A deal is being negotiated that, if completed, would result in Saudi Arabia, for the first time, establishing warm relations with Israel.

The main thing the Saudis would get in exchange — security guarantees — wouldn't come from Israel but from its closest ally — the U.S. Israel, a high-tech power, would play a major role in ambitious Saudi plans to move its economy beyond oil. It would also be expected to make concessions to the Palestinian self-ruling authority in the West Bank. The U.S. would regain some of its influence over Saudi Arabia, stemming efforts by China to expand its sway in the Middle East.

The deal offers significant rewards to all four governments, not least of them additional ways of dealing with Iranian military activity in the region. But the prospect of the pact stirs populist forces among all of their constituencies, posing risks to those in power.

1. Who's talking?

Although they have had secret contacts in the past, the Israelis and Saudis aren't speaking to one another directly but rather through the Americans. According to sources familiar with the talks, they involve, on the U.S. side, national security adviser Jake Sullivan and his deputies Brett McGurk and Amos Hochstein. For the Saudis, it's Defense Minister Khalid bin Salman, who is the brother of Crown Prince Mohammed bin Salman, as well as national security adviser Musaed Al-Aiban. For the Israelis, it's Strategic Affairs Minister Ron Dermer, a former ambassador to the U.S. and Prime Minister Benjamin Netanyahu's most trusted aide. The Palestinians haven't been invited in so far but have been in touch with the Saudis. Officials of the three negotiating governments say that the complexities are such that a deal will be very difficult to pull off - yet very much worth trying.

2. What does Saudi Arabia want from the deal?

First and foremost, the Saudis want protection from Iran. Crown Prince Mohammed, the kingdom's de facto leader, is said to have been traumatized by devastating attacks on Saudi oil production facilities in 2019 that his government says Iran was behind. Saudi Arabia and Iran have been at odds for decades.

Though China in early 2023 helped broker a restoration of diplomatic relations between the two after a seven-year break, they remain rivals for power in the Mideast. Saudi authorities worry about Iran's large missile arsenal; its proxy militias in nearby Yemen, Iraq and Lebanon; and its nuclear program, which outsiders have long suspected Iran is using to develop nuclear weapons.

Saudi Arabia wants an agreement with the U.S. that would be as close as possible to a mutual defense pact — in which any attack on the kingdom would be seen by Washington as an attack on the U.S. One possible model is the U.S.-Japan treaty in which Japan grants the U.S. the right to base military forces in the country in exchange for the promise that America will defend it if it's ever attacked.

Israel also has defense capabilities that could prove useful for defending Saudi oil fields.

As spelled out in his Vision 2030 plan for the kingdom, MBS, as the crown prince is known, has made economic and social advancement his goal. To move the economy of the country past its dependence on crude oil, of which it is the world's largest exporter, he wants to focus on innovation. For this, U.S. officials say, he believes it's vital to integrate economically with Israel, which has become a powerhouse in the technology industry.

Anticipating the day its oil runs out, Saudi Arabia is making plans to rely more on nuclear energy to power its own economy and is seeking U.S. help with that.

Publicly, Saudi Arabia has said that a precondition to recognizing Israel as an ally is an independent Palestinian state. The deal being discussed would not come close to achieving that. But it would need to contain sweeteners of some kind for the Palestinians so that Saudi authorities could say to their own people — and the entire Muslim world — that they are still fighting for the Palestinian cause.

3. What does Israel want from the deal?

Netanyahu has repeatedly said that after gaining ties with the United Arab Emirates, Bahrain and Morocco in 2020 in the U.S.-brokered Abraham Accords, the big prize for Israel is a deep relationship with Saudi Arabia. It is the richest and most powerful Arab state. Equally important is the kingdom's status as the birthplace of Islam and the site of the religion's holiest places. For Saudi Arabia to recognize Israel would counter the view among many Middle Easterners that the presence of a Jewish state in the mostly Muslim region is illegitimate. It would also likely open doors in other large Muslim nations such as Malaysia and Indonesia.

