CHAPTER 10
The Middle Eastern Cauldron
Israeli Jews as a Regional Market-Dominant Minority
THE EVENTS OF September 11, 2001, brought home to Americans the reality of Islamic terrorism and the importance of the Middle East conflict to American interests. The roots of that conflict have been attributed to many sources: religious fundamentalism, “ancient” Arab-Israeli animosities, the dispossession of Palestinian land, the nature of Islam, repressive regimes in the Arab states, American support for those regimes based on our need for oil, and so on.
These explanations are all partially true. But they leave out a crucial dimension of the story: the galvanizing effect of globalization on ethnic conflict. In the Middle East as elsewhere, globalization has wildly disproportionately benefited an “outsider” market-dominant minority—in this case, the Israeli Jews—fueling ethnic resentment and hatred among a massive, demagogue-incited population that considers itself the “indigenous” “true owners of the land.” In the Middle East, however, this conflict occurs not at the national, but at the regional level.
Previously throughout this book I have focused on dynamics internal to nations: specifically, the danger, within individual countries, of sudden democratization in the presence of widespread poverty and a resented market-dominant minority. By contrast, the Arab-Israeli conflict spans a number of different countries, and the market-dominant minority is for the most part located in a separate sovereign jurisdiction. Moreover, the Middle East, with only a few exceptions (of which Israel is one), has so far been seemingly immune to democratization—and the United States notoriously lax in promoting it, particularly among our oil-rich Gulf allies.
The Arab-Israeli conflict is about as loaded and complex as any the world has seen, involving religion, land, geopolitics, colonization and decolonization issues, competing claims to self-determination, and much more. To suggest that the Arab-Israeli struggle is principally about economic disparities would be both absurd and offensive. In addition, it is difficult to disentangle Arab animosity toward Israeli Jews from a broader anti-Semitism or from antisecular, anti-Western hostility more generally. Nevertheless, among many other dynamics, the Arab-Israeli conflict—pitting the region’s 221 million, largely poor Arabs against Israel’s starkly more prosperous 5.2 million Jews1—is a classic example of an intensely popular, majority-supported ethnonationalist movement directed against a hated, market-dominant minority. But let’s back up a bit and look first at some of the individual countries in the region.
The Absence of Market-Dominant Minorities in the Arab Countries of the Middle East
With a few possible exceptions, market-dominant minorities do not exist within particular countries in the Middle East. The ruling elites in the Arab states may be distinguishable in important respects from the poor masses they govern—for example, in their extreme wealth, their Western dress and orientation, or their relative religious moderation—but they are not perceived as ethnically distinct outsiders. Nor does Israel appear to have a market-dominant minority, although the Ashkenazim/Sephardim divide will be discussed in the following section.
Putting aside Israel for the moment, the Middle East can be roughly divided into three subregions: North Africa, the Gulf States, and the “Levant” or “Mashriq” countries. The North African countries include Algeria, Egypt, Libya, Morocco, and Tunisia. The Gulf States include Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates, Oman, and Yemen. The Levant, a colonial term (al-Mashriq is the Arabic equivalent), usually refers to the countries of the eastern Mediterranean including Lebanon, Syria, Jordan, and Iraq. In addition, Iran and Turkey, while not always considered part of the Middle East because their populations are not predominately Arab, are often included in the description of the Middle East region as they share the same religious traditions and an interwoven political history.
There are no market-dominant minorities today in North Africa. The major ethnic divisions in North Africa are between Arab and Berber. Self-identified Berbers make up roughly one-quarter of the population in Algeria, where political and economic friction has frequently resulted in mass demonstrations and deadly riots. Estimates of the Berber population in Morocco typically range from 30 percent to 45 percent. Berbers represent much smaller minorities in Libya and Tunisia. It is worth noting that most Berbers are also Muslim and that there has been considerable intermarriage since the rise of Islam and concurrent Arab influx some thirteen hundred years ago. In any event, Berbers are certainly not market-dominant, and if anything, disproportionately poor.
