Podcast Summary: "Saudi Arabia Part 2: Is the Window for Normalization Narrowing?"

What's Your Number? hosted by Yonatan Adiri and Michal Lev-Ram delves into the intricacies of the Israeli economy within a global context. In this episode, released on May 28, 2025, the hosts continue their exploration of Saudi-Israeli relations, discussing whether the opportunity for normalization between the two nations is diminishing.

1. Numbers of the Week

The episode kicks off with the hosts sharing their respective "numbers" to highlight significant economic indicators.

• Yonatan Adiri shares a remarkable figure: "$5.2 billion raised by Israeli tech companies in Q2 2025 thus far" (00:11). He emphasizes that this is a record-breaking quarter since Q2 2022, excluding major defense tech investments. Yonatan remarks, “to me, it’s absolutely incredible to see the ecosystem pushing forward, boldly going where no one has gone before. Definitely not in parallel to a war raging still in Gaza” (00:32).

• Michal Avram presents "150 million," representing the number of tourists Saudi Arabia aims to attract annually by 2030, having already surpassed the 100 million target last year (00:40). She acknowledges the ambition behind this goal, noting it encompasses various types of travelers, including Muslim pilgrims and business tourists.

Yonatan counters by prioritizing the impressive capital raised by Israeli tech over Saudi’s tourism ambitions, stating, “I'm siding with my number this time” (01:16). Michal concurs but expresses hope for future convergence between Saudi ambitions and Israeli investments.

2. Weekly News Briefing: Big Shorts

The hosts transition to discussing notable weekly developments affecting the Israeli economy.

a. Windex Performance

Yonatan introduces the Windex, an index tracking the stock performance of 50 publicly traded Israeli companies on U.S. exchanges. He highlights:

• Etoro's IPO: Celebrated as the first significant Israeli IPO in recent years, Etoro is set to join the Windex (04:57). Yonatan describes the reception as “widely received, big hug, big embrace from Wall Street,” lauding Yoni Asia’s leadership in navigating post-crypto dynamics.

• Elbit Systems: Successfully raised over half a billion dollars, reinforcing its position as a leading non-government defense tech company (04:57).

Yonatan also reports a 2% decline in the Windex, mirroring broader market downturns with the S&P dropping 1.70% and Nasdaq 1% (04:57). Notable movements include:

• Oddity (Il Maquillage): Up over 10% due to strong direct-to-consumer performance.
• Solared: Down 24%, reversing positive trends from previous weeks.
• Wix.com: Fell by approximately 17.25% following a weak Q1 report and concerns over AI’s impact on its business model (07:17).

Yonatan speculates on the AI-driven future of Israeli tech, questioning whether platforms like Wix.com will remain relevant amidst evolving technologies.

b. U.S. Legislative Developments

Michal brings attention to a significant U.S. bill passing the House, which includes controversial extensions of President Trump's 2017 tax cuts and Jobs Act. Key points discussed:

• Economic Implications: Yonatan expresses concerns about potential prolonged inflationary pressures in the U.S., which could strain Israel's growth due to intertwined economies (08:23).

• Military Aid Negotiations: Israel is approaching renegotiation of the next decade's military aid from the U.S., currently at $3.8 billion annually. Yonatan discusses two opposing viewpoints within Israel:

  1. Self-Sufficiency Advocates: Suggest Israel should reduce dependence on U.S. aid, leveraging its $550 billion economy.

  2. Supporters of Continued Aid: Highlight the importance of military aid for specific U.S. defense sectors and regional security (08:23).

• AI Regulation Moratorium: Michal notes a 10-year moratorium on states regulating AI included in the bill, highlighting uncertainties around future AI governance (11:28).

Yonatan comments on the shift in U.S. chip export policies, suggesting energy concerns will soon overshadow data center issues (11:28).

c. EU and Israeli Research Funding

Michal shifts focus to the European Union's potential impact on Israeli research funding. Key points include:

• Association Agreement at Risk: The EU's association agreement allows Israel access to R&D funds similar to Horizon 2020. Recently, 17 out of 27 EU ministers voted to discuss potentially freezing this access (12:42).

• Economic Consequences: Yonatan explains that Israel’s tech ecosystem, which heavily relies on EU grants, could face severe setbacks if access is restricted. He states, “This is not just about the money. This is about legitimizing the ability to work on basic research with Israel” (14:35).

• Strategic Importance: Michal underscores the detrimental effects of possible decoupling from the EU research network, emphasizing the importance of integrated global ecosystems for Israeli innovation (16:28).

3. Deep Dive: Saudi Arabia Part 2 – Is the Window for Normalization Narrowing?

In this segment, Yonatan and Michal explore the state of Saudi-Israeli relations, assessing whether the opportunity for normalization is closing.

a. Michal's Experience in Saudi Arabia

Michal shares insights from her recent visit to Riyadh, highlighting the nation's rapid transformation:

• Cultural and Societal Shifts: Initially, Saudi Arabia appears conservative and religious. However, behind closed doors, significant changes are underway. At a Fortune conference for women business leaders, Michal witnessed profound optimism and ambition comparable to early Silicon Valley (02:00).

