among them, uh, but also these Iranian-supported militias inside Iraq. And I think the Saudis had been sort of bracing themselves. They never really were consulted on the war to begin with, not its starting date, not its objectives, not the degree to which the United States would get involved to protect them and other Gulf partners if the Iranians, again, predictably started retaliating by striking uh Gulf targets. And they always knew like one possibility was the Houthis would get into the fight. And they didn't really at first, uh, but as you point out, in July, they started launching rockets and drones at Saudi targets, energy targets, like the heart of the Saudi economy, still, unfortunately, I guess. Um, and it's frustrating for the Saudis because, like, they saw it coming, and I think their expectation was that they had made this long investment in a relationship with the United States. Obviously, it goes back decades, but then the Saudi Crown Prince himself had made kind of a serious investment and effort with President Trump. Most recently, last November, when he came to Washington, and it looked great, right? They they were named a major non-NATO ally. Uh, Trump announced that they, that the U.S. would sell the F-35 aircraft to the Saudis. Uh, there was a new defense cooperation agreement, not a treaty, but something that sort of governs the nuts and bolts of the relationship. It really felt like an upgraded military partnership, the sort of thing you'd want in place if things really go south in the region. And then that all happens, and you know, it doesn't seem like the U.S. is really prepared to get involved.

Neri 11:34

No, it doesn't. And uh, we'll get back to the U.S. and also maybe some of Saudi's other allies, who they also have some kind of defense agreement with, and uh, that whole facet of it. To the best of your understanding, why did the Houthis start firing in July? You know, like you said, they stayed out mostly uh from the Iran War, the proper Iran war that began February 28th. Um, they weren't even really that involved in last year's Iran war. So, what happened this past summer where they decided to start firing um at Saudi?

SPEAKER_04 12:04

Yeah, the the Houthis are complicated characters, and um it's not the answer to that is not as simple as saying they're an Iranian proxy, so Iran told them to, right? Uh they are an Iranian proxy in the sense that they at times do Iran's bidding and certainly kind of carry that ideological fervor and kind of anti-Americanism and anti-Israel and in this case anti-Saudi sentiment. But they consider themselves their own Islamic state. They consider themselves sort of on a par with Iran, uh, not anybody's employee, but their own thing, uh, with their own religious legitimacy, including, you know, the Houthis themselves uh are from the descendants of the prophet, and they see Mecca as part of their territory. They're not, they don't lack ambition. And, you know, from the moment that they basically back in whenever it was, 2015, took control of Sanaa and much of the Yemeni state, Saudi was really their principal antagonist. Uh, they don't even recognize the legitimacy of the Saudi monarchy. Um, and Saudis launched a war. It was an unsuccessful war. It had U.S. support at first. Sorry to go over all this history. No, no, it's support. But it does lead up to this past July. Um, and I'm gonna condense it considerably. But uh they launched basically an unsuccessful war in an effort to get rid of the Houthis. And it had U.S. support, uh, significant U.S. support, that eventually stopped because it was a disastrous war. There was high numbers of civilian casualties. In the end, they didn't dislodge the Houthis that were particularly resourceful. And the Saudis eventually embarked on kind of a political process with the Houthis. And I would say it was somewhat galling for the Yemeni government, which again the Saudis support that we recognize, because it created a channel directly from the Saudis to the Houthis, sort of implicitly legitimized them in the country. Because the Saudis at that point, I mean, they love, they would love to get rid of them, but their real goal was to ensure that the most kind of pernicious aspects of them, the rockets and drones, the antagonism stopped so they could do what they what the Saudi Crown Prince really wanted to do, which is focus on the country's internal transformation and development. And that's it's hard to do if the Houthis are launching rockets at you. So they they went in this political process, which from the Saudi perspective buys calm, doesn't solve the problem, but gives them space. From the Houthi perspective, it buys them legitimacy and the prospect of money, which is something they really want. You know, the Saudis are effectively, through all of their actions, making life economically miserable for the Houthis. And this roadmap included the prospect, possibly, of the Saudis helping economically, including paying salaries of government employees in Houthis-controlled areas. They never really did it. It was kind of a bad look. After October 7th, the Houthis started targeting Israel, then they started targeting U.S. naval ships. Right. It was a tough period, and the idea of kind of proceeding with that was not a good look. And the Saudis definitely recognized that. So you had this really, you know, a very uneasy period, including in kind of in a heightened way after the Gaza War started. And if you recall, you know, they they continued firing at naval vessels, maritime traffic. They were trying to hit U.S. Navy ships. It would have been disastrous. The U.S. eventually got involved again towards the end of the Biden administration. Again, inconclusively, and then President Trump pulled the plug on that as well. So this whole time is this kind of mix of uneasy diplomacy and military action. Um, the Houthis kind of at each stage of the way, their grievances are only growing. The Iranians certainly support them militarily, financially. They provide them arms, they probably provide them advisors. In a way, they held that relationship in abeyance when the Iran war started this past February. But eventually, there they were. The Houthis were loaded with agreement with grievances against the Saudis. The Iranians had an opportunity to push back on what had been, still is really a fairly successful U.S. uh blockade of Iranian ships coming out of the Strait of Hormuz. The Iranian economy is being crippled. We always knew, the Saudis always knew they were going to retaliate. What do they do? This is my own theory, and I think there's it's plausible, which is they activate their proxy, both the Houthis and those in Iraq to start attacking Saudi energy infrastructure. What happens? Oil prices go up, gas prices in the United States go up, and so the Iranians are retaliating in a very way that has real resonance, particularly for Americans that head to uh elections in just a few weeks. And in this case, again, the Houthis, not 100% proxies of the Iranians, but only too happy to get involved. And now the Houthis are being attacked. For the first time, I mean, they were attacked pretty directly back in 2022 and earlier than that. There was an uneasy ceasefire until then. Now, you know, they're attacking uh tankers carrying Iranian crude, uh, an oil refinery in Jazan in the south of the country. Um, these Iraqi militias attacked the East-West Pipeline. You know, it's plausibly done in coordination with the Houthis. This is in Saudi Arabia. Yeah. Yeah. And so the how the Saudis are under attack. And um the Houthis, in a way, you know, they've they've borne the brunt of a lot of retaliation from Saudi Arabia, from the United States, at times from the Emirates, and they've they're tenacious and they're resilient.