In Egypt, historically, the Christian Copt minority was disproportionately economically successful. Their market dominance, however, was largely broken up by President Gamal Abdel Nasser, whose sweeping (and economically disastrous) land reforms and nationalizations in the 1950s disproportionately targeted wealthy Copts. Today, while there remain some very successful Coptic business families, Egypt’s economic elite, including many military insiders, is heavily Muslim and not perceived as ethnically distinct from the rest of the population.2
Similarly, there are few, if any, market-dominant minorities in the Gulf States. The main religious divide in the Gulf is between Sunni Muslims and Shia Muslims. The vast majority of the population in the Gulf States are Sunni Muslims, although each country has its own distinctive dynamic. In Bahrain, for example, the population is 70 percent Shia Muslim and only 30 percent Sunni. Because the ruling family and those with significant economic power in Bahrain are Sunni, the Shia majority often complains of their second-class status, and the kingdom has been rocked by a number of disturbances and riots over the years. Most Middle East experts agree that the Shia majority would vote out their Sunni overlords were there to be any real democratic opening.
More generally, most of the ruling families in the Gulf States are repressive and appear to be increasingly unpopular in their own countries, where they are widely viewed as morally bankrupt, toadying to the United States and living off the fat of a corrupt capitalism. Although the citizens of the Gulf countries enjoy a significantly higher standard of living than their brethren in the Mashriq, the consensus is that democratization in these countries would probably lead to the ouster of the current regimes. Nevertheless, with a few possible exceptions (such as Bahrain), the fact remains that the ruling families in the Gulf are not ethnically distinct from the majority of their populations.3
In the Levant there are significant group divisions, mostly along religious lines. Christians make up a substantial portion of the population in Lebanon (30–35 percent), Syria (10 percent), and Jordan (6 percent). Other religious divisions exist between various Muslim sects—most notably Druze in Lebanon and Alowite in Syria. In Syria, the Alowite have controlled the presidency through the military dictatorship of Hafez al-Asad and now his son, Bashir al-Asad. As with Bahrain, it is a near certainty that democratization in Syria would severely undercut the Alowite sect’s current political and economic dominance.
Lebanon is perhaps the most religiously diverse country in the region, with its plethora of Muslim and Christian sects. After World War I, for reasons including the establishment by the French of a confessional power-sharing system in which the country’s Christian Maronites controlled the presidency, Lebanese Christians emerged as something of a market-dominant minority, deeply resented by the country’s majority Muslim population. Largely over this issue, bitter civil war erupted in 1976, causing many wealthy Lebanese to flee the country. The extraordinary market-dominance of the Lebanese minorities in Latin America and West Africa has already been noted; many of these successful expatriate Lebanese have been Christians.
Today, Lebanon is generally viewed as being on the cautious upswing, although military dominance and political interference by Syria remain serious problems. With the 1991 Taif Accord, a new power-sharing system was put in place, in theory giving the country’s Muslim majority political representation more proportionate to their numbers. At the same time, many wealthy Lebanese Christians are returning to the country. Whether the problem of a market-dominant minority reasserts itself in Lebanon’s struggling democracy remains to be seen.4
In sum, with only a few possible exceptions, none of the Arab countries has a market-dominant minority. Few, if any, are democratizing. Rather, throughout the Arab Middle East, economic and political power tends to be concentrated in the hands of a corrupt, repressive, often hereditary ruling elite that deflects popular criticism by fomenting hatred against other, “outsider” targets.
Israel: Ashkenazim as a Market-Dominant Minority?
Israel presents a surprisingly complicated case. This is true even if we bracket off the country’s Arab population for the moment and focus only on Israeli Jews. If the division between Ashkenazi Jews and Sephardic Jews is viewed as an ethnic division—I return to this question later—then the former are arguably a market-dominant minority.
