Several Israeli companies are in talks with the Public Investment Fund of Saudi Arabia about business opportunities in the Kingdom’s new “smart city”, according to documents obtained by the Jerusalem Post.

The Israeli daily claims to have seen correspondence confirming economic cooperation between Arab diplomats and businessmen in Tel Aviv; Israeli firms will reportedly be competing under the table for billion-dollar contracts from the Saudi government.

“The Saudis are not so willing to cooperate with the Israelis formally, but … it’s much easier to create all kinds of cooperation on water, energy, ag-tech, food tech. This is the stuff that the prince of Saudi Arabia [Mohammed Bin Salman] wants to promote in the smart city,” said a source in Israeli venture capital who is familiar with the project.

On Tuesday, Saudi Arabia officially launched the NEOM, a developmental project to create an economic zone spanning the country and parts of Egypt and Jordan. Designed to free the Kingdom of its dependency on oil, it will focus on industries including water, biotechnology, food, advanced manufacturing and entertainment; at an estimated cost of $500 billion.

The project is part of Bin Salman’s 2030 economic vision for the country, which he has also promised will come with modernisation.

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The news comes amid increased rumours of a burgeoning relationship between Saudi Arabia and Israel; causing controversy in recent weeks. The normalising of relations between the two countries remains a proposal that has repeatedly been rejected by the Saudi public.

Yesterday Major General Anwar Bin Majed Bin Anwar Eshki, a former government advisor, was reported to have confirmed suspected relations when he said diplomatic and intelligence cooperation between Saudi Arabia and Israel were solely based on non-political matters.

Last week, Israeli officials also confirmed that Bin Salman had secretly visited Tel Aviv in September. The suggestion was vehemently denied by Saudi officials who insist that settling the Palestinian issue must take place before any normalisation of relations.

Last month, leaked documents by the Twitter account Mujtahidd spoke of the country’s plans to “accept Israel as a brotherly state”, causing widespread controversy. The rumours were again denied by state officials. But recent months have witnessed an informal economic rapprochement between Riyadh and Tel Aviv, with former Saudi businessmen and former senior officials visiting Israel.

Israel has also supported the current blockade imposed by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt on Qatar. Tel Aviv has repeatedly called on Doha not to host prominent Palestinian figures, a view now shared by Riyadh and Abu Dhabi.

Read: Ex-Saudi minister defends meeting with Israeli officials