Last year was a watershed in the Middle East. It began with a war in the Persian Gulf and ended with an Arab-Israeli peace conference in Madrid. The liberation of Kuwait, the destruction of Iraq’s offensive capabilities by the U.S.-led coalition and the simultaneous, though unrelated, disintegration of the Soviet Union promoted the United States to a position of unchallenged dominance in the region. The radical powers—Syria, Iraq, Iran, Libya and the Palestine Liberation Organization (PLO)—found themselves without a superpower patron; the back of the "rejectionist front" was broken. As a direct consequence, by the end of 1991 all of Israel’s Arab neighbors were engaged in direct peace negotiations with the Jewish state and Iran had arranged the release of the remaining American hostages.

The gulf crisis exposed the inadequacies of governments and the failure of their ideologies, the perfidy of some leaders and the venality of others. And the end of superpower rivalry in the Middle East robbed the players of their most valued asset: the ability to secure patronage by playing one superpower against the other. Yet not one Middle East government was overthrown as a result of the year’s tumultuous events. Instead the region’s leaders, most of whom had been in power for at least a decade, sought to adjust to the new post-Cold War, post-Gulf War circumstances as best they could while retaining a powerful urge to cling to the old ways of doing business.

Given America’s dominant influence, things might have been different had the United States adopted a more ambitious approach to restructuring the Middle East order. The objectives were certainly lofty. In his March 6 victory speech to Congress, the president called for a new regional security structure, limitations on the Middle East arms race, an end to the Arab-Israeli conflict and economic freedom and prosperity for all the people of the region. But the Bush administration also had a preference for the status quo, and its actions fell short of its ambitious objectives. It sought more to stabilize the old order than to remake the Middle East in its own preferred image.

Bilateral security arrangements in the gulf (facilitated by new arms sales), modest proposals to control weapons of mass destruction, a set-piece beginning to prolonged Arab-Israeli negotiations and the dodging of any democratic agenda—so much a feature of American policy in other regions—were all part of this more cautious approach. It meant leaving Saddam Hussein in place as well as restoring the emir of Kuwait to power. This gradual approach suited the pace of the Middle East’s leaders. And it obviated the need for the president to expend energy or confront the difficult dilemmas inherent in a restructuring effort.

At year’s end the Middle East certainly appeared, on the surface, to be a more stable place. Western interests were well protected, American influence was unchallenged, oil supplies at reasonable prices were secured. But as Syria and Iran embarked on ambitious rearmament programs and Saddam Hussein struggled to consolidate his grip on power, signs of political turmoil became evident across the Arab world. There was a nagging sense that the moment had been missed, that devoting America’s diplomatic energies to the launching of Arab-Israeli negotiations might not be sufficient to prevent the emergence of new threats to regional stability in the not too distant future.


The Gulf War was above all a product of miscalculation, in the first place by Kuwait and America’s Arab allies, which simply could not imagine that Saddam Hussein would use military power against them (especially power they had helped him to accumulate). It was also a failure of assessment on the part of the United States, which should have better understood the implications of Iraq’s defeat of Iran for the regional balance of power and shifted its policy toward Iraq from accommodation to containment. Finally, the war was a massive miscalculation by Saddam Hussein himself. Given the extent and sophistication of his nuclear weapons programs it is astonishing that he did not wait the mere 18 months, if that, until he had acquired a nuclear device before embarking on his Kuwaiti adventure. That he did not wait may have been due in part to his inability to fuel Iraq’s economic growth and his military ambitions simultaneously. More likely it is attributable to his flawed strategic vision—that the Saudis would not dare challenge his fait accompli by inviting infidel forces to defend the Islamic kingdom and that, even if they did, a post-Cold War United States was unlikely to go to war for Kuwait when Saddam was offering to guarantee American oil supplies.

Iraq’s failure to comprehend American resolve and capabilities was most evident in the weeks before the outbreak of war on January 16, 1991. The common assumption in Washington and Arab capitals was that, faced with a U.N.-endorsed demonstration of the coalition’s commitment, Saddam Hussein would decide to withdraw. Instead, Saddam went beyond the brink. He may have considered that his prospects were better in war—given his own willingness to sustain heavy Iraqi casualties and his belief that the United States could not bear the same costs—than they would be after a humiliating withdrawal. But unconditional withdrawal was the most George Bush could allow Saddam Hussein, given the way he combined aggressive intentions and offensive capabilities in an area of vital concern to the United States.

Based on past experience Saddam clearly believed he could draw on mass discontent in the Arab world to undermine the cohesion of the coalition. His attempt to don the robes of Gamal Abdel al-Nasser and ride a wave of pan-Arab sentiment to victory over the "imperialist" powers was a dismal failure. His hollow claim to be liberating Palestine by invading Kuwait resonated only in the Palestinian streets of Jordan and the West Bank. His cynical effort to appeal to Islam and the gap between rich and poor in the Arab world, coming from a secular leader of an oil-rich country, was met with disdain except in the Maghreb and Jordan, where Islamic fundamentalists sought to ride his coattails to greater power for themselves. None of these efforts made any difference where it might have really counted—in Saudi Arabia, Egypt and Syria. These three Arab states together proved capable of sustaining sufficient Arab support for the U.S.-led campaign to liberate Kuwait and thwart Saddam Hussein’s design. Despite dire predictions, the war was brief, allied casualties minimal and the "Arab street" dormant.

The determination President Bush showed in his efforts to liberate Kuwait was not matched by an equal determination to restructure the Middle East in the wake of victory. The gap between the regional expectations generated by American capabilities and the will of the United States to impose an American imperium on the region was most clearly manifest in the decision to allow Saddam Hussein to survive in power.