In the Middle Ages, explains Bernard Lewis, the terms Ashkenaz and Sepharad (actually two ancient place names from the Hebrew Bible) were used to refer to Germany and Spain, respectively. Over time, Ashkenazim came to refer to Jews of European or Russian origin, most of whom in the past spoke Yiddish, a German dialect. By contrast, the term Sephardim came to denote Jews who came from the Arab-speaking Muslim lands, even though only a small portion of these Jews actually originated in Spain. Ashkenazim founded modern Israel, but by far the largest immigration to the country after independence was from Muslim countries. At least until recently, Sephardim made up roughly 55 percent of the Jewish population in Israel.5
Generally speaking, Sephardic Jews are said to be darker and to “look Arab” whereas Ashkenazi Jews “look European.” Historically, Sephardic Jews from the Muslim countries were linguistically Arab and today often still speak Hebrew with an Arabic accent. Other cultural differences, more pronounced thirty years ago but still evident, include demographic patterns (orthodox Sephardim have higher birth rates), family organization (Sephardim are more patriarchal), religious observance, and so on. Provocatively, Bernard Lewis describes the Ashkenazim/Sephardim division in terms of a contest between “Jews of Christendom” and “Jews of Islam,” “both groups bringing with them certain attitudes, habits, and cultural traditions from their countries and societies of origin. They have now come together in an intense symbiosis.”6
In addition to cultural differences, there remains a substantial and persistent socioeconomic gap between Israel’s Ashkenazi and Sephardic Jews. Ashkenazim have dominated the elite institutions and professions of Israel since the state was founded. By contrast, most Sephardim came from much poorer, barely industrialized countries and typically arrived in Israel with little education, capital, or modern skills. Thus, writing for a prominent Israeli newspaper in 1949, Arye Gelblum lamented of his Sephardic compatriots: “[These immigrants are] only slightly better than the general level of the Arabs, Negroes, and Berbers in the same regions. … These Jews also lack roots in Judaism, as they are totally subordinated to the play of savage and primitive instincts. … [They display] chronic laziness and hatred for work.” Similarly, David Ben-Gurion saw Sephardic immigrants as lacking even “the most elementary knowledge” and “without a trace of Jewish or human education.”7
To be sure, the category “Sephardim” is highly artificial. There is an important distinction, for example, between the Sephardi Tahor (literally “pure” Sephardi) and the more recent Sephardic arrivals from the Arab countries, known as Edot Mizrach. (In fact, during Israel’s founding years, the Sephardi Tahor were a kind of Jerusalem aristocracy, who looked down on the Ashkenazi newcomers from Europe.) Further complicating the picture, many Israelis think of themselves more narrowly as, say, Yemenite Jews or Moroccan Jews rather than Sephardim, and some Sephardic communities have outperformed others. Nevertheless, on the whole, Ashkenazi Jews have many of the attributes of a market-dominant minority.
Ashkenazi Jews continue to be disproportionately represented among professionals, managers, academics, and big business, while Sephardic Jews predominate in low-skilled occupations and in poor “development” towns in outlying areas where there is high unemployment. The number of Ashkenazi Jews with university degrees is almost three times higher than that of Sephardic Jews.8 In recent years, Israel, originally more socialist in orientation, has aggressively liberalized certain sectors of its economy. Consistent with the proposition that Ashkenazi Jews are a market-dominant minority in Israel, there is a widespread sense among the Sephardim that market reforms are “leaving them behind” while reinforcing the dominance of the Ashkenazim.
Nevertheless, it may be inaccurate today to describe Ashkenazi Jews as an ethnic minority within Israel. As I have repeatedly stressed, ethnic identity turns not on “biology” but on subjective perceptions, which are in turn the product of prevailing ideologies in part constructed by elites and politicians. In Israel, the powerful official ideology is that Jews—whatever their social origins—are one people, and thus one “ethnicity.” When I ask Israelis whether the difference between Ashkenazi and Sephardic Jews might be seen as an ethnic difference, roughly half of them answer, “Of course it’s an ethnic difference,” while the other half respond with an annoyed “Of course not, that’s ridiculous.”