Neri 17:40

From Israel as well over the course of the Gaza War.

SPEAKER_04 17:42

From Israel as well.

Neri 17:43

Yeah. Yeah. Um, and they still they they take a licking and uh they keep on shugging away.

SPEAKER_04 17:48

They keep on ticking.

Neri 17:49

Yeah. They really do.

SPEAKER_04 17:50

They're just there's something to study. I mean, the the the resilience, the tenacity, uh, the resourcefulness is just something. And to look at them, you don't see kind of, it doesn't look like a modern army. And you think they can possibly be a modern army, but boy, have they mastered their terrain. Uh, and they have, you know, their leadership remains more or less intact, um, and ability to exercise control over the forces um under their authority. And it it doesn't mean life is okay for the Yemenis. It's it's one of the poorest countries in the world at this point, and they've lived through horrific conflict. But just as a as kind of an insurgent that has become a governing authority, the Houthis are extraordinarily tenacious.

Neri 18:36

They certainly are. Um, and they, well, they're still firing on Saudi. Um, by the way, Saudi's firing back at Yemen uh as well, lots of heavy, heavy airstrikes. But I'm curious, as somebody who who was in Riyadh uh for two years, uh obviously before this recent escalation, but you have you have a sense both of Mohammed bin Salman, the Saudi crown prince's, as you said, drive to modernize the kingdom, uh, to focus really on economic development. Uh so give us a sense um of the progress that MBS had made until, well, until quite recently, until maybe the Iran War, um, and how damaging the past few months have likely been for both his ambitions and and the kingdom as well.