That decision had in fact been made before the war was launched and was signaled in the articulation of war goals, which called for the liberation of Kuwait, the restoration of the emir and the destruction of Iraq’s offensive capabilities—especially its weapons of mass destruction—but stopped short of calling for Saddam’s removal.

There are many explanations for this decision. No U.N. mandate existed for Saddam’s overthrow. Advancing on Baghdad might have been opposed by the Arab coalition partners. If Kurdish and Shiite revolts following the ground war had been allowed to succeed, Iraq might have disintegrated, generating profound instability. Both the American and Saudi governments had been frightened by intelligence reports that Iranian-trained brigades had crossed into Iraq to provide the backbone of the Shiite revolt. The Bush administration was strongly opposed to assuming responsibility for governing Iraq. The Joint Chiefs of Staff were fearful that U.S. forces would become bogged down in the quagmire of Iraqi politics and—in a replay of Lebanon—a welcome, liberating force would soon turn into an unwanted army of occupation.

President Bush was also concerned with the pressure on Soviet President Mikhail Gorbachev from hardliners in Moscow who objected to Soviet acquiescence in a war on a former Soviet ally. An American move against Saddam in Baghdad, the president feared, would provide Gorbachev’s opponents with the justification for a coup. In any case U.S. policymakers believed that Saddam would be toppled and that American interests could be protected even if the Baath establishment remained in power, provided that Iraq’s ability to threaten its neighbors was eliminated.

With the expectation of imminent demise now foremost in his mind, Saddam was quick to comprehend the lack of American resolve. The Bush administration’s decision to allow the Iraqi army use of offensive air power was taken as a sure sign of American indifference to the ensuing slaughter. Within four weeks Saddam had rallied the support of the Sunnis, regrouped his armed forces, brutally snuffed out the Shiite revolt in the south and routed the Kurdish rebels in the north, forcing a flight of at least 1.5 million Kurdish refugees.

Saddam’s survival was a rude and unwelcome surprise to Washington. It forced a readjustment of policy with the announcement in May that the U.N.-mandated economic sanctions would remain in force until Saddam had been toppled. But relying on sanctions to force Saddam to quit Baghdad had a major drawback—the Iraqi people would have to pay the price. Indeed, Saddam cynically exploited the hardship of his people, purposefully refusing to cooperate with U.N. efforts to provide food and medicine in the hope that the international community would be blamed for their plight. By year’s end, although Saddam remained beleaguered in Baghdad and the base of his support appeared to be eroding, he was still in power. He was able to import sufficient food to keep his people on a subsistence diet and prevent them from rebelling. And he was able to create a crack in allied resolve when he persuaded Britain to unblock $125 million in frozen Iraqi assets; other European governments were reported ready to follow suit out of concern for the plight of the Iraqi people.

None of this affected the basic reality that Saddam could not for the time being threaten his neighbors. But it did raise the disturbing possibility that he, or a successor Baath regime, could eventually escape the sanctions, rebuild Iraq’s offensive capabilities and wreak revenge. This prospect was underlined by the frightening discoveries by U.N. officials inspecting Iraq’s strategic weapons facilities. They found a huge arsenal of chemical weapons and ballistic missiles as well as a biological weapons development program.

Most disturbing, however, was the extent of Iraq’s nuclear weapons program. Iraq had been pursuing four separate uranium enrichment routes, had produced limited quantities of plutonium and lithium-6 (for hydrogen bombs), was testing a detonation system and was probably still harboring undisclosed stocks of imported weapons-grade uranium. According to the U.N. Special Commission for the Disarmament of Iraq, Saddam was only 12 to 18 months from the deployment of nuclear weapons. With 15,000 nuclear scientists and technicians still in Iraq, there is now the real concern that even if all the nuclear material is discovered and all the nuclear facilities destroyed, Iraq’s bomb-building knowledge will remain.

The price of the decision to allow Saddam to survive is clear: only eternal vigilance can ensure that Iraq, the would-be Prussia of the Middle East, will not emerge again to threaten its gulf neighbors. In the meantime Saddam’s survival is a constant reminder of the volatility and dangers of the old order in the Middle East.


For the other Arab leaders there was some short-term comfort in Saddam’s survival. With the tiger back in its cage and the old order restored, perhaps they could go back to business as usual. No Arab leader in the coalition sought Saddam’s removal. As Boutros Ghali, then Egypt’s minister of state for foreign affairs, remarked in the midst of the war, "we have coexisted with the government of Saddam Hussein and [if Iraq withdraws from Kuwait] we will be able to coexist and even to cooperate with him."

A similar attitude was adopted toward the restoration of the emir of Kuwait. Indeed, King Fahd of Saudi Arabia was reported to have summoned National Security Adviser Brent Scowcroft to Riyadh in April to underscore the fact that the war had been fought to liberate Kuwait and to disabuse the United States of any notion of promoting democracy in Saudi Arabia’s northern neighbor.

But it would not prove so easy to resurrect the past. Saddam’s aggression and the Arab response had shattered the myth of pan-Arab unity and left the Arab world in disarray. It did not take long for the implications to translate into policy as Arab leaders, struggling to bolster their authority, placed state interests above "Arab interests" with a vengeance.

At first, in an instinctive throwback to an earlier era, the Arab victors had sought to recreate the idea of Arab collective security. In March the six gulf Arab states together with Syria and Egypt had issued the "Damascus Declaration" calling for the enhancement of "economic cooperation" and the establishment of a solely Arab peacekeeping force to maintain security in the gulf based on the nucleus of Syrian and Egyptian forces already deployed there. While the declaration spoke of a "common destiny and identical hopes and objectives," the reality soon proved very different.