Israel is a Jewish state—this is just the problem for the country’s Palestinians. As a matter of official policy, every Jew has an automatic right of admission to Israel, the famous Jewish “right of return.” Judaism is the official, established state religion. Every Jewish immigrant, whether from Russia or Iraq, is subjected to strong ideological pressures to learn Hebrew as quickly as possible, to “assimilate” into mainstream Israeli society, and to make a total commitment to the Israeli state. Precisely to integrate Sephardic Jews into Israeli society, the government has instituted various “affirmative action” policies, and rates of intermarriage between Ashkenazim and Sephardim are on the increase, suggesting a trend toward the gradual merging of the two groups. By contrast, marriages between Jews and Arabs in Israel carry a strong stigma on both sides and almost never occur.
Israeli Jews as a Market-Dominant Minority in the Arab-Dominated Middle East
Internal divisions within the Middle Eastern countries, whether viewed as “ethnic” or not, pale by comparison to the defining conflict in the region: the Arab-Israeli conflict. As mentioned above, the Arab-Israeli conflict is in many ways unique and obviously is not reducible to economics. The fact remains, however, that Israeli Jews are as a group far more economically advanced and successful than the vastly more numerous, generally impoverished Arabs surrounding them. Despite the infusion of trillions of oil dollars into the Gulf States, Israel has nevertheless outperformed all of her neighbors in the Middle East under any number of economic indicators. Indeed, most Israelis and Arabs would probably agree that Jews are a market-dominant minority in the Middle East, while bitterly disputing the reasons why this is so.
But first, the undisputed facts—and there are not many of these when it comes to the Middle East. There are roughly 5.2 million Jews in the Middle East, almost all of them living in Israel. By contrast, there are over 221 million Arabs in the region. In terms of per capita wealth, Israel is starkly more prosperous than all of the neighboring Arab countries. According to the World Bank, in 2000 Israel’s per capita income was roughly $16,700, compared to $7,230 in Saudi Arabia, $1,710 in Jordan, $940 in Syria, and $370 in Yemen. Per capita income is of course not the only measure of development. In 2000, Israel’s infant mortality rate was roughly 5.5 per 1,000 live births, compared to approximately 43 per 1,000 live births in the rest of the Middle East. Also in 2000, 4 percent of Israel’s population over the age of fifteen was illiterate, compared to 44 percent in Iraq, 45 percent in Egypt, and 54 percent in Yemen. In addition, Israel has a sophisticated welfare state, a powerful military said to have nuclear-weapon capacity, impressive infrastructure rivaling the Western nations, and a high-technology sector competitive with Silicon Valley.9
In stark contrast, large portions of the Arab Middle East are characterized by poverty, squalor, and mass frustration despite the region’s enormous oil wealth. In Saudi Arabia, writes Seymour Hersh, “Saudi princes—there are thousands of them—have kept tabloid newspapers filled with accounts of their drinking binges and partying with prostitutes, while taking billions of dollars from the state budget.” Meanwhile, the male unemployment rate is estimated at 30 percent (women are prohibited from working in all but a few occupations), and 25 percent of the total population is illiterate. Jordan too, writes Stephen Glain, considered a “bright spot” in the Middle East, “has the same problems as the rest of the Arab world: hordes of disenfranchised, unemployed, hopeless young men susceptible to poaching by extremist groups.” In the still poorer Arab countries of North Africa, conditions remain primitive in many regions, comparable to Indonesia or Bangladesh, with no potable water, electricity, or sanitation among vast portions of the population.10
Egypt is an especially tragic case in light of its optimistic, modernizing trajectory in the fifties and sixties. In A Portrait of Egypt, journalist Mary Anne Weaver describes two trips she took to Cairo, one in 1977, the other in 1993. In 1977, Weaver recalls living “on the tony island of Zamalek” with its gracious if slightly shabby Edwardian mansions:
[W]e sat on well-appointed terraces overhanging the Nile, and looked across the water at the slum of Imbaba; we speculated on its lifestyle. Its population density was 105,000 people per 2.2 square miles; an average of 3.7 people lived in every room. On our side of the Nile, the level of literacy was the highest in the world; in Imbaba, the average income was thirty dollars a month. Here, four languages were normally spoken at dinner parties, served by candlelight; rooms were filled with books. There, hidden away in the alleys, far from our understanding or view, sheep, goats, and children drank from open sewers, and after dark, some neighborhoods yielded to packs of wild dogs. I remember one evening in particular as I watched with friends the flickering lights of a funeral procession passing through Imbaba. The next morning, we read in the newspaper that two children had been eaten alive by rats.
