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Arab states turn cool towards Israel in blow to US aim of Saudi peace pact

WASHINGTON – Tensions between Gulf states and Israel are rising three years after the signing of historic peace deals, slowing down hoped-for investments and setting back US efforts to further integrate the region by including main power Saudi Arabia.

The United Arab Emirates (UAE) has expressed frustration in high-level contacts with Israel about the outcome of the 2020 Abraham Accords negotiated under the US presidency of Donald Trump, while Bahrain has outlined its disappointment, according to people familiar with the matter.

That is largely due to concerns over Israel’s deteriorating relations with the Palestinians – typified by the recent deadly raid on a refugee camp in the city of Jenin and incendiary comments by some far-right Israeli Cabinet members.

The strains are likely to complicate the United States’ already challenging goal of deepening relations between Israel and Middle Eastern nations, particularly Saudi Arabia.

The White House has been encouraging Saudi Crown Prince Mohammed bin Salman to approach Israel about a deal. The de facto ruler has so far held off, and in March restored diplomatic ties with Israel’s arch-enemy Iran through a China-brokered arrangement.

“This is not part of the vision some in the Abraham Accords had – Israel wanted it as an anti-Iranian axis,” said Mr Aziz Alghashian, a Riyadh-based analyst who studies Saudi policy towards Israel.  “The region is moving in a different direction now.”

Publicly, Saudi Arabia has said an independent Palestinian state is a pre-condition to recognising Israel as an ally. Privately, it has asked for firm defence guarantees from the US, access to top-notch US weaponry and the green light for its nuclear programme, including domestic uranium enrichment.

Opinion backlash

Israeli Prime Minister Benjamin Netanyahu, who has triggered mass protests and unnerved investors with a judicial-overhaul plan, is presiding over his country’s most religious coalition. It backs more Jewish settlements in the occupied West Bank and includes figures such as Finance Minister Bezalel Smotrich, who in March said there is “no such thing as a Palestinian people”.

This has exposed the UAE and Bahrain to a backlash in Arab public opinion that has been exacerbated by the recent offensive in the West Bank, which Israel said was aimed against militants and meant to destroy their weapons. The UAE condemned the operation, in which 12 Palestinians and one Israeli soldier died, and Mr Smotrich’s comments. The Bahrain government did not immediately respond to a request for comment.

Morocco, another country that established ties with Israel around the same time as the UAE and Bahrain, in June postponed an Arab-Israeli meeting to protest against Israel’s plans to expand settlements. The North African kingdom later said Israel now backs its desire to control Western Sahara, a disputed territory, which may improve matters. Following this, Mr Netanyahu’s office said he has been invited to Morocco.

After months of dragging its feet on a bilateral visit by Mr Netanyahu, the UAE invited the Israeli leader only for an international event – the COP28 climate conference later in 2023 in Dubai.

Mr Netanyahu’s moves are also frustrating the US, and he has struggled to get an invitation to Washington since he retook power in late 2022, though US President Joe Biden has indicated it will happen at some stage.

Some planned investments by Gulf companies in Israel have stalled. They include a US$2 billion (S$2.7 billion) acquisition by Abu Dhabi National Oil Company (Adnoc) and BP of half of NewMed Energy, an Israeli natural gas producer.

The deal was provisionally announced in March but has yet to be finalised. It has been delayed due to Israeli regulators taking time to approve it and should still happen by the end of the year, according to one person familiar with BP and Adnoc’s negotiations.

A consortium of Abu Dhabi firms led by wealth fund ADQ called off a plan to buy a controlling stake in Phoenix Holdings, an Israeli insurer and asset manager. That was because of rules that would have likely restricted several members in the consortium from making additional investments in Israel, according to a letter they sent to Phoenix, whose shares slumped after the announcement.

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