US-Saudi defense deal with civil nuclear component nears completion, official says

By Matt Spetalnick and Andrea Shalal

WASHINGTON (Reuters) - The U.S. and Saudi Arabia have reached a "near final set of arrangements" for a defense pact that includes a civil nuclear component but obstacles remain for a broader regional deal that would normalize relations between Israel and Riyadh, a senior U.S. official said on Tuesday.

The official said the bilateral deal was "more or less complete," but cautioned that certain elements, including a credible pathway to Palestinian statehood and steps on stabilizing war-torn Gaza, still needed to be completed.

"It is not done. Nobody here is going to say this is, you know, just right around the corner," the Biden administration official said on condition of anonymity.

The official briefed reporters following a Middle East visit by White House national security adviser Jake Sullivan, who held talks with Saudi Crown Prince Mohammed bin Salman and Israeli Prime Minister Benjamin Netanyahu.

The U.S.-Saudi agreement is intended as part of a Middle East "grand bargain" to reshape the volatile region that President Joe Biden’s administration is trying to revive after it was derailed by Hamas’ Oct. 7 cross-border attack on Israel and the outbreak of war in Gaza.

Some experts have called it a long shot due to the many stumbling blocks.

Netanyahu’s resistance to committing to an eventual Palestinian state, something the U.S. is pushing for and the Saudis have demanded, is a major obstacle.

U.S. and Saudi negotiators are seeking to complete an accord that would call for formal U.S. guarantees to defend the kingdom as well as Saudi access to more advanced U.S. weaponry, in return for halting Chinese arms purchases and restricting Beijing’s investment in the country, people familiar with the matter have said.

“We now have a near final set of arrangements, which will be the bilateral elements of this deal,” the official said.

But any Saudi pact is likely to 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.

The senior official said on Tuesday that the deal would include U.S. civilian nuclear cooperation for the Saudis structured by nonproliferation experts in a "rigorous way."

Saudi Arabia, the world's biggest oil exporter, wants U.S. assistance and technology to develop its own nuclear energy program.

Negotiators have also been discussing U.S. sales of advanced F-35 fighter jets and other weapons to the Saudis as part of the deal, a second U.S. official said on Monday.

On Sullivan’s meetings in Israel, the official said Israeli officials had "incorporated" and were taking seriously many of the concerns raised by the U.S. in planning for the military campaign in the refugee-packed city of Rafah in southern Gaza. But the official declined to elaborate.

"We're not here to kind of green-light Israeli military operations," the official added. "We're here to express concerns."

Biden has opposed a full-scale Israeli ground offensive in Rafah because of the risk of further heavy civilian casualties.

(Reporting by Matt Spetalnick, Andrea Shalal and Steve Holland; Editing by Chris Reese and Deepa Babington)