Can Israel embrace America’s vision of a ‘new Middle East’?

It’s decision time for Israel. And the question it faces goes beyond the immediate challenge of how to hit back against Iran’s barrage of missiles and drones last weekend.

It is a choice about Israel’s future relations with its Mideast neighbors and the wider world.

That decision – between permanent Israeli rule over the Palestinians of the occupied West Bank and the lure of a historic, U.S.-mediated peace with Saudi Arabia – is one Prime Minister Benjamin Netanyahu was wrestling with through much of last year.

Until Oct. 7.

That was when Hamas breached Israel’s southern border to attack, abduct, and kill more than a thousand people, and Israel responded with an invasion that has left tens of thousands of Gaza Palestinians dead and hundreds of thousands homeless and hungry.

Last Saturday’s missile strike, however, put that choice back on the table, and underscored what’s at stake.

That’s because Israel’s extraordinary success in fending off Iran’s unprecedented attack was not merely a testament to its own sophisticated air defenses.

It relied on a seamlessly coordinated response that involved the United States, Britain, and France, as well as Arab states including Jordan, the United Arab Emirates, and Saudi Arabia.

It was a dramatic demonstration of what Washington’s much-touted “new Middle East” could mean in practice.

The Arab leaders’ participation was especially significant, given growing grassroots hostility to Israel inside their own countries amid the humanitarian crisis in Gaza.

So alongside the web of other issues Israel’s leaders are weighing as they ponder their response to Iran’s attack, they now have real-world evidence of the benefit of coordination with Arab states. They know, too, that they could not necessarily count on similar help if Israel’s retaliation were to result in a second onslaught of missiles from Iran.

Yet even if Israel does find a way to respond without further escalating regional tensions, it still has to address the deeper, longer-term question: whether to buy into the U.S. vision of a formal deal with the leading power in the Arab and Muslim world, Saudi Arabia.

That question has become both more pressing and more difficult since Oct. 7.

It is more pressing because it goes to the core of a critical issue Israel will need to tackle once its troops have ended their operations against Hamas: how to rebuild Gaza and put in place political and security arrangements to safeguard the territory’s civilian population and Israel’s as well.

The Americans, and their international allies, see a key role here for the Arab states in the Gulf: helping fund reconstruction, encouraging a root-and-branch reform of the West Bank-based Palestinian Authority – readying it to take control – and providing a transitional security force in Gaza.

But the “new Middle East” framework has also become more difficult since Oct. 7.

The nature of the main political concession that Israel would have to make – a change in its policy toward the Palestinians – has gotten a lot harder for Mr. Netanyahu to swallow.

U.S. President Joe Biden met Mr. Netanyahu in late September 2023, two weeks before the Hamas attack, to outline his vision of a route to Middle East peace. It involved curbing Jewish settlements in the West Bank, expanding the areas under Palestinian control, and at least leaving open the door for an eventual two-state peace.

But that was six months ago.

Today, with international alarm deepening over the civilian suffering in Gaza, the Saudis, other Gulf Arab states, and Washington are convinced that a more explicit pathway toward Palestinian statehood is now essential. The Saudis, in particular, are unlikely to feel able to normalize ties with Israel without this.

But at home, Mr. Netanyahu would find such a commitment even costlier than ever.

The pair of small, far-right parties on which Mr. Netanyahu’s governing coalition depends have redoubled their drive to expand Israeli settlements and ultimately annex the West Bank. They want Israel to retake control of Gaza as well, once the fighting is over.

So at least for now, prospects of reviving the idea of a peace deal seem very slim.

Still, incentives remain on both sides.

The Saudis share Israel’s concerns about the Iranians and their regional proxy armies. Last weekend’s coordinated response to the Iranian attack will also have brought home the potential benefits to Saudi Arabia.

In 2019, a missile attack by Iranian-armed Houthis in Yemen caused major damage to a key Saudi oil installation. The kind of intelligence sharing and joint action seen last weekend could have thwarted it.

A more formal U.S. security guarantee and access to top-of-the-line American warplanes are also major attractions for the Saudis in a deal with Israel.

For Mr. Netanyahu, such an arrangement could not only ensure Arab support and participation in postwar Gaza. It could also strengthen his hand in seeking a demilitarized buffer zone in southern Lebanon to reduce the threat from Iranian-armed Hezbollah forces there.

And there’s a political incentive as well: At a time when most Israelis hold him responsible for allowing Oct. 7 to happen, he could claim credit for a long-sought Saudi peace deal, finally opening the way to Israel’s acceptance in the wider Arab and Muslim world.