Colossus (24 page)

In their responses to these external threats, the Israelis felt under no obligation to consult the United States. The Americans were not warned about the Six-Day War; nor were they entirely jubilant at the successive Israeli victories. As Nixon commented in an interview in 1970, the Middle East had become “terribly dangerous. It is like the Balkans before World War I—where the two superpowers, the United States and the Soviet Union, could be drawn into a confrontation that neither of them wants because of the differences there.”
²⁸
As containment gave way to détente, neither superpower relished the prospect of another Arab-Israeli war. When it came in 1973, the Americans offered support to Israel only after it was clear that the Russians were helping the other side; in both cases assistance entitled the superpowers to press for a cease-fire. Yet brokering peace proved exceedingly difficult.
²⁹
American and Israeli politicians continued to incant the now familiar lines about their “special relationship” and “deep friendship.”
³⁰
American aid to the country reached unprecedented heights: between 1976 and 1985 a quarter of all U.S. economic and military aid went to Israel—altogether some twenty-five billion dollars. This was equivalent to around 13 percent of Israeli gross national income (see
figure 7
). But the more the United States took on the role of honest broker between Israel and Egypt, the less such money seemed to buy.
³¹

FIGURE 7
U.S. aid to Israel as a percentage of Israeli gross national income, 1966–2000

Note:
In 1988 grant returns and principal repayments exceeded new grants and credits.

Source: Calculated from data in various issues of the
Statistical Abstract of the United States
and the World Bank
World Development Indicators
database.

True, the Israeli prime minister Menachem Begin was persuaded by President Jimmy Carter to relinquish Sinai for the sake of peace with Egypt. That, however, was as far as he could go; talks about the future of the occupied territories came to nothing. In December 1981, when Israel decided to alter the status of the Golan Heights by bringing the area under its own law, jurisdiction and administration, the United States supported a UN resolution condemning this action.
³²
When Israel invaded Lebanon seven months later, the United States contributed to the peacekeeping force that was deployed to prevent an escalation of the conflict. That same year Ronald Reagan’s attempt at a “fresh start” in the peace process was effectively vetoed by the Israelis. The Americans never contemplated a complete break with Israel. Indeed, the 1983 agreement between Reagan and the Israeli prime minister Yitzhak Shamir was followed by a significant increase in military cooperation and economic assistance.
³³
Yet the Israelis tenaciously resisted American pressure to negotiate with the Palestinians. As
early as December 1988, Yasser Arafat accepted the American preconditions for bilateral dialogue (renouncing terrorism, recognizing the state of Israel and accepting UNSC Resolutions 242 and 338).
³⁴
The Israelis, however, became less rather than more willing to contemplate a return to the borders of 1967. With every passing year, as the settlement of the occupied territories proceeded (by 1983 there were nearly thirty thousand Jewish settlers) and as Palestinians living there resorted to violence, a return to the
status quo ante
became harder to imagine. The Americans protested about the policy of settlement and about the use of live ammunition against stone-throwing Palestinians, but to no avail.
³⁵

The crucial difficulty for the Americans was that even as Israel established its military superiority over the Arab countries, forcing the Palestinians to resort to terrorism instead of conventional war, so the
economic
importance of the Arab countries grew. In 1953 the United States still produced more than half of the total world oil production; by 1973 its share had fallen to 21 percent. American imports of oil had once been insignificant; by 1977 they had risen to 46 percent of total consumption, and a growing share of those imports came from the Middle East.
³⁶
This had advantages as well as disadvantages for the United States. As the oil-exporting countries grew wealthy, they spent increasing amounts of money on American goods and invested substantial amounts of their petrodollars in the United States.
³⁷
Between 1970 and 1972, for example, Saudi Arabia’s purchases of arms from American firms rose by a factor of twenty.
³⁸
In the years that followed, weapons worth eighty-three billion dollars were sold to the Saudis.
³⁹
In any case, a substantial part of the Middle Eastern oil industry was still in American hands, though this declined when the Saudis finally nationalized ARAMCO.
⁴⁰
Moreoever, it was not the United States so much as its principal allies that had become truly dependent on Arab oil.
⁴¹
In the cold war, this gave the future of the Middle East a strategic as well as an economic dimension. As Eugene V Rostow argued in 1975, “The first and most basic [American interest] is the geopolitical importance of the Middle East to the defense of Europe. Our alliance with western Europe is absolutely essential to the balance of world power on which the primordial safety of the United States depends…. Hegemonial control of the oil, the space and the mass of the region by the Soviet Union would carry with it dominion over Western Europe as well. NATO would be dis
mantled.”
⁴²
Up until this point, in fact, there seemed little cause for anxiety. The Soviets had more or less ceased to exert influence in Cairo since the expulsion of their military advisers in 1972. While they still had some leverage in Syria, that hardly represented “hegemonial control.” The Americans, by contrast, had appeared to be taking over Britain’s former position of predominance in the smaller gulf states that were among the best endowed with “black gold”: Kuwait, the United Arab Emirates, Bahrain, Qatar and Oman.
⁴³
Meanwhile, Kissinger’s shuttle diplomacy not only persuaded Egypt and Israel to “disengage” in 1973–74 but also brought a swift end to the Saudi oil embargo.

