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The Biden administration and Saudi Arabia are finalising an agreement for US security guarantees and civilian nuclear assistance, even as an Israel-Saudi normalisation deal envisioned as part of a Middle East "grand bargain" remains elusive, according to seven people familiar with the matter.

A working draft lays out principles and proposals aimed at putting back on track a US-led effort to reshape the volatile region that was derailed by the Hamas-led 7 October attack on Israel and the outbreak of war in Gaza, according to two sources who have seen the document.

It appears to be a long-shot strategy that faces numerous obstacles, not least the uncertainty over how the Gaza war will unfold.

US and Saudi negotiators have, for now, prioritised a bilateral security accord that would then be part of a wider package presented to Israeli Prime Minister Benjamin Netanyahu, who would have to decide whether to make concessions to secure ties with Riyadh, five of the sources said.

"We're very close to reaching an agreement" on the US-Saudi portion of the package, US State Department spokesperson Matthew Miller said on Thursday, predicting that details could be ironed out "in very short order".

That part of the plan is likely to call for formal US guarantees to defend the kingdom as well as Saudi access to more advanced US weaponry in return for halting Chinese arms purchases and restricting Beijing's investment in the country, according to foreign diplomats in the Gulf and sources in Washington.

The US-Saudi security accord is also expected to involve sharing emerging technologies with Riyadh, including artificial intelligence, according to people familiar with the matter.

The terms are expected to be finalised within weeks, a US official said on condition of anonymity.

The conditions that Netanyahu will face to join a broader deal are expected to include winding down the war in Gaza and agreeing on a pathway to Palestinian statehood, both of which Netanyahu has steadfastly resisted.

US officials hope Netanyahu will not want to pass up the opportunity to open relations with Saudi Arabia, guardian of Islam's holiest sites, but are mindful of the domestic political pressures he is under, including keeping Israel’s most right-wing government ever from collapsing.

A broader pact giving the world's biggest oil exporter US military protection together with normalisation with Israel would pave the way for Tel Aviv to establish ties with other Arab and Muslim states, and bind Riyadh to Washington at a time when China is making inroads in the region.

A normalisation deal would also bolster Israel's defences against arch-foe Iran and give US President Joe Biden a diplomatic victory ahead of the 5 November presidential election.

Normalisation with Israel is controversial across the Arab world and Palestinians view it as a betrayal of their national cause.

Overhanging these efforts is Netanyahu’s threat to launch a military offensive in the southern Gaza city of Rafah, where more than a million Palestinians are sheltering, despite US entreaties to refrain from an operation that could mean further heavy civilian casualties.

No normalisation while Gaza war rages

Saudi Arabia has called for an immediate truce leading to a permanent and sustainable ceasefire in Israel's war on Gaza and concrete steps toward establishment of an independent Palestinian state.

"Putting a proposal on the table, that's one thing, a proposal that we could take to Israel [for normalization]," Miller said. But Saudi Arabia, he added, has made clear there will be no normalisation deal "while the conflict in Gaza is still raging".

He spoke just a day after Secretary of State Antony Blinken returned from a Middle East trip in which he held separate talks with Netanyahu and Saudi Crown Prince Mohammed bin Salman.

While the Biden administration may be near to unveiling its plans, time is running short to make it a reality as the US heads deeper into the presidential election campaign.

What Biden's aides originally envisioned, in three-way negotiations before the Gaza war began, was for the Saudis to gain US security commitments in exchange for normalisation with Israel.

Now the administration is negotiating with Riyadh on a separate track and seeking to finalise the offer of a "grand bargain", which would leave Netanyahu to decide whether to join or miss out.

Miller said the components of the broader packageÌý– the US-Saudi deal, potential normalisation with Israel and a pathway to Palestinian statehood –Ìýwould all be linked together. "None go forward without the other," he said.

It remains unclear whether US defence guarantees for Saudi Arabia, which are expected to fall short of a full NATO-style pact, would be enshrined in a treaty requiring congressional ratification. But any agreement on nuclear cooperation is likely to require approval from Capitol Hill.

A proposed Saudi deal would face opposition in Congress, where many lawmakers have denounced Riyadh for intervention in Yemen, moves to prop up oil prices, and its role in the 2018 killing of journalist Jamal Khashoggi.

Senator Edward Markey, a longtime advocate for nuclear nonproliferation safeguards, said in a letter to fellow Democrat Biden on Wednesday that Saudi Arabia, "a nation with a terrible human rights record", cannot be trusted to use its nuclear programme purely for peaceful purposes and will seek to develop nuclear weapons.

However, congressional aides said the right agreement could attract enough support to gain the two-thirds Senate majority needed to ratify a treaty, winning the support of Democrats for something that is a Biden priority, and Republicans, if Israel's government is on board.

(Reuters)