SPEAKER_04 19:20

Right. You know, there was this period kind of early in his ascent to power. He had become, kind of came out of nowhere for a lot of people, became defense minister and then crowned prince. And it was kind of a honestly a reckless period. It was what made him famous for a lot of people, certainly in the United States. It included the escalation of the war in Yemen, it included, you know, the blockade of Qatar, the assassination of Khashoggi. Like it was a rough period. None of it really worked. You know, he got a bad name. He had ended up with a very sour relationship, at least initially with President Biden. And around that time, 2018, really, 2017, 2018, 2019, he really was turning inward. And so the idea that he wanted to shape this region of his was put on the back burner. And his real focus was trying to shape his country. And they, he and others recognized that the trajectory Saudi was on was just unsustainable. Like at some point, nobody knows when this energy transition is going to come. At some point, the world is going to lose its taste for oil. If Saudi Arabia doesn't have a viable economy by then, they're in deep trouble. And this was something that I think uh MBS felt his predecessors didn't recognize. You know, you can't, there are, there are countries that are wealthy enough to just kind of live off their savings in perpetuity. Maybe Kuwait is that, but Saudi is not. And so he set about an effort to fundamentally change the country, both diversifying the economy, kind of reducing their dependence on oil, and then changing the structure of society, basically emancipating women. You know, everyone in the West talks about women driving. I often thought that was the most superficial aspect of the changes there. When you're there, you realize women aren't just driving, they're working everywhere, every government agency, every business at very high levels, basically kind of empowering an economy. They're changing the educational system. They're frankly expunging. Uh, they had a bad history of really kind of horrible references to non-Muslims in their textbooks. That's all getting expunged. They don't want to be a part of that world anymore. They want to be a part of the modern world that invests in AI and develops technology and lives off of green energy. Like that's the world that they want. It's super expensive to make a transition like that. In fact, no country has ever really gone from that abject dependence on oil to, in theory, a country that isn't dependent on oil. And the only way you can do it is two things, right? You got to keep oil prices high enough that they can fund this very, very expensive transition. And you got to keep all these conflicts away. You got to keep the Houthi rockets and missiles away. You got to keep the Iranian kind of mayhem away. All of these conflicts that just disincentivize. People from getting involved in Saudi. Why are you going to invest in Saudi Arabia if your investment is going to get rocketed? Right. Right. So everything he was doing in terms of Saudi's foreign policy, look at it through that lens. Let's keep oil prices relatively high and stable, and let's keep conflict away. And he was, for a bit, fairly successful at doing that. You know, to everyone's disgruntlement, he worked with the Russians because they were part of OPEC Plus. He saw it as this kind of imperfect tool to keep oil prices stable. And then he was kind of engaging in diplomacy to a great degree, whether it was in Sudan or with Yemen, re-establishing relations with Iran, not because he thought any of this stuff was going to get fixed, but because it just helped keep these conflicts at bay while he could focus on what was going on internally. Now you see the fragility of that model, right? Because still dependent on oil. And no matter what you do to keep oil prices high, and they're high now, if you can't get it to your customers, there's no value to it. And so here we have oil, you know, I think now it's back under $100 a barrel, but it's kind of where they wouldn't mind it to be, but they can't send it to their customers, mostly in Asia, because the Strait of Hormuz and now Babel Mendib are both closed. And these conflicts that they were doing their best to kind of distance themselves from have now kind of come back. And they came back because of a war these guys didn't ask for. And I think this is sort of the central, for many, kind of a misunderstanding, because a lot of people feel like, and you hear this rhetoric, you used to hear it a bit in Israel, actually. Like the Saudis hate the Iranians. They should relish this war. They should be diving on, diving in head first, working with us to help do it. Yeah. But in fact, they're like, like, not our thing, right? We're just going to bear the brunt of it. The Americans aren't rushing to protect us. And meanwhile, like, how do you convince an investor to go to Saudi Arabia while this whole thing's going on?

Neri 23:55

Very difficult situation. Uh, by the way, just for our listeners, Ababl Mandeb is um the strategic waterway, the strategic choke point at the end or top of the Red Sea. Uh, so it's kind of the twin of the Strait of Hormuz that probably more well known. And Israel, yes. Uh Israel, many Israelis like to uh Saudi splain uh Saudi. Uh and they oftentimes you heard this, you know, last year's Iran War, this year's Iran War. Well, we, Israel, uh, we're doing the dirty work for Saudi and the rest of the Gulf Arab allies who um quietly are supportive of us, which, as you said, is um, you know, if it was true before, it's definitely not true now.

SPEAKER_04 24:33

Yeah, I mean, Gaza was the big turning point, I think. You know, if if Israel had stopped with the famous kind of the pager operation against Hezbollah and some strikes they had done, some extremely clever operations against Iranians, like it was this moment where suddenly Mossad was back to its mystique of days of yore. Like people are like, holy cow, boy, that was amazing. Like if they had stopped there, they would have had much of the Arab world kind of just shaking their head in amazement. Then the Gaza War started and it just became unsustainable. It was, it was, it was horrific. Their publics were seeing it.

Neri 25:09

You mean the Gaza War kind of escalated?

SPEAKER_04 25:11

Yeah, the Gaza War after October 7th. You know, suddenly this highly competent uh Israeli intelligence service, people stopped thinking about that and they started thinking about this Israeli army that they viewed as being just utterly reckless in Gaza. And then Iran war started and and uh it didn't get any better. By the way, Babel Mendeb, just so folks know, uh it's also, and this kind of points out why this is not just about Saudi and not just about oil, something like 25% of global container traffic goes through there from Asia to Europe through the Babel Mendeb and then the Suez Canal. So the Houthis at this point are staying away from anything that's not Saudi related. Right. But like if they wanted to, they could they could cause real pain for the global economy.

Neri 25:58

Uh yes, they they definitely could, which they somewhat started doing after October 7th when they got involved, uh, firing, like you said, not just on Israeli shipping or US naval vessels, uh, but others as well. Um definitely curtailed some trade through through the Red Sea. But uh I'm curious, if your MBS sitting in Riyadh right now and you cut this uh, you know, if not a defense or defense treaty, then a defense agreement with Donald Trump last November, right? And you also cut uh this Mecca agreement uh with Pakistan and Turkey earlier this summer, and now you're at war, you're taking incoming missiles and drones, even you know, the international airport in Riyadh, critical energy infrastructure, other cities, and yet nobody's coming coming to your aid, at least not yet. So what are you thinking if you're if you're MBS about your erstwhile allies?