The war cost Saudi Arabia some $50 billion and the Saudi government had to borrow internationally to fund its budget. Egypt and Syria had been paid handsomely by the gulf Arabs for providing the political cover of troop commitments to the coalition effort. But their expectation that they would play the leading role in postwar gulf security arrangements, and thereby continue to receive financial compensation, was quickly dashed. By April Saudi Arabia and Kuwait had quietly indicated to Egypt and Syria that their troops were no longer welcome.

The gulf Arab states had in fact decided to do the previously unthinkable—depend on bilateral security arrangements with the United States. Kuwait, a strident pre-war promoter of pan-Arabism and anti-Americanism, signed a bilateral defense agreement with the Pentagon in September that provided for a 10-year U.S. military presence. Saudi Arabia made a similar calculation: it was not about to permit Egypt and Syria a strategic presence in the gulf while it took on responsibility for their economies. King Fahd, however, was unwilling to run the gauntlet of domestic criticism from traditional religious forces for allowing the United States to establish a base and troop presence in Saudi Arabia. Instead, he entered into quiet arrangements for prepositioning military equipment and for joint exercises while seeking a massive and controversial infusion of American weapons and training to double the size of the Saudi army.

A similar preference for national over pan-Arab interests was evident in the decision of the gulf states to encourage the departure of Arab guest workers, breaking the compact between the small, rich countries of the gulf and the poor, overpopulated countries of the rest of the Arab world. During the crisis some one million Egyptian, Jordanian and Palestinian workers fled Iraq and Kuwait, and another 800,000 Yemenis were encouraged to leave Saudi Arabia. After the war the Kuwaitis took their revenge for what they saw as Palestinian betrayal by eliminating the once vital role the Palestinian community played in their government and private sectors. Nor were the other gulf Arabs willing to renew their dependence on Arab labor even if the workers came from countries that had sided with them during the crisis. Before Saddam’s invasion, the poorer Arab countries had been able to rely on worker remittances from the oil-rich gulf to boost their dismal economic prospects. Now Egypt, Jordan and Yemen faced massive unemployment problems about which their Arab brothers in the gulf cared little.

The breakdown of economic and security arrangements between Arab countries exacerbated Arab political divisions created by Iraq’s aggression—revealed most clearly in the treatment of the PLO, the symbol of pan-Arab solidarity. The gulf Arabs, led by Saudi Arabia, were particularly incensed by what they perceived as the perfidy of Yasir Arafat for siding with Saddam. Normally such feelings would have been overcome by the need to close ranks and express fidelity to the cause of Palestine. But the Gulf War had broken that mold too. Gone were the ritual declarations at Arab gatherings of support for the PLO as "the sole, legitimate representative of the Palestinians." Gone too were funding for the PLO and the usual visits by Arafat to gulf capitals (although the PLO leader was able to effect a reconciliation of sorts with his arch-rival, Syrian President Hafez al-Assad). The breakdown of the old Arab order was perhaps best symbolized by the Saudi crown prince publicly rebuffing Arafat at the Islamic Conference summit in December with the admonition, "No kissing, please."

Egypt tried to pick up the pieces of Arab unity, but the legacy of bitterness was too great. Egypt soon discovered it had inherited the empty forms—the Arab League headquarters back in Cairo with Egypt’s foreign minister as secretary general—rather than the substance. Denied a role as defender of the Arab gulf, Egypt was left to play handmaiden to America’s new dominant status in the region. Since all the Arab states now sought good relations with Washington, Cairo offered its services as a broker. Promoting Syrian relations with the United States was particularly important to the creation of an Egyptian-led postwar Arab order.

Syrian President Assad had been quick to understand his country’s need for alternative patronage when the Soviet empire began to collapse. The gulf crisis provided Assad with a perfect opportunity to build a better relationship with the remaining superpower. To consolidate this, Egyptian President Hosni Mubarak and Saudi King Fahd worked hard to bring Assad around to accepting the American-sponsored peace process with Israel and urged Washington to reciprocate. The benefits were immediate: a $2 billion infusion from Saudi Arabia, used to purchase weapons from the Soviet Union and Czechoslovakia as well as Scud missiles from North Korea; a summit meeting with President Bush; and repeated visits by Secretary of State James A. Baker to Damascus.

Assad also took advantage of his new relationship with the United States to gain its acquiescence in finishing the task of mastering Lebanon. The consolidation of Syria’s grip was a mixed blessing. On the one hand, Assad had restored order to Lebanon by disarming the militias. On the other, the price of stability was Syrian dominance, formalized in the "treaty of brotherhood and cooperation," which severely restricted Lebanon’s independence.

Whereas Saudi Arabia had previously played a subordinate role in inter-Arab politics, supporting the lowest common denominator consensus established by the radical states, the results of the Gulf War strengthened its hand and resolve. The expected reconciliation with the PLO did not materialize. Instead Saudi Arabia’s actions in inter-Arab politics were determined by a new litmus test: whether a particular decision would enhance relations with the United States and strengthen the American commitment to Saudi Arabia’s defense.

In effect, Saudi Arabia and Egypt—the two established mainstays of American influence in the Arab world—had switched roles. Changed circumstances and opportunities had led Egypt to adopt the role of conciliator in the Arab world, whereas Saudi Arabia was now more willing to do America’s bidding—even if this strained relations with its Arab allies.

