Cutting through the Hype: Understanding the Economic Potential of Saudi Arabia-Israel Diplomatic Relations

ABSTRACT: This article will assess the extent of future trade relations between Israel and Saudi Arabia after normalization, and attempt to identify key sectors likely to benefit from the diplomatic shift. Using a robust methodology, we aim to project potential trade volumes between the two countries and discuss the challenges inherent to the new economic landscape. The core of this analysis uses 2020 trade figures, a pivotal year marked by the signing of the "Abraham Accords", to project future trends and estimate potential trade figures between KSA and Israel in the coming years. The strength of our research lies not in its precise trade volume calculations but in the highlighted sectors poised for growth and an understanding of factors that influence economic cooperation. Initially focused on Saudi Arabia—the more sought-after party in this context—the article details both the current measures taken to align KSA politically and diplomatically with Israel and previous steps taken to reach a peace agreement. We then discuss relevant regional and geopolitical developments. Moving on to our economic analysis, we highlight factors that could shape or alter the scope of transactions between the two countries. Finally, we introduce our method for evaluating the economic potential between Saudi Arabia and Israel, by comparing it with World Trade Organization data from various countries already trading with Saudi Arabia in similar fields.