SPEAKER_04 26:50

Yeah, frustration is what I think. Um you know, it's it's not at a point where they're willing to walk away from the relationship. Uh I think the Saudis view their whole kind of security perspective, their whole security framework is anchored in the United States. They have decades and decades of buying weapon systems, training, exercises. They're they're knitted into the U.S. Central Command's structure. So they and they want that. They want to be kind of anchored in the United States from a security perspective, but they are deeply, deeply frustrated. Now, I don't doubt that the U.S. could provide other kinds of assistance to them now, short of actual airstrikes. There's information that could be provided, targeting and so forth. That's possible. But I think they feel like this is the moment that they've invested in, that they've spent time working on, that they want their principal defense partner to come and help them. Now, look, it doesn't necessarily mean that the US getting involved would fix this, right? Both we and the Saudis have been launching airstrikes against the Houthis for quite a long time now, and it hasn't really done them in. But from uh as a political matter for the Saudis, they've been attacked directly. They they have to retaliate and they are going to retaliate. And also as a political matter, I think it's natural for them to look to their principal partner for help in that. So I think they're frustrated. They'll do a few things. They'll continue this military effort, but I think they'll look for some kind of a diplomatic off-ramp, right? I think it'll probably start with Iran, much easier if there's some modus vivendi reached among Gulf states and the Iranians. They'll hate it, right? It'll be something that maybe even kind of, if not legitimizes, at least kind of grudgingly accepts a continuing Iranian role at the Strait of Hormuz. So politically impossible, but as a practical matter, they got to get this oil moving again, and they have to get back to a point where they're not in the middle of an open conflict between the US, Israel, and the Iranians. So if they can de-escalate that, reach some kind of imperfect modus vivendai with the Iranians, I think that opens the door for a de-escalation with the Houthis. Um, and so if I were Saudi Khan Prince, I dare say that's what he would be thinking about right now, just trying to keep a lid on this and trying to keep this thing from exploding even further.

Neri 29:18

So this is really interesting. So you're saying I don't want to call it, you know, cutting their losses because there is kind of a strategic rationale to it, but essentially finding some deal vis-a-vis Iran and the Gulf and the Strait of Hormuz, and cutting some kind of deal with the Houthis, maybe going back to the previous ceasefire, maybe more financial support, whatever the Houthis may be asking for, and in that way actually kind of settling things down, stabilizing things and getting the economy back running and the oil exports running again. Exactly.

SPEAKER_04 29:48

I mean, look, there's a there's a perspective that you could say, well, all the damage that's been done to Iran is a good thing, right? So their air defenses are gone, um, their nuclear program seems to be under rubble, much of their leadership is gone. Like there's there was serious damage done to Iran and the regime that in some ways maybe would have a positive impact in the long run, right? But for the moment, if you're the Saudis, if you're any of the Gulf states, everything for them is worse than before this whole thing started. And so, you know, I again in lots of conversations where people want to know, you know, what's the path forward? Kind of what is the what is this formula that we haven't quite figured out yet that gets us out of this war in a way that's satisfactory? And I think there might not be one, right? I think it's entirely possible the war will end. I think it's likely the war will end, uh, but in a way that's just it's worse off for everybody. It's worse off for the Saudis, it's worse off for the United States, it's obviously worse off for the Iranians. Um, and part of that might be that this international waterway, which had forever been open and free, is now suddenly Iran staked a claim to it. And until the time comes when, you know, the Saudis and others are not as dependent on it. Uh, maybe they have other export routes for their oil, maybe demand for oil is lessened. Um, you can gradually wean your way off dependency on the Strait of Hormuz and you have more leverage. Maybe at that point there's a bit more of a possibility to kind of revisit what is becoming this status quo. But for a while, it's gonna be, it's probably gonna have to involve accepting some enduring Iranian uh role there.

Neri 31:34

Very interesting. I mean, I I agree with you, that's probably the likeliest path, but uh, I think for many people in well, in Washington and definitely Israel, it's not a very satisfactory path, right?

SPEAKER_04 31:46

It's not. It'll it's you know, I don't want to give the per give the sense that just because like it leads to an end that it's somehow satisfactory, it's unsatisfactory. But I don't see I don't see a satisfactory exit right now.

Neri 31:59

And you weigh it against the alternative, which is what escalation, another well, a presumption of the war, more more damage across the region.

SPEAKER_04 32:07

Yeah, you know, the people indulge the sunk cost fallacy, right? Like we're in this far, we we just need to keep bombing, and eventually it'll all be okay. But it, you know, this war has created this sort of doomsday machine, right? Whatever you do, it makes it worse. You don't want to stop trying because then you're accepting a horrible situation, but every step you take makes it worse. It either makes it worse from an economic perspective, from a security perspective, or from a political perspective. President Trump's kind of finding this, right? He's frustrated, he feels like he can threaten to annihilate Iran, and that will make them more malleable in these negotiations. But time and again, we've learned it doesn't, right? So you want to say, stop talking, stop bombing, send your diplomats, hopefully some competent ones, to have a conversation, reach a modus of vendi, and uh at least get the economies of the region going again. Um, and then you can think if there is some clever way to deal with the enduring threats that the Iranians pose, including, you know, the status of their nuclear program, sponsorship of proxies, the missile program, all these things, which thus far have really not been totally resolved.

