The Mideast Maelstrom May Get Much Worse

As the U.S. focuses on terrorism, moderate regimes will come under heavy pressure

The horrific Sept. 11 attacks on the World Trade Center and the Pentagon are opening a new blood-soaked chapter in the difficult history of the U.S. in the Middle East. Although conclusive evidence is still lacking, intelligence agencies around the world point to Afghanistan-based Osama bin Laden, the renegade Saudi who has many admirers in the Arab world. Some also believe bin Laden and his followers may have acted in concert with a rogue state, possibly Iraq.

If the U.S. acts on these suspicions, the already dangerous situation in the Mideast could worsen immeasurably. Indeed, the U.S. could well adopt a far more militaristic and security-driven approach to the area and pay less attention to letting moderate Arab leaders save face. That could mean striking both at terrorists and at regimes that the U.S. suspects of harboring terrorists, from Afghanistan to Iraq, Iran, and even Syria. What's more, Israel may get even tougher with the Palestinians now. "We must see to the collapse of the Palestinian Authority and even retake some territories controlled by the Palestinians," says Tsachi Hanegbi, Israel's Environmental Affairs Minister and a member of the Likud party.

An escalation of violence could be risky for both the U.S. and Israel, however. The moderate Arab governments in the region are already under stress. If the U.S. lashes out blindly or mounts a massive military operation without regional support, that would put countries such as Jordan, Egypt, and Saudi Arabia under even greater pressure. "We could see some very bad fallout in terms of confidence and political stability," says Abdulrahman Al-Rashed, head of one of Saudi Arabia's biggest merchant families.

Even before the World Trade Center cataclysm, ties between Washington and its Middle Eastern allies, including Saudi Arabia and Egypt, were strained. Leaders such as President Hosni Mubarak of Egypt and Crown Prince Abdullah of Saudi Arabia have blasted George W. Bush's aloofness about the region. And they don't think the U.S. has done enough to restrain Israeli Prime Minister Ariel Sharon's hard-line policy toward the Palestinians. To show his displeasure, Abdullah recently declined an invitation to visit Washington. Meanwhile, more than a few Arabs welcomed the Sept. 11 debacle as comeuppance for what they see as American arrogance. "The popular reaction is that these are the just rewards for American policy; people don't seem to think about the cost of innocent lives," says Aziz Abu Hamad, a Saudi analyst.

A major military strike and a hardening of American attitudes could widen the gap between the U.S. and these moderates. "My fear is that you will get a polarizing of attitudes," says a senior Western diplomat in Riyadh. "Almost anyone who comes from this side of the Mediterranean will be a terrorist. That doesn't bode well."

But many analysts think a sweeping change in the region is inevitable, even if it is uncomfortable for the Arab moderates. Washington is understandably likely to focus its attention and efforts almost entirely on countering terrorism. The response "will be massive and unrelenting," predicts retired U.S. Air Force General David E. Baker. "The message should be that we won't tolerate countries that support acts of terrorism against the U.S." Longer-term projects such as resolving the Palestinian issue, which underlies much of the regional tension, would go on the back burner. "This is going to divide the world into camps of those who support the U.S. and its efforts against terrorism and those who do not," says Gerald Steinberg, a political science professor at the Bar Ilan University near Tel Aviv.

VALUABLE ALLY. Steinberg and others think that the attacks on the U.S. will increase American sympathy for the plight of the Israelis, who have been under siege by Palestinian suicide bombers. At the same time, Israel will seem an even more valuable ally to an angry Washington because it has long stressed terrorism as the key Middle Eastern issue and because it has useful military and intelligence assets. Indeed, sources in the Sharon government say they are already discussing ways to ramp up intelligence cooperation with the U.S.

As the crisis escalates, the Saudis, who control much of the world's oil, are in an especially tough spot. They could well be pressed to allow their air bases to be used for massive attacks on Iraq and perhaps Iran, as well. They may also be expected to raise their output of crude oil to avoid price spikes--OPEC agreements be damned.

This won't be a pleasant choice for the Saudis. They fear the Islamic militants and would like to see them eradicated. But they also want to avoid kowtowing to Washington. "If it all starts boiling over, the region is going to face some very difficult choices," says Raad Alkadiri, an analyst at PFC, Washington-based energy consultants. Simon Henderson, who runs the Saudi Strategies consultancy in London, thinks some of the more pro-American members of the Saudi royal family could seize the initiative from Abdullah, who has Arab nationalist leanings.

But the U.S. will be under pressure to use some caution in how it acts. American interests are likely to be entwined with the region--particularly the oil-rich Persian Gulf--for years. In fact, world dependence on gulf oil supplies has been growing because of the rising thirst for oil in North America and developing countries as well as the low rates of investment by the big oil companies.

The U.S. even has to be wary about how it deals with Iraq, the only Arab country that has welcomed the attacks. "The American cowboy is reaping the fruits of his crimes against humanity," declared Baghdad TV on Sept 11. Despite the hostility between the U.S. and Baghdad, roughly a quarter of the oil that Iraq produces winds up in the U.S. A cutoff of Iraq's 3 million barrels per day in production could lead to price spikes, unless a steep economic downturn chills demand for oil.

At the moment, the oil markets don't appear too worried about a supply outage. Benchmark crude rose by an extraordinary $3.50 per barrel, to $31.05, on Sept. 11 in frantic trading. But it quickly gave up much of those gains. "Oil always rushes to judgement and then feels guilty later on," says Peter A. Gignoux, head of the oil trading desk at Schroder Salomon Smith Barney in London. "The market recognized that there wasn't a supply disruption."

SAFETY IN NUMBERS. Of course, much depends on what the U.S. actually does. A prolonged series of raids or an armed incursion into Iraq would certainly ratchet up regional tensions, oil prices, and rattle the regimes. Afghanistan, the base of bin Laden, is remote, but a U.S. foray or massive raids there would also leave America vulnerable to charges that it was trashing yet another Muslim country, especially if the retaliation fails to disable the bin Laden network. It would be much safer if the U.S. can put together a coalition--as it did after Iraq's Saddam Hussein invaded Kuwait in 1990.

Some Mideast policymakers think that fixing the Palestinian problem offers the best hope of soothing the resentment that fuels bin Laden's followers. The hope is that Palestinian leader Yasser Arafat will finally enforce a ceasefire to head off an intensified conflict with Israel. But even a peace deal may not be enough to stop bin Laden, whose hatred for the West goes far beyond the particulars of the Israeli-Palestinian confrontation. "With the best possible deal conceivable, he would still be out there trying to blow up airplanes," says the Riyadh diplomat. Terrorism without end. That's the most frightening prospect of all.

By Stanley Reed in London, with Neal Sandler in Jerusalem and Stan Crock in Washington

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