However, there did not need to be a specifically
Soviet
control of Middle Eastern oil for both the United States and its allies to suffer acute economic pain. Arab control might suffice. The Libyan dictator Muammar al-Qaddafi had already demonstrated this after the 1967 Arab-Israeli war, when he had exploited increased Western demand for Libyan oil by raising prices and profit shares and finally nationalizing the oil companies’ assets. Up until 1972 the United States had succeeded in squaring the circle of its support for Israel and its support for the Saudi king, who loathed Zionism as deeply as he loathed communism.
⁴⁴
In 1973, however, the Saudis backed the Egyptian assault on Israel not with soldiers but with a 70 percent increase in oil prices and a rolling embargo that cut supplies of oil to supporters of Israel by 5 percent per month. When the Americans more than doubled their aid to Israel, the Saudis imposed a total embargo on exports to the United States. At a time when American and West European monetary authorities were still learning to live with floating exchange rates and when their fiscal authorities had largely embraced a vulgarized version of Keynesian demand management, the sharp spike in oil prices had dramatic consequences. Inflation surged, public finances lurched into the red, yet at the same time unemployment rose (see
figure 8
). Still worse “stagflation” was to follow in the aftermath of what was, in many ways, the most disastrous American foreign policy setback of all—the Iranian Revolution of 1979, which saw the American-backed shah, the once-vainglorious but now-ailing Mohammad Reza Pahlavi, supplanted not by a Soviet puppet but by something altogether unexpected: a radical, theocratic proponent of Islamic fundamentalism.

FIGURE
8
The Oil Price and the American “Misery” Index, 1970–2002

Source: Economagic.

The shah was not the worst of the despots installed and propped up by the United States during the cold war. True, the regime was very far from liberal, and the shah’s penchant for conspicuous consumption was less than judicious. Compared with the dictators the United States cultivated in Nicaragua or Chile, however, he was an enlightened despot. The shah’s Iran was a relatively unequal society, no doubt, by American or West European standards, but no more so than Turkey and less so than many Latin American countries. The extraordinary thing was the insouciance of its American architects as the regime slid toward the edge of a revolutionary abyss. To lose Vietnam to the heirs of Ho Chi Minh, as we have seen, had not really mattered in geopolitical terms. But to lose Iran to the ayatollah Ruhollah Khomeini, the Lenin of Islamic revolution, was a calamity whose ramifications were and remain incalculable. Iran was, after Turkey, the biggest of the Middle Eastern states, with a population three times that of Iraq. Crucially, it was second only to Saudi Arabia as an oil producer, accounting for over
10 percent of total world output in 1973, making it the third largest in the world (the United States was still the world’s biggest at that time).
⁴⁵

In January 1980 President Carter, still reeling from the incarceration of fifty-two American hostages in the Tehran Embassy, anxiously attempted to redefine American strategy in the Middle East. Henceforth, he declared, “Any attempt by an outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States … and such an assault will be repelled by any means necessary, including military force.”
⁴⁶
This was intended as a signal to the Soviet Union, which had just embarked on its own disastrously ill-conceived invasion of Afghanistan, not to exploit the Iranian crisis for its own ends. At the time it seemed a new nadir in the cold war; Carter himself described the Russian action as the greatest threat to world peace since 1945. In its aftermath, the arms race in Europe entered perhaps its most dangerous phase, with the deployment of intermediate-range nuclear missiles first by the Soviets and then—amid sometimes violent protests—by the Americans. Nor was it illogical to fear that Moscow would capitalize on the chaos in Tehran; it had long regarded Persia as a region of strategic importance and had indeed informally shared power there with Britain from the late nineteenth century until the 1940s. Yet the “outside force” Carter had in mind turned out not to be the problem in the Middle East. From now on it was forces
within
the region that would pose the most serious threats to American interests.

Like all revolutionary regimes, Khomeini’s Iran was soon embroiled in a war with its neighbor. The Iraqi dictator, Saddam Hussein, fearing a pro-Iranian rising by his own country’s Shiite population, decided to invade Iran in 1980. Kissinger’s sardonic comment—“a pity they both can’t lose”—reflected the dilemma the United States now confronted. A regime that regarded America as the “Great Satan” could scarcely be a tool of American policy, yet the Baathist tyranny of Saddam Hussein in Baghdad, though secular in the old Arab nationalist style, was only marginally more appealing. In a feat of
Realpolitik
that eclipsed even Kissinger’s during the 1970s, the United States ended up giving assistance to both sides. Arms were secretly sold to Iran, first to buy the release of the embassy hostages, later to raise funds for American covert operations in Central America. Saddam meanwhile received substantial commodity credits, rising to more than
one billion dollars in 1989, despite the fact that his forces not only used chemical weapons but on one occasion attacked an American warship.
⁴⁷
If the outcome of the Gulf War was that neither side lost, it owed something at least to American Machiavellianism—the same deviousness that inspired the Reagan administration to channel cash and weapons to the mujahideen fighting the Red Army in Afghanistan.