Fifteen years later Weaver found that, despite immense amounts of Western aid, the disparity between rich and poor in Cairo had, if anything, intensified:
I was struck, more than ever before, by the contrast between the poverty that seemed to be everywhere and a world of astonishing wealth. At a downtown car dealership, I listened as two men, wearing sparkling rings, argued and gesticulated, flailing their arms, over the price—$400,000—of a new Mercedes, which had just arrived. Then I watched bands of ten-year-olds lumber by in mule-drawn carts. Their faces were pretty but filthy, and they were dressed in rags; they lived among smoking piles in south Cairo’s City of Garbage, and they survived by collecting rubbish along the streets.
But one of my most vivid impressions on this visit was of decay: of crumbling buildings seen through a patina of dust; of torn-up sidewalks and sewage in the street; of a city that was angry and was living on the edge as its population continued to grow. … And the more the city crumbled and the more its population swelled, the more eager it appeared to be to embrace revival of Islam.11
In a region of prodigious inequality and mass poverty, Israel is like a tiny industrialized Western enclave. Indeed, a constant charge hurled by Arabs is that Israel is “an extension of the West.” Compared to the rest of the region, a starkly disproportionate percentage of Israel’s population is highly educated, highly skilled, and highly “Westernized.” Unlike the Arab states, Israel is not considered a “developing” country; in 1996 the IMF reclassified Israel as an “advanced economy.” Moreover, despite the fact that Israel has no oil, while the Gulf States sit on the largest reserves in the world, marketization and economic liberalization in the region has reinforced Israel’s disproportionate prosperity as well as its industrial and technological superiority. In January 2001, Limor Nakar reported in the Chicago Sun-Times:
Bear Stearns has just established its first Israel office and HSBC will open its first branch in Israel early this year. They join Lehman Brothers, U.S. Bancorp Piper Jaffray and other investment companies.
These investors are responding to economic changes in Israel that began when the government instituted a reform program based on three pillars: the privatization of state-owned companies, the de-regulation of major industries and the liberalization of markets. With these policies in place, Israel’s economy took off.
… Israel, a start-up nation, now is filled with start-up companies and second only to the United States in the number of new companies it pioneers. As a result, more venture capital dollars are invested in Israel than in anywhere outside of the Silicon Valley. … In the last two years, Israel also has seen the largest deals ever with U.S. firms.12
In all these respects, despite the ravaging economic effects of prolonged warfare, Israeli Jews can be viewed, at the regional level, as a market-dominant minority within the overwhelmingly Arab-populated Middle East.