• Women in the Workforce: Saudi Arabia has doubled the presence of women in the workforce within a decade, recognizing that societal progress hinges on female participation (23:07).

• Innovation and Localization: Vision 2030 aims to localize industries, reducing reliance on foreign investments and fostering homegrown tech and AI sectors (22:05).

Michal expresses disappointment that Israel remains virtually invisible in the Saudi innovation conversation. She recounts leading discussions on AI and startups, only to find no acknowledgment of Israeli contributions, except for a mention of Etoro (20:43).

b. Strategic Analysis by Yonatan

Yonatan provides a strategic perspective on normalization prospects:

• Missed Opportunities: He agrees that Israel has missed initial chances to establish a presence in Saudi Arabia's burgeoning tech ecosystem (17:21).

• Indispensable Role of Israeli Tech: Despite limited visibility, Israeli innovations—such as patents and IPOs—are integral to the global tech landscape. Yonatan questions how to translate this real-world significance into the Saudi context (21:41).

• Regional Dynamics: The future of normalization is intertwined with broader Middle Eastern issues, including:

  • Iran Nuclear Negotiations: The outcome will heavily influence regional stability and Saudi-Israeli relations.

  • Syria and Turkey Relations: Potential normalization between Syria and Turkey could pave the way for Israeli-Saudi ties (28:38).

Yonatan emphasizes the need to move beyond outdated stereotypes, quoting former Prime Minister Peres discussing the importance of female equality for Middle Eastern progress (27:08).

c. Path Forward

Michal and Yonatan contemplate the incentives and timelines for normalization:

• Saudi Ambitions: With ambitious goals set for 2030, Saudi Arabia is rapidly transforming. Michal highlights the urgency for Israel to engage now to capitalize on these developments before Saudi initiatives outpace potential Israeli partnerships (23:07).

• Continuing Optimism: Despite the window potentially narrowing, Yonatan remains hopeful that ongoing geopolitical shifts will eventually facilitate normalization, contingent on resolving critical regional issues (28:38).

4. Words of the Week

The hosts conclude with a poignant excerpt from a piece by Saudi journalist Manal Al Barakati, reflecting on Saudi Arabia's transformation:

"Trump marveled at the transformation he's witnessed in the eight years between his visits to Riyadh. What he's walking into isn't a rebranding. It's a country recalibrating in real time, learning what it means to keep up with its own ambitions." (29:06)

Michal reflects on this transformation, acknowledging ongoing challenges such as dictatorship and repression but underscores the significance of recognizing Saudi Arabia's ambitious evolution. She emphasizes the importance of aligning with Saudi vision despite imperfections, asserting that Israel must find its role within this dynamic landscape.

Conclusion

Yonatan and Michal wrap up the episode by reinforcing the critical intersection of Israeli economic resilience and regional geopolitical shifts. They advocate for proactive engagement and strategic partnerships to ensure Israel remains a pivotal player in the evolving Middle Eastern and global economic arenas.

Notable Quotes:

• Yonatan Adiri (00:32): “It’s absolutely incredible to see the ecosystem pushing forward, boldly going where no one has gone before. Definitely not in parallel to a war raging still in Gaza.”

• Michal Avram (02:35): “The energy, the Optimism, the development, this hunger, this ambition is like, it's infectious.”

• Yonatan Adiri (08:23): “Israel can do with another billion, which is like 0.18% of its GDP, so to kind of self invest like China.”

• Manal Al Barakati (29:06): “What he's walking into isn't a rebranding. It's a country recalibrating in real time, learning what it means to keep up with its own ambitions.”

Timestamps:

• 00:11 – Yonatan’s number on Israeli tech funding.
• 00:40 – Michal’s number on Saudi tourism goals.
• 04:57 – Discussion on Windex and Etoro IPO.
• 07:17 – Performance of Oddity, Solared, and Wix.com.
• 08:23 – Implications of U.S. bill and military aid negotiations.
• 11:28 – AI regulation moratorium in U.S. bill.
• 12:42 – EU's potential impact on Israeli R&D funding.
• 14:35 – Strategic importance of EU research grants.
• 16:28 – Consequences of EU-Israel decoupling.
• 17:21 – Transition to deep dive on Saudi Arabia.
• 20:43 – Michal’s observations in Riyadh.
• 21:41 – Yonatan on Israel’s indispensable tech role.
• 23:07 – Saudi Vision 2030 and localization efforts.
• 27:08 – Importance of female equality in Middle East progress.
• 28:38 – Future of Saudi-Israeli normalization.
• 29:06 – Words of the week from Manal Al Barakati.

This summary encapsulates the key discussions, insights, and strategic analyses presented in the episode, providing listeners with a comprehensive understanding of the current state and future prospects of Israeli-Saudi relations within the broader economic and geopolitical landscape.