Neri 33:22

Right. Let's hope that's the path that is taken, uh, and not uh another crack at the at the Iranian pinata as somebody who's sitting here in Tel Aviv, that would be uh that would be not great. But again, people, I mean, uh I'm sure you've heard it too. People here say, well, you know, just a little, a little more pressure, whether economic or military, and uh the Islamic Republic will fall. Doubtful. Highly, highly doubtful.

SPEAKER_04 33:46

Yeah, and by the way, even if it falls, right, it's not totally clear that chaos is in anyone's interest. I think if you're a Gulf state and one of your fears is chaos in the region. Chaos breeds, refugee flows, radicalization, terrorist groups coalescing in areas where there's there's no government control, they aren't thrilled with chaos. You know, there's some school of thought that says Israel would prefer chaos in Iran rather than kind of an enduring government that's antagonistic to Israel. I don't know if that's all Israeli analysts believe that. Some certainly do, but very few analysts in the Gulf buy that.

Neri 34:28

For them, chaos is just a losing proposition. Because it's right across the strait. It's right across the water, a very short trip. So yes. Um, and I think you and I probably heard that verbatim on the eve of the war, I think, earlier this year. That fear of chaos uh from various quarters of of the Gulf. Uh, but you know, Trump and well, Trump and Yahoo made their own made their own calculations, didn't ask them.

Shanie 34:57

Talking about Israel has gotten so hard. People are angry and dug into their positions, and most of the time it feels like the conversation is over before it even begins. But what if we kept talking? I'm Shady Reichmann from Israel Policy Forum, and this is Disputed Territory, a podcast for Real Talk about Israel.

SPEAKER_07 35:14

I don't find that shaming people works very well and getting them to listen to you. What I try to do is at least open up the space that people can listen. I also try to ask people questions to like push them to ask themselves to evaluate their own ideologies.

Shanie 35:31

We can believe that there needs to be and is a Jewish state and also work every day to make it better. And I see my work as really digging in there, trying to fix the hardest and most challenging parts of Israel. And it doesn't take away from loving it.

SPEAKER_05 35:44

You can call these things wrong, you can call these things unacceptable when two, etc., but you should not dehumanize an entire society.

Shanie 35:53

We're going to talk about Zionism, the Israeli-Palestinian conflict, Jewish identity, the relationship between American Jews and Israel, and the questions that don't always have easy answers. You'll hear from people with different perspectives. Sometimes I'll agree with them and other times I won't. But that's the point.

SPEAKER_01 36:09

When I criticize the Tanya Man Begin fear and the settlements, and when I speak about a two-state solution, all of this is because of my love for the Jewish people.

SPEAKER_00 36:17

I feel like my responsibility is to be a diaspora Jew and to stay compassionate and to stay nuanced. Why that is so incredibly difficult in this moment, I don't know.

Shanie 36:29

I believe the conversations about Israel don't have to drive us apart. They might actually be the only productive way forward. This is disputed territory, real talk about Israel. Follow along on Apple, YouTube, Spotify, or wherever you get your podcasts.

Neri 36:52

You had a great article in the Times of Israel last week, uh, which everyone should check out, which hopefully we'll we'll provide a link to at the in the show notes. Um the article ostensibly was about the the late U.S. Senator Lindsey Graham and Graham's quest uh to secure an elusive Israel-Saudi normalization deal. Uh but really the article was was about much more than than just that. So I wanted to start here, Michael. Uh you got to Riyadh in April 2023, and normalization talks, as you wrote in the article, uh, were already taking place quietly uh in the spring of 2023. So uh give us give us the inside scoop. How close was a normalization deal between Israel and Saudi brokered by the US on the eve of October 7th, 2023?

