Axios from Tel Aviv

Diplomats and lawyers from the U.S., Israel, Saudi Arabia and Egypt are working on a complex choreography of agreements, understandings and letters that will allow a deal around two strategic Red Sea islands to be inked ahead of President Biden's visit to the Middle East next month, three Israeli officials told me.

Why it matters: The deal would be a significant foreign policy achievement for the Biden administration in the Middle East and could open the way for a gradual warming of relations between Saudi Arabia and Israel.

• But because Saudi Arabia and Israel don’t have diplomatic relations and can’t sign official bilateral agreements directly, the countries involved are trying to use creative legal and diplomatic solutions to try to indirectly finalize a deal.

What's happening: The Biden administration for months has been quietly mediating among Saudi Arabia, Israel and Egypt on a deal that will finalize the transfer of the islands from Egypt to Saudi control.

• At the center of the mediation efforts is the issue of how to meet the Saudi demand that the U.S.-led multinational force leave the islands while maintaining the same security arrangements and political commitments the Israelis need, as Axios previously reported.
• Israeli officials want to make sure any commitment the Egyptians made in their peace agreement with Israel is still binding for the Saudis, especially the agreement to allow Israeli ships through the Straits of Tiran.
• Two senior Israeli officials said the Saudis agreed to uphold Egyptian commitments including freedom of navigation.

Behind the scenes: Israeli officials said outgoing Prime Minister Naftali Bennett, incoming Prime Minister Yair Lapid and Defense Minister Benny Gantz were briefed in recent days about the proposed approach.

• Under the approach, Saudi Arabia would sign an agreement with Egypt and send a letter to the U.S. as the guarantor stating its commitments, two senior Israeli officials told me. The U.S. would then give Israel a letter with guarantees, mainly on the issue of freedom of navigation.
• An Israeli official stressed the approach has not been finalized, but the parties are getting close to an agreement.
• A spokesperson for the White House National Security Council said that the U.S. "has long played an important role in promoting Red Sea security and stability. We have no comment on these particular reports.”
• The Saudi and Egyptian embassies in the U.S. did not respond to requests for comment.

State of play: Gantz and the Israeli defense establishment feel comfortable with the proposed approach and think Israel’s security interests will be guaranteed, a senior Israeli official told me.

• "The trick here was how Saudi Arabia can sign an agreement with Israel without signing an agreement with Israel. There is no disagreement of substance," a senior Israeli official told me.
• "The key issue is how to do it in a way that everybody feels comfortable with politically," the official added.

The big picture: Separately from the island deal, Saudi Arabia is expected to allow Israeli airlines to use Saudi airspace for eastbound flights to India and China, as Axios reported last week.

• Another issue that is still under discussion ahead of Biden’s visit is the possibility of direct charter flights to Saudi Arabia for Muslim Israeli pilgrims, the officials added.

Israeli Prime Minister Naftali Bennett has decided not to run in the upcoming election, his office said today.

Why it matters: Bennett's announcement comes as the Israeli Knesset is set to vote on calling an early election.

• Once an election is called, Bennett will be replaced by Foreign Minister Yair Lapid. Bennett will stay on as the alternate prime minister until the elections.

State of play: It's unlikely that the vote on calling an election, which was expected today, will take place before midnight local time. That means Lapid won't become prime minister until midnight tomorrow at the earliest.

Behind the scenes: Bennett in recent days had been giving mixed signals about his political intentions and was under pressure from many of his supporters to stay in the race with his current party Yamina.

• He served as prime minister for a year.

What to watch: Bennett is likely to turn over the leadership of the party to his deputy, Ayelet Shaked.

• Shaked, a conservative right-wing politician, will have to rebuild the party and decide on its direction in the upcoming elections. 

U.S. energy envoy Amos Hochstein told Israeli negotiators last week that he wanted to try to get a deal between Israel and Lebanon on the maritime border dispute in two months, two Israeli officials told me.

Why it matters: Hezbollah leader Hassan Nasralla has threatened to use force to prevent the Karish rig, which is located south of the disputed area and seen by Israel as a "strategic asset," from producing natural gas, which is expected to start in 10 weeks.

• Hochstein is concerned about a potential escalation and thinks the time left can be used as a window of opportunity when both sides will have an incentive to get a deal and avoid a flare-up, according to Israeli officials.

Driving the news: Last Friday, Hochstein had a virtual meeting with the Israeli negotiations team and briefed them on the position he received from the Lebanese government during his trip to Beirut the week before.

• Israeli officials told me Hochstein sounded upbeat about his trip to Beirut. According to the officials, he said there was progress and all main political players in Lebanon managed to get a consensus regarding the way forward.
• The Israeli negotiators stressed the most important thing for them is ensuring Israel’s security interests are guaranteed, Israeli officials told me.
• An agreement could allow Lebanon to begin natural gas exploration, which may boost its imperiled economy.