Reasons for Israeli Economic Dominance
If you ask Israeli Jews the reasons for their market dominance in the region, they tend to respond consistently. They invariably cite the unique origins of modern Israel, in which, beginning around 1882, thousands of well-educated European Jews came together in their common commitment to a Jewish state. They emphasize Israel’s impressive tradition of the rule of law (Arabs would angrily disagree), including its well-respected independent judiciary and relatively low levels of corruption. They point out that Israel is the only democracy in the Middle East (again Arabs would disagree), an attribute that, but for constant warfare and terrorism, is attractive to foreign investors and global markets. Many Israeli Jews acknowledge, and some worry about, the tremendous amount of financial assistance that Israel has received from external sources. Between 1950 and 1985, U.S. government grants to Israel totaled approximately $21 billion, a level of aid far exceeding that provided to most other countries. (The two largest recipients of United States aid today are Israel and Egypt, which receive $3 billion and $2 billion, respectively, per year.) Over the same period, financial contributions from world Jewry totaled roughly $9.4 billion. Meanwhile, between 1950 and 1965, West Germany paid the government of Israel $780 million in Holocaust reparations. In addition, between 1950 and 1985 it paid Israeli citizens $7 billion in personal reparations.13
But most important, Israelis seem to agree, is the country’s “human capital”: its unusually skilled and educated population and their deep commitment to the survival and success of a Jewish homeland. Most developing countries suffer from “brain drain”; this is certainly true of many Arab nations. By stark contrast, Israel has always been a magnet for talented Jews who move to Israel out of ideology rather than out of hopes for a better life. (Tellingly, aliyah, the Hebrew term for the act of moving to Israel, literally means “going up,” while yored, literally “one who goes down,” refers to someone who moves from Israel to any other place in the world.) Most recently, over a million Russian Jews—a quarter of them engineers—have emigrated to Israel since 1990. In part because of this latest influx of engineering skill, Israel has become one of the world leaders in high technology.
If you ask Arabs in the Middle East the reasons for the disproportionate success of Israel as compared to the Arab nations, their responses also tend to be consistent, but, predictably, could not differ more from the Jewish perspective. Typically, their first reaction (not directly responsive to the question) is to emphasize the mistreatment of Palestinians within Israel and the Occupied Territories. Although Palestinians residing in the pre-1967 areas of Israel do have Israeli citizenship and the right to vote—there are a few Palestinian members of the Knesset—Palestinians in the Occupied Territories have few political rights and are treated as a conquered people. More generally, Arabs in Israel are treated as second-class citizens in numerous respects, including frequent infringement of their land rights. At least until the most recent deterioration in Palestinian-Jewish relations, many Israeli Jews disagreed with their government’s policies toward the Palestinians.14
As for Israel’s economic success vis-à-vis the other countries in the region, Arabs usually attribute it to a combination of U.S. aid and Israel’s “racist” “neo-colonialism,” although one often hears half-admiring, half-contemptuous grumblings about Jewish wealth, greed, and moneymaking tendencies. Generally speaking, Arabs see the Israeli Jews not as members of a persecuted minority but as a ruthless, expansionist colonizing force supported by the capitalist countries, especially the United States. Indeed, because the Zionist movement that founded modern Israel was largely European in origin and ideological inspiration, Arabs commonly describe Israel as representing, as a historical matter, “the last wave of European overseas colonization.” A favorite historical parallel among Arabs is between Israeli Jews and the twelfth- and thirteenth-century Christian Crusades. The Crusaders, of course, were eventually expelled from Palestine after two centuries of precarious rule.15
Arab Ethnonationalism and “Driving the Israelis into the Sea”
To describe the Middle East as a site of majority-based ethnonationalism targeting a market-dominant minority might at first seem surprising. The Middle East, after all, is not a nation but a region. Moreover, it is a region that, on the whole, has assiduously resisted democratic politics and majority rule. Nevertheless, closer examination reveals striking parallels between the defining conflict in the Middle East and the central dynamic in, say, a contemporary Indonesia or Zimbabwe.