SPEAKER_04 37:36

So I think there are people that were in the middle of it as well who think that except for uh October 7th, it would have happened. I'm not sure, but I can give you my perspective on all of that, which is that you know, there were basically four big parts of the negotiation. One was uh for the Saudis the centerpiece, which was a mutual defense treaty. Basically, like a NATO alliance or the U.S. Japan or US Korea mutual defense treaty ratified by the US Senate. Um, one country comes to the other's defense, right? So that was a big piece of it. There was another piece, which was basically a defense cooperation agreement. So not a political treaty, but something that governs basing access, overflights, armed sales, the nuts and bolts of a military relationship. That was number two. Number three was an economic component. The big centerpiece of that was likely to have been this nuclear deal that was just announced by the Trump administration. Basically, U.S. Saudi civil nuclear cooperation. What the Saudis really wanted at the center of that was the ability to kind of generate nuclear power to build nuclear power plants, exploit their own uranium, in theory, to take that uranium and make their own, enrich it and make their own nuclear fuel, although that's obviously the subject of considerable controversy. But nonetheless, some kind of an economic piece was part of that normalization package. All of those were things that we or the Saudis would do for each other. Uh, the fourth piece had to do with the Palestinians, right? There was going to be a set of measures to bolster the prospects for Palestinian statehood. And that was not something that we and the Saudis would do for each other. That was some set of expectations that would have emerged for Israel to do vis-a-vis the Palestinians. So by the time I got to Riyadh at the beginning of 23, almost all of the discussion was about the first two pieces, the treaty and the defense agreement. I was Hoxtein, who worked for President Biden, was negotiating uh an energy piece and some other economic measures that they had discussed. But that was the principal focus of these discussions for many, many months. And it's it's an arduous negotiation, right? These are detailed things. In the case of a treaty document, we hadn't done a treaty in over 60 years. So there wasn't a lot of muscle memory there. So by the time October 7th rolled around, we were just about to turn our attention to the Palestinian element, right? I think there was this sense that the other pieces were falling into place. Uh, there were still going to be some decisions that had to get made, but you know, we always knew that this Palestinian piece needed to be addressed. I should pause and say around this time, I heard two sorts of criticisms of this. One, and you can imagine the sort of political perspective they come from. One said that um President Biden is so anxious to get this normalization deal, he's just gonna sell out the Palestinians. There won't be anything in it for them. The other said that President Biden is so enamored of doing something for the Palestinians that he's gonna jam measures on Israel that even the Saudis don't want. Okay. So one says, you know, one sort of the, I don't know, what you want to call it, sort of the pro-Israel side, and one is the pro-Palestinian side. Neither were true, right? There was always going to be a part of this that furthered the cause of Palestinian statehood. We know that because the Saudis said it publicly. Uh, they said it privately, they said it publicly. There was really no difference between what they were saying. I think a lot of people felt as though the Saudi Crown Prince was sort of not particularly concerned about the Palestinians. Whatever his own views of that issue were, he's also a politician and he knows he has a public, actually, he has three big constituencies that he cares about. He has his family, right? The El Sa'ud family, and there's they care about this. He has his own population, 20, 25 million people that that, especially after the kind of the watching all of the carnage in Gaza after October 7th, even if they didn't care about it much before, they certainly cared about it then. And then the broader Arab Muslim world, right? Right. MBS might be sort of reducing the influence of religion in his own society, but he knows that his father and eventually he will be the custodian of the two holy mosques. Um, and you can't just walk away from an issue that much of the Muslim world deeply cares about. So there was always going to be something related to the Palestinians. There was a lot of discussion going on inside the U.S. government about what that would be. There was a plan to start discussing that in greater detail with the Saudis. October 7th came around, sucked all the air out of the room, right? It was hard to have a conversation about that. I think the Saudi view of October 7th was I'm not sure, I'm not sure if they were angrier at Hamas or at Israel, perhaps in equal measure, because for them, this whole disaster put off the prospect of what they really wanted was moving ahead with the relationship with the United States. Right. So the negotiations never really stopped, right? Even though it seemed like it was becoming more improbable after the Gaza War started. Um, the fact is, on the two first parts, the treaty and the defense agreement, we were pretty close. The negotiations continued kind of under the radar. By the end of the Biden administration, I think we had we were probably at like the 98%. Now, those 2% were important things that would have to go up to the leadership level to make decisions on, but nonetheless, no one, no one thought it wasn't doable. Um, the economic piece was still a little bit uh unclear, but the general sense was that we had figure it out, right? And then the Palestinian piece was nowhere, right? The Saudis, remember, we had really only just started talking about the substance of what that would be. And you can imagine it would be a lot of different things related to Palestinian economic empowerment and all sorts of things that anybody that's been involved in that issue has talked about for years. But for the Saudis, and they made this very clear politically, um sorry, publicly, they needed two big things, right? One was the Gaza war had to be over. Over. IDF out of Gaza. No buffer zone, no yellow line, no nothing, right? IDF out of Gaza, Gaza war over. And the other thing they needed was. You know, you heard different terms, uh, an irreversible pathway to statehood. There was different turns of phrase. They basically needed was the Israeli government as a matter of policy to articulate support for Palestinian statehood. And at the time I remember thinking, I don't know which would be harder for this Netanyahu government, right? They seemed to have no inclination to get out of Gaza completely, even after the war to peace and the ceasefire and the hostage release. And uh Palestinian statehood, this was you know kind of central to their yeah, like it was it was Netanyahu's stated public position to prevent the emergence of a Palestinian state. Even, and I put this in the article, like um he he gave this half-hearted endorsement of the idea of Palestinian statehood back at the Bahan speech in what was it, what walked away from that eventually completely. Whatever he would have to say about Palestinian statehood now would have to be more forward-leaning than that speech at a time where you know he didn't want it himself. Like I think he had become very ideological in this point over the years, but also his government wouldn't have wouldn't have accepted it. So you had two impossible things. You know, you have this sense like, I don't know how this is going to get resolved before the Biden administration is over. Because the idea was, and Lindsay Graham, Senator Graham talked about this, he and others thought the only way you could do this normalization deal is with kind of Biden as a president and Republicans Senate. Because if it were, if it were a um Trump presidency, uh that you would never get, you would need two-thirds of the Senate to ratify a treaty. You would never get enough senators to give President Trump this victory. Now, my view was like, I actually could have imagined two-thirds of the senators giving President Trump this victory if there were a real deal. You know, if this were something for everybody, right? Saudi got its treaty with the United States. The US got normalization between Israel and Saudi Arabia. The Palestinians kind of helped cement the possibility of statehood for them. Um Israel got recognition by the custodian of the two holy mosques. It'd be something for everybody. It'd be pretty appealing. Um, and on substance, like personally, I thought it was a righteous idea, right? This is good for everybody. It's good for the region. Better even than the Abraham Accords, because you know, if you if Saudi is recognizing Israel, it makes it much easier for a whole host of other countries in the Arab and Muslim world to do that. And you start to do what I think what Mohammed bin Salman saw the advantage of it was, which is remember, his whole goal is let's reduce the conflict of the region so we could focus on developing our countries. And if you could reduce, if you could eliminate that central conflict that's defined the region since the creation of the state of Israel, right, that would be a good thing for everybody. And so it was a good idea. And it was also good because like anybody that's followed kind of peace efforts over the years knows that the prospects for Palestinian statehood is growing more remote. This is something that maybe was the last best hope for that. So it was a good idea. It's probably still a good idea, but um, the sort of ever-hopeful crowd that says, yeah, don't worry, MBS doesn't really care about the Palestinians. And you would hear that Saudi splainting all the time. No, don't worry. I know he might say that publicly, but I know he doesn't really care. When push comes to shove, there's other things we could do, right? It's just not true. And I think if you talk to the Saudis now about their attitude on it, like the good news is their view is look, Israel and Saudi Arabia are two countries in the Middle East, and the Middle East would be a better place if everybody just recognized each other and cooperated with each other and talked to each other. If if you remove that central point of tension that's characterized the region forever, but like we have a price.

