Benzinga - by Piero Cingari, Benzinga Staff Writer.
Saudi Arabia is on the path to secure a defense pact with the U.S., with conditions tied to the establishment of diplomatic relations with Israel.
Three sources familiar with the matter have revealed to Reuters that Saudi Arabia is determined to secure a military arrangement in which the U.S. would pledge to protect the kingdom, even if Israel doesn’t make significant concessions to Palestinians in their pursuit of statehood.
The agreement may not provide the robust, NATO-style defense guarantees initially desired by the Saudi kingdom. Instead, the deal could mirror U.S. agreements with Asian states or resemble the U.S.-Bahrain pact, which does not require congressional approval.
As part of the deal, Saudi Arabia could be acknowledged as a major non-NATO ally, a status already granted to Israel. This elevation would bring substantial benefits, including training and access to advanced U.S. weaponry.
Notably, the pact is unlikely to fulfill Palestinians’ aspirations for statehood. However, Israel might ease some restrictions on Palestinians as part of the negotiation process.
The defense pact’s details are still under discussion. The potential agreement could significantly influence the geopolitical dynamics in the Middle East, aligning Saudi Arabia and Israel, two historical adversaries, and strengthening ties between Riyadh and Washington, D.C., against China’s increasing influence in the region.
There was little response in U.S. defense stock prices following the news. The iShares U.S. Aerospace & Defense ETF (NYSE:ITA) was up by a mere 0.2% at the time of this writing. Industry giants, such as Boeing Co. (NYSE:BA) and Lockheed Martin Corp. (NYSE:LMT) were 0.4% higher and 0.2% lower, respectively.
September has been the worst performing month for U.S. defense and military stocks in a year, as fears over the U.S. government shutdown weighed on the industry.
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