As already established, Israeli Jews are perceived, by themselves and Arabs alike, as a disproportionately wealthy, market-dominant minority in the Middle East. In addition, Arabs perceive themselves as an exploited “indigenous” majority—the original inhabitants and “true owners” of the Middle East—who are suffering at the hands of an abusive, “outsider” colonizer minority. (On this point, of course, the Jews disagree: For them, as for the Palestinians, the Israeli-Arab conflict is in part a fight for their ancestral homeland.) Tellingly, but not necessarily accurately, in a famous Egyptian best-seller, The Jews, History and Faith, Dr. Kamil Safan, widely respected in Egypt as an “expert on Hebrew and Judaism,” writes that in ancient times pharaohs turned on the Jews because “they tried to take control of the economy of Egypt” and “collaborated with the colonialists—the Hyksos—against the people of the country.”16 Like whites in South Africa or Chinese in Indonesia, Israeli Jews are feared as much as they are hated. Every Arab in the Middle East is conscious that Israel has the backing of the most powerful nation in the world and that between 1948 and 1973 Israel won four wars, humiliating Arab forces that outnumbered them twenty to one.
Further, although the Arab countries generally are not democratizing, the ruling elites in these countries routinely engage in populist demagoguery, deliberately fomenting anti-Israeli sentiment, both to deflect criticism from themselves and to keep their frustrated populations united against a common enemy. At the same time, nonruling demagogues, including many highly influential Islamic clerics, also engage in anti-Israel baiting, whether out of sincere zealotry or for more instrumental reasons. Meanwhile, in Arab newspapers Jews are routinely referred to as “terrorists” and perpetrators of “genocide”: “Cartoons depicting Israelis and other Jews with Nazi-style uniforms and swastikas have now become standard,” writes Lewis. “These complement the Nazi-era hooked noses and blood-dripping jagged teeth.”17 The increasingly influential Al-Jazeera, unusual in the Arab world for its journalistic independence, is simultaneously anti-Israel and “pan-Arabist,” observes Fouad Ajami. “These are reporters with a mission.”18
As a result, although there has been minimal democratization in the Arab Middle East, an intense, majority-based Arab ethnonationalism, along with tremendous hostility against Israeli Jews, nevertheless exists throughout the region. Although it is certainly not clear that fundamentalism is supported by a majority of Arabs—sentiment on the “Arab Street” varies considerably from country to country—there is no question that if popular elections were held throughout the Arab world, Israel would be a common whipping boy among vote-seeking politicians.
Today very few Arab states even formally recognize Israel’s “right to exist.” Worse, many Arabs in the Middle East seem committed to the policy, officially renounced by the Palestinian Liberation Organization in 1993, of destroying Israel and “driving Israelis into the sea.” As David Remnick recently wrote: “Forget Hamas and Islamic Jihad and their culture of martyrdom and absolute victory. Last year, Faisal Husseini, a decided moderate among Yasar Arafat’s leadership ranks, gave an interview not long before he died in which he compared [the Oslo Accords of 1993] to a Trojan horse, an intermediate, tactical step leading to the elimination of Israel. He said, ‘If you are asking me as a Pan-Arab nationalist what are the Palestinian borders according to the higher strategy, I will immediately reply: From the river to the sea’”—that is, with no Israel on the map. Meanwhile in Iran, former president Hashemi Rafsanjani, speaking in a Tehran stadium shortly after the attacks on the Pentagon and World Trade Center, “called for Israel’s nuclear destruction. A single nuclear bomb would be sufficient to destroy Israel, he said, whereas any Israeli counterstrike could do only limited damage.”19
Thus, despite its ancient roots and unique status as the crucible of religious strife, the conflict in the Middle East is also a striking manifestation of an intense majority-supported movement aimed at eliminating a despised market-dominant minority. In part, the ferocity of anti-Israeli feeling in the Middle East is sui generis. But it is also in part driven by factors familiar throughout the developing world. The ethnic hatred felt by many Middle Eastern Arabs, compounded by extreme poverty and a profound sense of powerlessness and inferiority, is analogous to the deep resentment experienced by the black majority in Zimbabwe, by Indonesia’s pribumi majority, or by Serbs in the former Yugoslavia.