Neri 47:55

Right. So I think that that's an important point to emphasize, uh, publicly and especially for our audience. Uh, it wasn't just uh the Israeli prime minister or the Israeli government paying lip service to this quote-unquote Palestinian component that the Saudis really wanted something tangible um before October 7th, and then also during the Gaza War when the normalization deal was held up as this kind of grand bargain, right? Not only to kind of normalize relations between Israel and Saudi, but also to actually entice the Netanyahu government to end to end the Gaza War, right? It was a carrot that was held up there. Um, it just wasn't as big a carrot as Netanyahu moving ahead for, well, total victory and refusing to do anything towards a Palestinian state in his mind.

SPEAKER_04 48:41

Yeah, look, so so there's two problems, right? But even before October 7th, the there was the theory, which was that the prospect of Saudi Arabia recognizing Israel is a pretty enticing thing if you're an Israeli politician. Maybe it's enough to convince Netanyahu to embrace Palestinian statehood, right? That was always the theory. This was a big deal. This is his legacy. Doesn't come for free, right? Is it enough? A lot of people would say, no, of course it wasn't enough. That Netanyahu was never going to do that. That he always thought, and I talk about this in the article, they could find some combination of words that, you know, you called it wordsmithing.

Neri 49:18

Wordsmithing.

SPEAKER_04 49:19

Wordsmithing, right? That kind of meant something but didn't really mean anything. So that was like pre-October 7th. After October 7th, I think there was a more of a hope than a belief that because all of the attention was focused on getting the hostages out and ending the war, and it was always just so close, right? But if you could get there, that might be enough of a boost politically of optimism, right? The Gaza war's over, the Israeli hostages are released. We can now move ahead with something really big that's going to bring this region together and Netanyahu could claim credit for. So somehow, this the end of the Gaza war and the release of the hostages kind of rolling into a normalization deal, just as the Biden administration was ending. I don't know. It never seemed realistic to me because I just don't think it ever changed, even releasing the hostages, whatever, never really changed the Israeli government's calculation about Palestinian statehood. It's only gotten hardened.

Neri 50:24

And Netanyahu had spent pretty much every day since October 7th promising the Israeli public, but really his right-wing base, um, not stopping till we achieve total victory.

SPEAKER_04 50:34

And no doubt, like October 7th does does affect the psychology of the Israeli public 100%, right? But like it doesn't affect, it doesn't change the calculus of the Saudis, for example.

Neri 50:44

Right. Uh I wouldn't want to I wouldn't want to suggest that. And and like you said in the article, um they're kind of their demands only increased, right? They they wanted end of the Gaza War idea of withdrawal and the original, whatever, Palestinian component, credible pathway to Palestinian statehood. My only point, and I agree with you 100%, uh, Michael, I think you saw that because you probably spent a lot more time here on the ground in Israel than maybe others who were trying to broker this deal and understood the kind of the politics and the psychology of of the various players. That, well, the carrot wasn't enticing enough, wasn't big enough for Bibi to actually reverse himself on both the Gaza War and future pathway to Palestinian statehood.