What it did not change, however, was the way the royal family conducted the internal affairs of the Saudi kingdom. Fearful of the domestic implications of heightened dependence on the United States, the Saudi rulers dramatically reduced the profile of America’s troop presence, appeased the conservative tribal and religious sectors and took back authority from the younger generation of pro-American princes who had fought the war and helped save the kingdom.

A similar retrenchment took place across the Arab world. With the manifest failure of pan-Arabism and Arab socialism, the Arabs in general were left with a choice of two ideologies: Islamic fundamentalism or liberal democracy. Where democratization had been tried—in Algeria, Jordan and Egypt—Islamic fundamentalists had taken the opportunity of greater freedom of expression and elections to increase their strength and challenge the regime. The prolonged failure of Arab regimes to meet the basic needs of their people proved fertile ground for a homegrown ideology that provided hope and the certainty of ultimate salvation. The political turmoil provoked by the gulf crisis gave the fundamentalists an opportunity to consolidate their gains but, in its wake, Arab regimes countered with crackdowns.

This situation was first evident in Jordan, where King Hussein was unable to resist the tide of pro-Saddam, anti-Western sentiment and, during the crisis, gave free rein to the Islamic fundamentalists to promote their invective. But in the war’s aftermath, the king shut them out of the government, arrested large numbers of the more extreme elements and committed Jordan to peace negotiations with Israel, despite the virulent objections of the Islamic bloc in parliament.

In Algeria, as in Jordan, the Islamic Salvation Front organized mass demonstrations in support of Saddam Hussein and demanded that the government train and arm Islamic volunteers to fight for Iraq. But in the aftermath of Saddam’s defeat, the army intervened, suppressing violent demonstrations, arresting thousands of fundamentalists, including the leaders of the Islamic party, and postponing elections until late in the year.

It might well have been a different story in liberated Kuwait had the United States taken a strong stand for democracy. In an effort to court American public opinion during the gulf crisis, the emir-in-exile had promised the opposition parties that he would reconvene parliament and hold elections after Kuwait was freed. Once back in his palace, however, he declared a state of emergency and postponed elections until October 1992.

The Bush administration watched all these events from the sidelines, which suited the Arab regimes fine. Preoccupied with consolidating their rule they were not looking for encouragement from Washington to take risky measures that would open them to criticism from their own people. Feeling the need to come to terms with American dominance in postwar regional affairs, the Arab regimes found it easier to do so without bringing democracy into the bargain.

The gulf crisis had nevertheless shaken the foundations of rule in the Arab world, whether the regimes were on the side of victor or vanquished. And by year’s end, it was clear that suppression alone was an insufficient response. In Algeria postponed and gerrymandered elections resulted in a stunning victory for Islamic fundamentalists, which led to a military power play. In Saudi Arabia, after years of procrastination, the king finally announced that an appointed consultative assembly would be convened in 1992, while openly warning against Islamic extremism. From the Maghreb to the gulf, regimes were groping for legitimacy, buffeted by the demands of democracy and Islam—antithetical partners in the creation of a new Arab order that was bound to be marked by political turmoil.


For Israel the Gulf War was a traumatic event that shook the foundations of its long-held military doctrine and left the Jewish state feeling more vulnerable and isolated—even though the results of the war enhanced its security margin and improved the prospects for reconciliation with its Arab neighbors.

In the face of Arab hostility, preemption and retaliation had been at the heart of Israel’s strategy of deterrence. Yet in the gulf crisis Prime Minister Yitzhak Shamir came to see the advantages of not responding to the sustained Iraqi Scud missile attacks on Israel’s civilian population, even though Israelis were forced to don gas masks and sit night after night in sealed rooms. In a November 1990 meeting in Washington, Shamir reached a strategic understanding with President Bush that, if it came to war, Israel would not preempt an Iraqi attack. The president assured him that the United States intended to destroy Iraq’s offensive capabilities. Since Saddam wanted Israel to join the war, he could not be deterred from attacking by the threat of an Israeli response. Therefore, to preempt would simply be playing into Saddam’s hands.

Israel had nonetheless prepared a combined forces response to root out the missiles in western Iraq. As the war continued and the United States proved unable to eliminate the threat, there was a reluctant acceptance in Washington of the inevitability of an Israeli response. By this stage, however, few were concerned that the Arab coalition partners would drop out if Israel entered the war—Egypt, Saudi Arabia and Syria had all publicly indicated that they would understand if Israel responded. Rather the problem was that Israel would have to overfly Jordan to retaliate against Iraq, and it seemed doubtful that King Hussein could avoid a response, given the king’s embattled position with his own people. Thus Jordan and Israel could both be drawn into a widening war with potentially uncontrollable consequences.

This was a concern that weighed as heavily on Shamir as it did on policymakers in Washington. Throughout the buildup to war, Shamir had repeatedly expressed concern for the king’s situation and urged American interlocutors to appreciate Hussein’s predicament rather than punish him for it. Shamir believed that the king provided a better guarantee of stability on Israel’s longest border, along the Jordan River, than any of the likely alternatives were the war to lead to his overthrow. For this reason he wanted to avoid—if he could—a situation in which the king would be forced to challenge the Israeli air force as it crossed Jordanian air space en route to Iraq. In the aftermath of the war, when asked about taking confidence-building measures to demonstrate his interest in peace with Israel, King Hussein acknowledged this tacit understanding between himself and Shamir. He responded that Jordan and Israel had already engaged in such measures: "We managed to avoid war."