What they're saying: The Israeli officials said they think two months is a possible timetable for getting a deal in principle.

• “We all understand the time window, and we all hope we can make progress," a senior Israeli official told me.
• The State Department didn’t comment on the details from Hochstein’s virtual meeting with the Israeli negotiation team.
• “The exchanges with the Lebanese and the Israelis were productive and advanced the objective of narrowing differences between the two sides," State Department spokesperson Ned Price said.

Senior diplomats from the U.S., Israel, the United Arab Emirates, Egypt, Morocco and Bahrain met in Manama, Bahrain, on Monday to push forward with the establishment of the Negev Forum, a new framework for cooperation in the region.

Why it matters: Regional cooperation and integration between Israel and other countries in the Middle East will be a central theme during Biden’s visit to the region in two weeks.

Flashback: Monday's meeting in Bahrain was a follow-up to the unprecedented Negev Summit, which took place in Israel last March and brought together Secretary of State Tony Blinken and the foreign ministers of Israel, UAE, Bahrain, Morocco and Egypt.

State of play: The diplomats at the meeting agreed to form six working groups on clean energy; education and co-existence; food and water security; health; regional security; and tourism.

• Another meeting of the Negev Forum steering committee will take place in October to agree on its final mandate and the division of labor between the member states, Israeli officials said.

Senior Israeli officials said they hope the forum will turn the Negev Summit from a one-off to a permanent framework for cooperation in the region.

• “This is the beginning of a regional alliance," a senior Israeli official said.
• The Israeli officials said the stated goal of the meeting was to hold a ministerial meeting of the Negev Forum before the end of the year in a desert resort in one of the Arab countries that are part of it.

Behind the scenes: Israeli officials who attended the meeting said Egypt and Morocco pushed for more integration of the Palestinian Authority in the forum.

• The Palestinians were not invited to the Negev Summit in March and have been very suspicious of the initiative as a whole. They were briefed ahead of Monday's meeting and after it, according to sources briefed on the issue.
• U.S. officials said they made clear in the meeting that the work of the forum is not a substitute for progress between Israelis and Palestinians or progress toward a two-state solution.

What they're saying: The joint statement at the end of the meeting stressed that the working groups will also work on initiatives that strengthen the Palestinian economy and improve the quality of life of Palestinians.

• “The participants also affirmed that these relations can be harnessed to create momentum in Israeli-Palestinian relations, towards a negotiated resolution of the Israeli-Palestinian conflict, and as part of efforts to achieve a just, lasting and comprehensive peace," the statement said.

A senior State Department official said: “The U.S. is supporting new frameworks that aim to harness American capabilities to enable partners to work more closely together, which we think is really essential to a more secure and prosperous and stable region over the long term."

What to watch: Israeli officials said there was an agreement to try to expand the forum ahead of the next ministerial meeting and invite the Jordanian foreign minister as well.

• The more long-term goal is to add Saudi Arabia to the regional forum, an Israeli official said.

Unilever said Wednesday that it sold its Ben & Jerry’s business interests in Israel to the local company that had the license to sell its ice cream, ending tensions between the international food conglomerate and the Israeli government.

Why it matters: Last July, the board of Ben & Jerry’s said it would stop selling its ice cream in the occupied West Bank and East Jerusalem, saying "it is inconsistent with our values."

• The company’s decision followed the May 2021 war in Gaza and a long pressure campaign by pro-Palestinian activists in Vermont where Ben & Jerry's headquarters is based.

Driving the news: Unilever's decision Wednesday comes after a monthslong legal and diplomatic pressure campaign by the Israeli government, Israel supporters in the U.S. and the Israeli company that had the Ben & Jerry’s franchise.

• In a statement on Wednesday, Unilever said it agreed to a new arrangement with Avi Zinger, the owner of the Ben & Jerry’s franchise in Israel, that “will ensure the ice cream stays available to all consumers” in Israel and the West Bank.
• Under the deal, Ben & Jerry’s ice cream can only be sold under its Hebrew and Arabic names in Israel and the West Bank.
• Unilever said that while the Ben & Jerry’s board was independent in making the decision not to sell the ice cream in the West Bank, it had reserved primary responsibility for financial and operational decisions and therefore has the right to overrule Ben & Jerry's and enter the new arrangement.

What they're saying: “Unilever rejects completely and repudiates unequivocally any form of discrimination or intolerance. Antisemitism has no place in any society. We have never expressed any support for the Boycott Divestment Sanctions (BDS) movement and have no intention of changing that position," Unilever said in a statement.

• The Israeli government welcomed Unilever’s decision. “Antisemitism will not defeat us, not even when it comes to ice cream. We will fight delegitimization and the BDS campaign in every arena, whether in the public square, in the economic sphere or in the moral realm," Israeli Foreign Minister Yair Lapid said.
• Ben & Jerry's did not immediately respond to Axios' request for comment.