What Markets and Democracy Would Bring in the Middle East
After September 11, 2001, many prominent voices immediately called for free markets and democratization as the solution for terrorism and ethnic conflict in the Middle East. In a sense, this is no surprise: Poverty and corrupt, repressive regimes have clearly helped turn the Middle East into the cauldron of hatred that it currently is. Thus for Thomas Friedman, the solution to Middle Eastern terrorism and strife is “multi-ethnic, pluralistic, free-market democracy.”20
Unfortunately, “multi-ethnic, pluralistic, free-market democracy” is not a policy. It is an ideal, and the problem is getting to that ideal. Even if U.S. foreign policy were unconstrained by dependence on Arab oil or other problems peculiar to the region, the basic policy prescription that America promotes elsewhere in the non-Western world—laissez-faire markets and rapid democratization—would be a very high-risk strategy in the Middle East.
It is critical to distinguish between the short-term realities and the optimistic longer term prospects of market liberalization in the Arab states. In the longer term, if the Arab economies could be genuinely opened and their societies transformed from what Newsweek’s Fareed Zakaria calls their present “feudal” conditions, there is good reason to think that markets could produce enormous benefits in the Middle East. Three distinctive features of the Middle Eastern states could make market reforms especially propitious. First, unlike most developing countries, the Arab states have an unusually large number of skilled and educated individuals, often with advanced degrees, who are currently unemployed. Second, the populations of the Arab states include groups famous the world over for their “entrepreneurialism.” As Zakaria notes, “The Palestinians, tragically, have long been the region’s best merchants and would probably respond fastest to new economic opportunities if they could put the intifada behind them.”21 Finally, again unlike most developing countries, the Arab states generally do not face the “problem” of an internal market-dominant minority, and for this reason markets are less likely to be ethnically destabilizing at the national level. Thus, with certain optimistic assumptions, markets can be a key to long-term Middle Eastern reform, both economically and politically.
In the short run, however, laissez-faire global markets in the Middle East will not transform the entrenched realities of Arab society or have a civilizing effect on ethnic relations. On the contrary, for at least a generation, the effects of marketization in the Middle East would at best produce only marginal benefits for the great mass of Arab poor. However correct in theory, free trade agreements and privatization—in the absence of major structural reforms, which are highly unlikely to occur—cannot in the short term alter the pervasive illiteracy, corruption, and Third World conditions prevailing throughout the Arab states.
Meanwhile, even if the turn to fundamentalism in the Middle East is a product of closed or repressive political regimes, it sadly does not follow that political liberalization in the region today would lead to moderation—or, for that matter, pro-market regimes. On the contrary, rapid democratization in the Arab states would likely be a recipe for extremist politics, dominated by ethnonationalist (if not fundamentalist) parties unified in their hatred of Israel and the West. As Zakaria candidly observes: “America’s allies in the Middle East are autocratic, corrupt and heavy-handed. But they are still more liberal, tolerant and pluralistic than what would likely replace them [with democratic elections]. If elections had been held last month in Saudi Arabia with King Fahd and Osama bin Laden on the ballot, I would not bet too heavily on His Royal Highness’s fortunes.” A similar dynamic exists throughout the Arab states. In Kuwait, the democratically elected Parliament is packed with Israel-despising Islamic fundamentalists. In Jordan and Morocco, the kings are much more moderate and Western-oriented than the populations over which they rule. Finally, in the Palestinian Authority, the suicide-and-murder-bent Hamas is more popular than the arguably more moderate Palestine Liberation Organization.22
Many of us tend to think of the Arab-Israeli conflict as being so ancient in its roots that it is impervious to the forces of modernity. In truth, the problem is worse. Given the current realities, the principal forces of modernization—markets and majoritarian politics—are fuel to the fires of ethnic conflict in the Middle East. While free market democracy may well be the optimal end point in the Middle East, the simultaneous pursuit today of laissez-faire markets and immediate majority rule would almost certainly produce even more government-sponsored bloodshed and ethnic warfare.