Saudi Arabia is leading urgent Arab diplomatic efforts to develop an alternative plan for Gaza's future, directly challenging former US President Donald Trump's proposal to relocate Palestinians, multiple sources with direct knowledge of the initiative have told Reuters.

Following threats from the Trump administration earlier in the week, Hamas released three Israeli hostages in Gaza's southern city of Khan Yunis on February 15 under a continuing ceasefire agreement with Israel.

The Kingdom's Ministry of Foreign Affairs condemned Trump's remarks as the product of an "extremist, occupying mindset" attempting to mask crimes in Gaza while firmly rejecting any form of ethnic cleansing or forced displacement and reaffirming Palestinians' right to their homeland.

The initiative centres on a critical meeting in Riyadh this month, bringing together Saudi Arabia, Egypt, Jordan, and the United Arab Emirates. Draft proposals, including a Gulf-led reconstruction fund and arrangements to sideline Hamas, will form the basis of discussions ahead of a scheduled Arab summit on February 27.

"We are telling the Americans we have a plan that works. Our meeting with MbS is going to be critical. He is taking the lead," a Jordanian official told Reuters. US Secretary of State Marco Rubio responded on February 13, saying: "Right now the only plan — they don't like it — but the only plan is the Trump plan. So if they've got a better plan, now's the time to present it."

The Egyptian proposal, emerging as central to the Arab initiative, involves forming a national Palestinian committee to govern Gaza without Hamas involvement, enabling international participation in reconstruction while maintaining Palestinian residency and moving towards a two-state solution.

Saudi state broadcaster Al-Ekhbariya highlighted the Kingdom's position by deliberately omitting Netanyahu's title in its coverage, emphasizing Israel's perceived illegitimacy. Saudi newspapers have launched pointed criticisms, with Al-Madina declaring that "a gangster mentality cannot bring peace."

The level of Saudi frustration became evident after Trump's announcement. "He is not pleased," a source close to the Saudi royal court said of Crown Prince Mohammed bin Salman's reaction.

Former Saudi intelligence head Prince Turki al-Faisal stated bluntly in a CNN interview that if Trump visited Riyadh, "I'm sure he will get an earful from the leadership here."

The Kingdom's stance has effectively paused discussions about normalising relations with Israel, which Saudi Arabia had conditioned on progress toward Palestinian statehood. When asked about prospects for normalisation talks advancing with Israel, Prince Turki was unequivocal: "Not at all."

British journalist David Hearst argued that Trump and Netanyahu's rhetoric has pushed Saudi Arabia to reclaim its nationalist discourse, ultimately causing a breakdown in relations between Riyadh and Netanyahu's government.