The appreciation in Amman for Israel’s restraint was mirrored in Riyadh, where the Saudis had shared a war experience with Israelis—both came under simultaneous Iraqi Scud attacks. The Saudi rulers contrasted Israel’s behavior with Saddam’s recklessness and concluded that they had a common interest in promoting a more stable regional status quo.

The Syrian response would prove to be the most important. Damascus had been Israel’s staunchest foe, the heart of Arab rejectionism. Yet Syria seemed almost to encourage Israeli retaliation for the Iraqi attacks. Whether in the wake of a war in which they found themselves on the same side these two bitter enemies could sit down and talk peace would become the key to unlocking the negotiating process.

Certainly for the first time since the signing of the 1979 Egypt-Israel peace treaty, the effect of the war on Arab state attitudes toward Israel seemed to open the possibility of engaging them in the peace process. This was good news for Israel, which had long been emphasizing the need for negotiation with the Arab states as well as with the Palestinians. And the positive trend was compounded by two other new strategic realities. First, the destruction of much of Iraq’s offensive capabilities combined with Syria’s loss of Soviet backing had diminished, for the time being, the threat of an eastern-front war coalition. Second, the PLO had committed a devastating blunder by siding with Saddam. In one stroke Arafat had alienated both his principal Arab backers and the United States, had forfeited financial assistance and undermined the intifada in the occupied West Bank and Gaza.

These developments presented Israel with a window of opportunity that would not be open for long. Syria was already rearming, and Iraq would eventually recover from the war’s devastation. Over time, if there were no alternative, the Arab states and the United States would return to the PLO as before. But in the wake of the war, there was a chance for Israel not only to engage the Arab states in the peace process but also to avoid the PLO and deal with Palestinians from the territories, who had always been Israel’s preferred interlocutors.

Israel’s need for a peace process had also increased. Its citizens had glimpsed the meaning of a new Arab-Israeli war in which the civilian homefront would be exposed to the terror of missile attacks possibly bearing weapons of mass destruction.

This fear coincided with hope generated by a massive influx of Soviet Jews. More than 185,000 came in 1990 and another 145,000 arrived in 1991. This unprecedented influx of so many highly educated immigrants in such a short period provided an extraordinary opportunity to revitalize the Zionist enterprise. It also presented a profound challenge to Israel’s absorptive capacities. Whereas a year ago the problem had been to find housing for so many people, in 1991 it became clear that the real challenge would be to find the immigrants productive and creative jobs—by expanding the economy and increasing exports. Toward this end the Israeli government sought U.S. loan guarantees that would enable it to borrow large amounts of capital in the international markets; Israel also needed greater access to European markets for its exports. Prime Minister Shamir understood very well that the receptivity of the United States and Europe to these essential requirements would depend on Israel’s responsiveness to the peace process.

There was, however, one other necessary ingredient for Israel to engage in a meaningful peace process: a relationship of trust between Israel and its only ally, the United States. From Shamir’s point of view Israel had delivered, in very difficult circumstances, on a promise of restraint during the crisis—which he assumed to be of much greater strategic importance to the president than the controversial settlements in the West Bank. From President Bush’s point of view the United States had done Israel a huge favor by taking care of the Iraqi threat, and he now had to deliver on his promise to his Arab coalition partners to seek a settlement of the Palestinian problem. Both sides expected gratitude, but quickly rediscovered mutual suspicion about each other’s motives.

As President Bush announced to a joint session of Congress on March 6, the principle of exchanging "territory for peace" was at the heart of his administration’s approach, and now he believed that changed strategic circumstances had made that trade possible. But in Shamir’s view, Israel was already "such a small country" that security—as well as politics and ideology—required it to hold on to the occupied territories, regardless of the temporary change in its security environment.

Differences over Israel’s settlement policy epitomized the gap between the two leaders’ perceptions. The president had been persuaded to downplay his objections on the assumption that the best way to stop settlements was to give Israel an incentive by bringing the Arabs to the negotiating table. But Israel’s housing minister, Ariel Sharon, had pressed ahead with an ambitious program that included establishment of an additional 16,000 housing units in the occupied territories. This clearly rankled President Bush, and when Israel made a request in September for $10 billion in loan guarantees he was determined that the United States would not be forthcoming until he received some satisfaction on his long-standing request for a freeze on settlement activity.

The administration did not want to jeopardize the chances of a peace conference by insisting on a settlements freeze at this delicate moment, especially when the Arabs had already been persuaded to delay a similar demand until after negotiations had begun. Instead the administration asked the Israeli government, and then Congress, to delay considering loan guarantees to avoid interfering with the peace process.

In Jerusalem the request for delay was an unwelcome surprise. In June the government had been warned publicly by its ambassador in Washington that it would have to choose between loan guarantees and settlements. But in August the Israeli government decided to accept the American proposals for a regional peace conference and assumed that this would clear the way for quick passage of the guarantees through a Congress that appeared overwhelmingly supportive. So confident was the Israeli government that on the day Secretary Baker called Prime Minister Shamir to ask for a delay in the request, the cabinet was agreeing on a budget compromise that depended on the first year’s $2 billion in guarantees. Thus Israel pressed its request, and the Senate might have quickly passed the legislation had Bush not intervened. On September 12 he issued a veto threat, demanding that Congress delay the request until January 1992 and suggesting that Israel was already getting a good deal of assistance at a time of economic hardship in America.

