As far as the terrorist organization Hamas is concerned, the October 7 massacre was aimed, among other things, at thwarting the prospect of a normalization of relations between Israel and Saudi Arabia, an aim that, for the time being, has been achieved. In the past few months, together with France, the Saudis have been energetically promoting unilateral international recognition of a Palestinian state.
At the same time, the Saudi royal house continues to enjoy flourishing ties with the US, to strengthen its status as an AI power with huge investment by Nvidia and Amazon in constructing server farms in the kingdom, and to engage in joint ventures with people close to US President Donald Trump.
The latest such venture highlights the scale of the trend: one of the biggest leveraged deals ever for the acquisition of US gaming giant Electronic Arts at a valuation of $55 billion.
The Saudi Arabian sovereign wealth fund PIF together with Jared Kushner’s Affinity Partners (in which the main investment is Saudi money) and Silver Lake, which is connected to the UAE, will finance a substantial part of the acquisition, the aim of which is to make Saudi Arabia a power in gaming and sport.
At such an early stage of negotiations between Israel and Hamas, can a normalization agreement be discerned on the horizon?
Hadas Lorber, head of the project on US-Israeli relations at the Institute for National Security Studies at Tel Aviv University, and founder and head of the Institute for Responsible AI, HIT, sees the growing involvement of Kushner and of former UK prime minister Tony Blair in the rebuilding of the Gaza Strip and shaping government there after the war as a good sign for the process vis-à-vis Saudi Arabia.
“The Saudis and the Emirates want to participate in the plans for rehabilitating the Gaza Strip. Besides demilitarization and the establishment of a technocratic administration based on local forces with Arab backing, Gaza City, according to Blair and Kushner, is supposed to become a tax-free city of startups, with server farms for processing cloud computing and AI, and a Tesla factory employing cheap local labor. The plan has drawn support from several billionaires, such as Peter Thiel and Larry Ellison, who are looking for additional tax-free zones with simple regulation. Ellison is prepared to invest $350 million in the project.”
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Trump seeks to promote regional stability, but full normalization with Saudi Arabia is still subject to political constraints and to Palestinian demands, Lorber says. “The solution at the moment is therefore a gradual model, postponing any immediate decision on issues such as the two-state solution. Under the plan, Israel will or will not recognize the aspiration of the Palestinian people to self-determination in the future, after certain conditions materialize, but the bottom line is that, in the Trump era, normalization with Israel is seen as part of a model whereby the US administration ‘rules’ the Middle East through the lever of local money.”
Lorber sees normalization with Saudi Arabia as part of a general move that will also include normalization with countries such as Indonesia, Syria, Lebanon, and Muslim countries in Africa.
The big landmine
While Lorber believes that the strategic achievements by Israel and the US in Lebanon, Iran, and Syria, and Trump’s unreserved support for Israel during the war, have enhanced Israel’s status in the eyes of de facto ruler of Saudi Arabia Mohammed bin Salman , other experts say that Israel has not yet succeeded in rehabilitating its status, and that normalization is still not on the horizon.
Dr. Yoel Guzansky, a senior researcher and head of the Gulf Program at INSS, believes that such an agreement is still a long way off. “Israel has not recovered the status it had before the war, and as long as we are only in the first hours of a hostages deal, not to speak of the day after, we are still not there. Even if Hamas agrees to being disarmed and to demilitarization of the Gaza Strip, we are still after two years of war during which the entire Arab world looked on Israel negatively. Discussion on normalization will encounter many questions,” Guzansky says.
“Saudi Arabia is working intensely to promote relations between all Arab countries and Israel, the main condition remaining the establishment of a Palestinian state, insistence on which stems not just from Saudi sentiment towards their Palestinian brethren, but from the fundamental assumption that without a solution to the Palestinian problem, or at least the start of a diplomatic process that will lower the flames of the confrontation, the region will continue to be mired in wars, and its economic and security interests will continue to be harmed as a result of that,” says Dr. Michal Yaari, a researcher and lecturer on the Gulf States at the Hebrew University of Jerusalem and the Open University.
“Foreign investors and tourists will not come if they fear for their personal safety and their money. We as Israelis are happy that we have struck a critical blow at our enemies, but in the Gulf they know that together with the blow to our joint enemies, hatred of Israel that fuels Islamic jihadi organizations has risen considerably. Not only that, but if we look at the assassination attempt in Doha – as far as the Gulf States are concerned, and Saudi Arabia among them, there is a substantial fear that Israel might decide to eliminate its enemies on their soil, as it did in Qatar and the UAE.”
Despite the achievements on the Lebanese, Syrian, and Iranian fronts, Yaari believes that Israel’s standing in Saudi Arabian eyes has been damaged. “If, before October 7, Israel was a military, economic, diplomatic, and technological power, today it looks like a country that has been exposed in its weakness, and that is ruled by an extreme faction that is not restrained by the leadership. The public in the Gulf States, which in the past was not very concerned aboutr the Palestinian issue, has been exposed by the Arab media to the scenes from the Gaza Strip, and sees Israel as a belligerent and violent country,” she says, but adds, “It attributes that to the leadership, and even today the public in the kingdom does not rule out an agreement with Israel on condition that the war ends and progress is made on the diplomatic track between Israel and the Palestinian leadership.”
Guzansky says that, at this stage, Saudi Arabia sees Syria as its main sphere of influence. “In Syria there is a new regime that is very close to the Saudis, and opposed to Iran, and part of regional competition over spheres of influence between Saudi Arabia and the UAE and Qatar.
“Saudi Arabia will become involved in the Gaza Strip to the extent that it sees Hamas really being disarmed, and that there are US guarantees and that the situation is stabilizing.”
Published by Globes, Israel business news – en.globes.co.il – on October 12, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