SPEAKER_04 51:26

Right. I mean, having spent a lot of time in Israel and a lot of time in Saudi Arabia, I can tell that they they both lack an understanding of the other, uh, but they often believe they have an understanding of the other.

Neri 51:38

Yes. Don't don't don't get me into uh what Israelis perceive to understand about American politics and what and what some Americans want to believe about Israeli politics. Uh that's a whole probably a whole other podcast. The final question for you, Michael, is something that you wrote in the in the piece and that caught me. Basically you were talking about the the politics on the US side, uh especially in Washington, with regard to Israel's Saudi normalization, but but it goes beyond that, where you said that this kind of win-win-win scenario, this grand bargain, was probably a lot easier to do a few years ago, definitely before October 7th and the Gaza War, than it perhaps is now. That the waiting support, as you write, for Israel among the US electorate kind of moved lawmakers, at least back then, to think that a deal would be worth ratifying because it was actually just good for Israel. Um, and as you write again, uh it was becoming an anachronism faster than many realized.

SPEAKER_04 52:36

Yeah, unfortunately, right? Like the the the deal was always it worked because there was something in it for Saudi, for America, for the Palestinians, and for Israel, right? So, and the Israel piece was really palpable in the United States. And you can see it, we had members of Congress visit Saudi Arabia, and Lindsey Graham was kind of foremost among them. He saw this as just this deal was good. And for him, it was also giving Saudi Arabia another look after kind of a tough relationship with them because this was great for Israel. Now that argument still kind of resonant with some folks in the US political world, but now increasingly, I'm not even sure it's something that a lot of politicians on the left would even advertise. Like if some do, like there's still some solid pro-Israel Democrats, but to make it kind of a political slogan at this point that I want to do this because it's good for Israel, that's getting scarcer and scarcer right now. And that's one of the reasons, and you know, the Saudis understood that too. I remember having conversations with them about how they see waning support in America for Israel. And so for them, and keep in mind, right, for them, the deal they normalize with Israel, that was the price they would pay for the treaty that they want. Right. And they recognize you got to do this soon because that price, like the whole value of the relationship with Israel, is declining. And so you need to strike while the iron's hot and you could present Congress with this kind of delicious dish that does so much for everybody. And they recognize that that's gonna get harder and harder faster than I think the Saudis felt like it was gonna get harder faster than Americans even realized.

Neri 54:15

Yeah, and I I think that was a really interesting point uh that popped up in in your article that I think is is well definitely lost on many people here in Israel. Um, I don't know what the what the debate is like uh in DC right now. It's been a while since since I went back. But yes, you know, it was true during the negotiations over a normalization deal where you had, you know, some people asking, why is the US actually paying, quote unquote paying for this normalization deal when Israel in theory just has to what pay lip service to a Palestinian state and then they get they get a normalization deal, what the US is actually ponying up, whether it's you know, defense treaty or other other uh military support or economic support or nuclear support. So that was that was kind of part of the debate in certain quarters a few years ago. Now I can't even imagine what it's like.

SPEAKER_04 55:02

Yeah. I mean, look, I thought it was good for us too, right? I think you know the Saudis get a treaty, we get a treaty, right? We get the clarity and a partnership that they want from us, we get from them, right? We want an economic partner that's deep pocketed and and has a long-term view. Um, we want we want to bolster the prospects for Palestinian statehood, and we want we want Israel to feel secure. Like all these things are good for America, but they're all really good for the other parties.

Neri 55:30

Yes. Um, but I think, well, the sooner rather than later is I think the the crux of it.

SPEAKER_04 55:36

Yeah.

Neri 55:36

Michael, thank you so much for for coming on. You didn't disappoint. And uh, you know, I'm not gonna invite you to my uh to my garden uh in the consulate in Jerusalem for for an espresso, but next time you're in Israel, uh come to Jaffa and we'll um I'll I'll see you on my terrace and for an espresso.

SPEAKER_04 55:54

With great pleasure. Thanks. Thanks for the invite, Neri.

Neri 55:56

Take care. Okay, thanks again to Ambassador Michael Ratney for his generous time and insights. Also, a special thanks to our producer, Jacob Gilman, and our editor, Tracy Levy, as always, and to all of you who support Israel Policy Forum's work. Just a reminder: you can email us with any feedback or questions, even anonymously, at policypod at ipforum.org, policypod at ipforum.org. We always love to hear from you. Uh, and do consider making a donation to Israel Policy Forum, so keeping a credible source of analysis and ideas on issues such as these that we all care deeply about, including this podcast. And most importantly, thank you for listening. Please subscribe and spread the word and chaksamech upcoming to all those celebrating.