In Israel President Bush’s harsh words were taken as confirmation of Shamir’s worst fears—that the Bush administration intended to use Israel’s need for economic assistance as pressure for a return to the indefensible 1967 borders. Shamir nevertheless understood that a refusal to participate in the peace negotiations was only likely to trigger greater American pressure and to make securing assistance even more difficult. Instead of rejecting the negotiations as an American ambush, Shamir embraced them, deciding at the last moment to head the Israeli delegation to the Madrid peace conference himself. But he also made it clear that Israel’s flexibility in the negotiations would be determined by American as well as Arab behavior. Thus he refused to have any discussion with the United States about matters of substance, vigorously objected to American intervention in the negotiations with procedural or substantive proposals and delayed Israel’s attendance at the December talks in Washington for five days to make his point.

The Bush administration understood that it would be difficult to make progress in the negotiations without Israel’s cooperation and that Israel’s flexibility would depend in large part on the state of U.S.-Israeli relations. Accordingly it sought to make up for actions that were unpalatable to Israel by reaffirming the fundamentals of the relationship. Thus 12 days after his insistence in September on delaying the loan guarantees, President Bush went before the U.N. General Assembly and called for repeal of the "Zionism is racism" resolution. In his speech opening the Madrid peace conference on October 30, the president tried to counterbalance the perception that the United States was about to impose a settlement on Israel by insisting that it was up to the parties to make peace, that the objective should be peace treaties (an Israeli requirement) and that the basis of the solution was "territorial compromise" (implying that the Arabs would have to give up territory as well). On December 3, the day before Arab-Israeli negotiations were supposed to begin in Washington, the State Department announced that the United States would pursue the president’s call for U.N. repeal of the offensive resolution. This occurred in the General Assembly on December 16, by a resounding vote of 111 to 25, with 13 abstentions. The administration also refrained from intervening in the Washington negotiations, refusing to break the procedural deadlock between the Israeli and Jordanian-Palestinian delegations and insisting that the parties solve the problem themselves as Israel had requested.

Clearly both the United States and Israel recognized that they needed each other, that they were partners in the pursuit of peace, just as they had been partners—albeit silent partners—in the prosecution of the Gulf War. But with the debate about loan guarantees still looming in the near future, mutual distrust was likely to continue to plague the relationship, making cooperation difficult and hindering progress in the peace negotiations. Prime Minister Shamir illustrated this tension when he said in late September, "I have many doubts whether the United States could fill this role [of an honest broker] because of its behavior recently, but there is no better candidate."


The difficulties the United States faced in dealing with Israel arose in part because of personality differences and in part because of divergent views regarding Israel’s security and political requirements. But they were also a product of America’s new status as the dominant power in the Middle East. In the wake of the war, all states in the region looked to Washington to achieve their purposes. Since the end of superpower rivalry meant that the United States needed each of them less, Washington could afford to be less sensitive to their concerns and could expect them to be more willing to do America’s bidding.

Consequently the Bush administration found itself in the unprecedented position of being able to set the postwar Middle East agenda. As the president outlined it to Congress on March 6, the agenda would be ambitious, at least on the rhetorical level. But it soon became clear that the administration’s objective was to bolster the existing order in the Middle East rather than to undertake a more radical transformation.

The president had called for a new security structure for the region. But at year’s end the administration found itself in a dispute with Saudi Arabia over the terms for prepositioning American equipment, while the gulf Arabs haggled among themselves about collective security arrangements. All the regional powers—Iran, Iraq, Turkey, Egypt, Syria and Israel—were effectively excluded from these arrangements. The United States could feel reassured that its bilateral arrangements with the gulf Arabs would provide more secure access and more rapid force deployments in a future crisis, but there was little guarantee that such a crisis could be averted.

Controlling the proliferation of weapons of mass destruction and preventing a new arms race also proved to be elusive. The effort to disarm Iraq made substantial progress in uncovering Saddam’s strategic arsenal and nuclear program. But suspicions remained that Iraq was still concealing missiles and possibly weapons-grade nuclear material, and it was clear that the intrusive inspection regime and arms embargo would need to be maintained indefinitely.

To provide a broader framework for the administration’s approach to regional arms control, President Bush had announced on May 29 an initiative designed to restrain "destabilizing" arms transfers, to freeze ballistic missile development and deployment, to end production of fissile material and eventually establish a regional nuclear free zone, and to extend the chemical and biological weapons conventions to the Middle East. As in other areas, however, the administration’s approach was gradualist, eschewing calls from Congress for an arms moratorium in favor of a modest attempt to introduce the notion of arms control that would hamper the efforts of radical regional powers to acquire greater military capabilities while not interfering with U.S. efforts to strengthen its friends.

By October the five permanent members of the U.N. Security Council—also the largest suppliers of weapons to the Middle East—had agreed on guidelines for arms transfers. They would inform each other of new arms sales, help establish a U.N. register of conventional arms transfers, work to prevent the proliferation of weapons of mass destruction, adhere to the Missile Technology Control Regime (MTCR) and follow agreed guidelines for the transfer of conventional weapons. On paper the areas of agreement were impressive, and the fact that China was engaged in this process was a positive development, given its sales of ballistic missiles to the region.

There were, however, some important contradictions and flaws in the process. In implementing its regional security arrangements, the United States itself was engaged in major new arms sales to the region. There were no sanctions for noncompliance to counterbalance considerable incentives to export as domestic defense budgets decline and the need to compete in foreign markets grows. The MTCR does not include North Korea, Argentina or Brazil, which are already selling weapons to the Middle East and which will have strong incentives to step into any breach. The initiative also does not address the regional actors whose arms control negotiations are to be left to the multilateral discussions associated with the Arab-Israeli peace process. Moreover those negotiations will not include Syria, Iraq and Iran, the region’s worst offenders.