Netanyahu has his own reasons for making at least some concessions to the Palestinian Authority, the body charged with limited self-rule under early peace agreements with Israel. It governs in the West Bank, having lost power in the Gaza Strip to the militant Islamist group Hamas. (Israel forces and settlers left Gaza in 2005, though Israel maintains control of Gaza's airspace and maritime territory.) Netanyahu announced in July that his government will do more to support the Palestinian Authority out of concern that Hamas, which is backed by Iran, is meddling in the West Bank. For now, that mostly means helping with industrial development and allowing more of the tax revenue Israel collects on behalf of the authority to flow into its coffers.

Netanyahu is also facing deep internal divisions over his far-right governing coalition's policies and indictments against him for fraud and bribery. A deal with Saudi Arabia would shift the focus to a source of national pride and unity.

4. What's in it for the U.S.?

For the U.S., the deal represents an opportunity to push back against China's rising profile in the Mideast. It would help Israel, a key ally, integrate with its neighbors and strengthen an anti-Iran alliance, with the U.S. in a central role. If the Saudis get the kind of security guarantees they want from the U.S., relations between the two countries, which have been strained, would vastly improve. That could give the U.S. more influence over the level of Saudi oil production, which largely determines the price of oil and thus gasoline. For U.S. President Joe Biden, a completed deal would be a major foreign policy accomplishment for his 2024 reelection campaign. Officials involved in the talks say that an agreement would have to come together by next spring. After that, the November election will dominate the attention of both Biden and Congress, whose Republican members will be reluctant to support any deal brokered by the president, out of concern it would benefit him politically.

5. What's in it for the Palestinian Authority?

For Palestinian Authority President Mahmoud Abbas, the deal would fall well short of advancing the dream of an independent Palestinian state. But it would offer a chance to slow or stall Israeli measures that make that dream improbable. Specifically, Palestinian negotiators will want Netanyahu's government to limit building of Israeli settlements in the West Bank and to put off plans to annex the existing settlements to Israel. A deal could also weaken Iran's creeping influence in the West Bank, and, most likely, would result in substantial financial assistance from Saudi Arabia.

6. What are the populist forces against the deal?

All four governments face the potential for backlash domestically.

Although a poll earlier this year found that 40% of Saudis were unopposed to economic ties with Israel, the Saudi public has little appetite for fully embracing the Jewish state, especially one led by a far-right government that opposes Palestinian statehood.

In the U.S., the left wing of Biden's Democratic Party is critical of Israel because of its continued occupation of the West Bank and the policies of the government Netanyahu now leads. It's more reproachful of Saudi Arabia for its violations of human rights, including the 2018 murder of Washington Post columnist Jamal Khashoggi by Saudi agents. The Saudi requests from the U.S. are substantial — for advance fighter jets and air defense systems on top of the defense pact, and for help with a civilian nuclear program that could one day be used to create nuclear weapons. Liberal Democrats will be wary of handing such tools to MBS, a leader with absolute power who U.S. intelligence concluded likely approved the operation to capture or kill Khashoggi. MBS has denied any involvement while accepting symbolic responsibility as the kingdom's de facto ruler.

Among Palestinians, Abbas — who was elected president in 2005 and has held onto the post though his term expired in 2009 — is already unpopular. In a poll conducted in the West Bank and Gaza Strip in June, 80% of respondents said he should resign. A majority — 52% — favored "armed action" as the best way to end the occupation, suggesting that many Palestinians would consider future diplomatic agreements with Israel a betrayal of their national cause.

In Israel, religious rightists who are part of Netanyahu's government consider annexing the West Bank a more important mission than gaining acceptance by Saudi Arabia. Their opposition, however, could prove a blessing to the parties negotiating it.

7. How could opposition to the deal prove a blessing to the negotiating parties?

If talks advance and Netanyahu appears willing to make concessions to the Palestinians that are unacceptable to the far-right partners in his ruling coalition, they may threaten to quit. That would give him another shot at forming a more centrist government with more moderate parties. That was his preference when he was invited to form a government after November elections. Those parties refused to sit with him then, because he's on trial and viewed by many as untrustworthy. The parties would have to reevaluate their position if presented with the historic opportunity of a Saudi peace deal. A more moderate ruling coalition would likely pursue policies in the West Bank more agreeable to the Palestinian Authority, as well as to the Saudis and the Americans. Such a coalition would also likely drop the current government's initiative to curb the powers of Israel's judiciary, which has provoked fears in Israel and in the U.S. that the country's democracy is threatened.

Bloomberg's Sam Dagher contributed to this report.