While the gap between rhetoric and substance was evident in the areas of regional security and arms control, it was less so in the realm of political and economic restructuring—if only because here the administration had purposely downplayed expectations. President Bush made no mention of promoting political freedom or democracy in the post-Gulf War Middle East, even though these objectives were the centerpiece of American post-Cold War policy in eastern Europe. In his speech to Congress these traditional American foreign policy objectives were replaced by a commitment to promote "economic freedom and prosperity" in the Middle East. Even here, however, the one concrete proposal put forward by the secretary of state—a Middle East bank for economic development—was quietly shelved. And by year’s end, with the United States preoccupied with promoting economic prosperity at home, the objective was left to be pursued by others with greater interest and more money—the Europeans and Japanese.

In the president’s March 6 speech much greater emphasis was placed on his fourth objective of a peace process to end the Arab-Israeli conflict. By the end of 1991 this would emerge as the administration’s crowning achievement. Converting victory in the gulf into a breakthrough in the peace process seemed to many observers a doubtful proposition. But what they overlooked were the six new elements generated by the end of the Cold War and the results of the Gulf War. Skillfully molded and manipulated by Secretary Baker and his aides, these elements produced the breakthrough of October 30, when Israel and all its Arab neighbors sat together in Madrid to negotiate peace.

The first of these elements was the demise of the Soviet Union and the dramatic shift in Soviet policy from competition to cooperation with the United States in the Middle East as evidenced during the gulf crisis. The message to Moscow’s erstwhile allies in the Middle East was very clear. Henceforth they could not rely on the Soviet Union to back their radical policies, to guarantee their regimes if those policies got them into trouble, or to rebuild their armies if they engaged in war. This bolstered U.S. diplomacy not only by eliminating the ability of the regional states to play the superpowers against each other, but also by weakening the radical states that had previously rejected peace negotiations with Israel.

This contributed to the second element: Syrian weakness. Syria had previously benefited from opposing any settlement with Israel, but with the loss of its superpower patron its road to salvation had a Washington signpost. And with the United States making the peace process the litmus test of its relations with the states of the region, Assad understood that the road to Washington had to pass through Jerusalem. Syrian engagement in peace negotiations with Israel could make Damascus important to U.S. diplomacy. At a minimum it would give the United States a stake in restraining Israel—a capability that it had just demonstrated in the Gulf War. At best it might drive a wedge between the United States and Israel.

The third element was a change in the approach of Saudi Arabia, which now became willing to offer overt support for U.S. diplomatic efforts. This was in part a payback for American protection during the gulf crisis. But the Saudis now had an incentive to help solve the Palestinian problem to show that they were better able to secure Palestinian rights than Saddam could, and they felt that if it were not solved after this war another Arab demagogue would one day come along and seize the issue to make trouble for them again.

The fourth element was the sudden reversal of Palestinian fortunes. The discrediting of the PLO for its embrace of Saddam, its loss of Arab political and financial backing and the deflation of the intifada left the Palestinian movement in desperate straits. Now that the PLO had lost international support, the local leadership had an opportunity both to take matters into their own hands and to change the status quo. Jordan shared this desire to engage in the peace process because King Hussein had also discredited himself by his opposition to the liberation of Kuwait. The peace process provided the only way for him to refurbish his relationship with Washington and seek its help in reestablishing the financial support of his erstwhile gulf Arab backers.

The fifth element was Israeli flexibility. Prime Minister Shamir had previously opposed an international conference with Soviet involvement and PLO association with the process. But now he had every incentive to be more flexible about the procedures for negotiations, as long as he secured his basic objective of direct negotiations with the Arab states and Palestinians from the territories without a prior commitment to territorial concessions.

The final and decisive element was American influence. All the regional actors sought the good graces and partnership of the United States. For so long they had been unwilling to say "yes" to peace with each other, but now they could no longer afford to say "no" to the Americans. The key to progress lay in the quick exploitation of the window of opportunity created by the Gulf War. Accordingly, President Bush dispatched his secretary of state to the region in March to sound out the parties.

That trip and seven more shuttles produced evidence of all six elements at work. Moscow followed Washington’s lead in the peace process, literally speaking from the same talking points. In nine months of diplomacy there was not a single instance when the Soviet Union deviated from the American position.

Syria began its engagement in customary fashion, insisting on procedural arrangements that would have given it a veto over the negotiating positions of other Arab parties. But in July, after laborious coaxing by Secretary Baker and an assurance from President Bush that the United States viewed the Golan Heights as occupied territory, Assad accepted the American proposals for convening negotiations without conditions or amendments. His willingness to accept arrangements that would bring Syria face-to-face with Israel in bilateral negotiations for the first time—and without any control over the other Arabs—was a clear indication of how Syria’s circumstances had changed.

Saudi Arabia welcomed the secretary of state on his first visit with a commitment to engage in the process and support American efforts. By April, however, growing criticism from the Islamic clergy at home and opposition from Syria and Egypt to Saudi involvement led King Fahd to back away. After a stern reminder from Washington of Saudi Arabia’s obligations to the United States, the king announced in May that the Gulf Cooperation Council would send an observer to the peace conference and that Saudi Arabia would attend the follow-on negotiations with Israel on regional issues. The Saudis also worked behind the scenes, withholding funding from Syria and the PLO to ensure their cooperation and backing for Palestinians from the territories in the negotiations with Israel.

Palestinian pragmatism was evident from the outset when Palestinian leaders from the West Bank and Gaza broke their own boycott on contacts with U.S. officials and met with the secretary of state, forcing the PLO to give retroactive approval. Subsequently they accepted Baker’s proposal to negotiate an interim arrangement for Palestinian self-government and agreed to leave final-status negotiations until well after an autonomy regime had been put in place. This was precisely what the Palestinians had been offered in the Camp David accords but had vehemently rejected for more than a decade. They also accepted the exclusion from their joint delegation with Jordan of PLO officials, representatives from outside the territories and residents of east Jerusalem. This too they had previously found unacceptable.

Israel’s flexibility was apparent in Shamir’s acceptance of Baker’s proposal for a regional conference under the joint auspices of the United States and the Soviet Union, a position he had previously staunchly rejected. For two months, he stood firm on his procedural objections to the American bridging proposals that provided for a minor U.N. role and the reconvening of the full conference if all parties agreed. But as soon as Syria agreed to direct negotiations, Shamir dropped those objections, comparing Assad to Anwar al-Sadat in that "a revolution had occurred in his concepts." While insisting that Israel would negotiate only with Palestinians from the West Bank and Gaza who were not associated with the PLO, Shamir was willing to tolerate a good deal of "static" in the background—in the form of PLO officials accompanying the delegations to Madrid and Washington, the delegations’ members declaring that they took their orders from the PLO, and Faisal Husseini, a resident of east Jerusalem, asserting his role as leader of the delegation.

American influence was evident in the very fact that the secretary of state was able to get all sides to change their long-standing positions. He launched the direct negotiations between Israel and all its neighbors without corresponding shifts in the equally long-standing policies of the United States. Baker’s constant reminders that the regional parties needed the negotiations more than the United States did, and that he and the president had plenty of other pressing matters to attend to, had a salutary effect on Arab and Israeli leaders alike. Baker succeeded in using this influence to persuade each of the parties to accept the previously unacceptable: direct, bilateral "two-track" negotiations between Israel and the Arab states and Israel and the Palestinians; the objective of a "comprehensive settlement" based on U.N. resolution 242. Negotiations on the Palestinian track would deal with interim self-government arrangements first, leaving the final status of the West Bank and Gaza to negotiations that would not begin until three years after the interim arrangement had been implemented. Palestinians would be represented by delegates from the territories who accepted this phased approach; regional issues would be discussed in multilateral negotiations involving the gulf Arabs and the Maghreb states; and the full conference would reconvene after the opening session only with the consent of all parties.

Given the bitter, long and tragic history of the Arab-Israeli conflict, it was an extraordinary moment in Madrid when the Arab and Israeli delegates entered the Hall of Columns on October 30 and sat down together at the peace table. They were entering a new era of negotiations, but they soon made it clear that they were carrying the heavy baggage of past enmities. Israel gained the recognition of its Arab neighbors, although their unwillingness to shake hands in the conference room showed how grudging that acceptance was. The Palestinians gained Israel’s recognition, although they had been forced to swallow bitter pills. The Syrians finally sat down with the Israelis for bilateral negotiations but only after they publicly attacked Shamir—their supposed negotiating partner—as a "terrorist."

Just how long and arduous the negotiations would be became even clearer in the second round that took place in Washington in December. The Israelis showed up five days late to register their anger with the United States for imposing the timing and venue. The Israelis and Lebanese quickly found common ground when Israel declared that it had no territorial designs on Lebanon, but then just as quickly became bogged down on the issue of the Syrian troop presence in Lebanon. The Syrians would not agree to talk about peace until the Israelis committed to full withdrawal from the occupied territories; the Israelis would not agree to talk about withdrawal until the Syrians committed to a peace treaty. The Jordanian-Palestinian negotiations failed to get under way because the Israelis objected to the Palestinian demand that the Jordanian and Palestinian delegations be separated. Nevertheless all sides engaged in prolonged exchanges—the Israelis, Jordanians and Palestinians sitting on a couch in a State Department corridor—and agreed to meet again in the new year.

Israel and its Arab neighbors were at last talking to each other. That taboo had been broken. Along with the death of pan-Arabism and the demise of the rejectionist front, negotiations in process provided some hope that a new, more stable and peaceful order might well arise from the ashes of yet another Middle East war. If the elements that produced the Madrid breakthrough could be sustained, there was good reason to believe that agreements between Israel and its neighbors could eventually be negotiated.

But as the Gulf War demonstrated, the mere fact that Arabs and Israelis were finally talking to each other would not solve the region’s problems. And by the end of 1991 there were many indications that the old order was still smoldering. Saddam Hussein was celebrating his survival by pinning "Mother of all Battles" medals on the chests of his generals. President Assad arranged his own reelection with 99.9 percent of the vote. Iran was taking advantage of Arab disarray by rebuilding its army, purchasing nuclear technology from China and forging an alliance with Sudan and Yemen, the outcasts of the Gulf War. And the electoral success of Islamic militants in Algeria brought about a constitutional upheaval early in 1992.

Meanwhile, after demonstrating in Madrid what it could achieve with its newfound influence, the dominant power became preoccupied elsewhere: America turned inward. President Bush was required to tend to the nation’s ailing economy and his own reelection campaign, and Secretary Baker was busy trying to fashion a global policy that could accommodate the transformation of the Soviet Union into a cumbersome Commonwealth of Independent States. America’s leaders will undoubtedly come back to deal with the Middle East if only because the Middle East always seems to find a way to intrude on America’s agenda. And when they do, they will find that their cautious approach to restructuring the Middle East order will require them to deal with the remaining elements of the old order before they can hope to create the new.

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  • Martin Indyk is Executive Director of The Washington Institute for Near East Policy. David Kaye provided research assistance for this paper.
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