DEMONSTRATORS CARRY PICTURES OF TOPPLED IRAQI PRESIDENT HUSEIN IN AMMAN
Ali Jarekji  /  Reuters file
Demonstrators carry pictures of toppled Iraqi President Saddam Husein during a rally Jan. 16 in the center of the Jordanian capital of Amman.
By Producer
NBC News
updated 3/15/2004 6:46:44 AM ET 2004-03-15T11:46:44

Change in the Arab world normally moves at a snail's pace but the war in Iraq has catapulted the region into an era of upheaval where the only certainty is change.

Most Arab political analysts from Egypt to Kuwait believe that the aftermath of the war has already spread instability in the region -- and they can't predict the outcome.

“Instead of curbing the terrorist threat, it seems this war has encouraged its expansion," said Dr. Saleh Al-Mani, a political science professor at King Saud University in Riyadh, Saudi Arabia.

"Now terrorism not only unleashed havoc to the Iraqi people, but also threatens adjoining countries like Kuwait and Saudi Arabia. War and instability, whether in Palestine or Iraq, only produces chaos and the decline of the rule of law. It is a lose-lose relationship," he said.

His views are echoed in another Iraq neighbor, Syria.

"We see the occupying force on our eastern border as a threat to security in the region, not an element of stability in Iraq," said Dr. Nabil Sukkar, director of the Consulting Bureau for Development and Investment in Damascus and a former senior economist for the World Bank.

Sukkar believes that the U.S. presence is fueling Islamic fundamentalism in the region. 

"The ordinary man on the street feels Islam is under attack," Sukkar said, basing his contention on conversations with people on the street and from call-in talk shows on Arabic satellite TV stations. "Fundamentalism is not helpful to reform and modernization,” he added.

Syria has also suffered economically. Since Iraq sold oil at subsidized prices to its neighbor since the 90's, Syria was able to export its own oil for hard currency.

Now that Syria has been obliged to use its petrol for domestic consumption, its foreign exchange reserves have dropped. Syrian trade with Iraq, its free-trade partner, has just begun to recover.

Economic fallout
But perhaps no other country outside of Iraq has suffered greater economic and political trauma than Jordan.

"It has created a new strategic environment to the east of Jordan, a lot of instability. We are still grappling with what will happen. Will it be united or not?" said Dr. Hassan Barari, political science professor at Jordan University and researcher for the Center for Strategic Studies. 

For the past 12 years, Jordan relied on subsidized Iraqi oil which it received for half price. The remaining 50 percent was purchased with Jordanian commodities. Now Jordan's annual energy bill of $1 billion takes a huge bite out of its GDP. The government will be forced to raise the price of petrol which will cause hardship.

"About 20-25 percent of Jordanian products had been designed to go to the Iraqi market, now there is no market,” said Barari. Few people want to take the risk of doing business in Iraq because of the danger and instability, a problem hindering Arab investment in Iraq in general.

Barari also maintains that Jordan has lost strategic depth through the disintegration of Iraq, formerly a strong ally. Jordan, ever vulnerable to forces beyond its borders, now faces uncertainty on both borders.

From the west, Jordanians fear that at some point, Israel may try to solve the Palestinian problem at Jordan's expense by transferring some of its rapidly growing Palestinian population to the Hashemite Kingdom.

And from the east, Jordanians dread a possible fragmentation of Iraq into competing entities. 

Egyptians view on U.S. occupation
Although Egypt does not border Iraq, people on the streets of the most populous Arab nation resent what they regard as an American occupation of a brotherly Arab state.

The war “has increased the sense of threat or risk in the region. The fact that the U.S. has a large military power stationed in a neighboring Arab country is a source of concern for many Egyptians,” said Dr. Gamal Abdel Gawad, a political analyst at the Al Ahram Strategic Center in Cairo.  

Gawad feels the region is at a crossroads. The prevalent mood, he said, is a lack of direction. People feel lost: they are distrustful of their own leadership and that of the Bush administration, and disenchanted with pan-Arab demagogues like Saddam Hussein, who proved to be a paper tiger.

In the void of credible leadership, "the overall psychological and political environment is conducive to radicalism," he said. 

But at the same time, Gawad believes the U.S. presence in Iraq has helped prod Iran and Libya into opening their nuclear and biological weapons programs to international scrutiny.

"The progress regarding the issue of weapons of mass destruction in Libya and Iran has increased a sense of security in the region." 

Benefits from Saddam’s demise
Without a doubt, Kuwait has reaped the greatest security and financial dividends from Saddam’s fall. 

"We have benefited a lot in Kuwait. We used to fear Iraq but now we are not under the siege of threat," said said Dr. Shamlan AL Essa, Director of Kuwait Center for Strategic and Future Studies. "For the first time, Kuwaitis celebrate freely without fearing an Iraqi invasion."

In the first few months of the war, Americans spent over $2 billion on its invasion and the aftermath in Iraq -- much of which benefited the small kingdom.

Most goods are transferred from Kuwait to Iraq and all foreign troops pass through on their way to Iraq, generating millions of dollars in revenue. 

Hotels are fully booked. Kuwaitis have launched investment projects in excess of a billion dollars each. The stock market has jumped from 1,500 points to 5,500 in the past year.

The war “has allowed the Kuwaiti economy to open up to meet Iraqi demand," said Al Essa. The only downside is the danger of doing business in south and mid-Iraq. 

But even in Kuwait, with a population that is 30 percent Shiite, the war has caused some friction.

Al Essa explained that Sunni Islamic fundamentalists have started criticizing the increased influence Shiites now enjoy in Iraq, fearing it will enhance the position of Kuwait's Shiites.

Some of the fundamentalists are on the offensive against their Shiite compatriots and are trying to fragment society, something the government won't tolerate.

In Kuwait, Shiites are an integral part of society — they serve in government, control most small businesses, and helped found the nation.

New possibilities for political reform
But while the war in Iraq is fraught with inherent dangers, it has also created exciting possibilities.

The U.S.-led overthrow of a dictator has accelerated the pressure for political and social reform that began in the wake of the Sept. 11, 2001, terrorist attacks.

For years, people have been clamoring for democratic reform while Arab regimes have just as staunchly resisted any change that that would erode their grip on power. Now under U.S. pressure to reform their political systems, Arab regimes can no longer afford to neglect the demands. 

Jamal Aruri  /  AFP-Getty Images file
Palestinians read about the capture of Saddam Hussein in newspapers Dec. 15 in the West Bank city of Ramallah.
Reform has become the hot-button issue of the day. It is exposing the fault lines between liberals and religious conservatives and between autocratic regimes and the masses that want to decide who will govern them and how.

"The daily demand for democracy has become a core issue," said Kuwaiti professor El Essa. 

In Kuwait, western-educated liberals are fighting a fervant battle with fundamentalists over what reform means. Liberals envision a secular democracy where women are allowed to vote and run for office. Islamic fundamentalists strongly oppose any form of democracy that will not allow for an Islamic state.

"The Islamists and fundamentalists…don't want American secular democracy. They want a democracy whereby if Islamists take over, they won't allow anybody else," said Al Essa.

Most Arab governments are walking a fine line: they are trying to appease the United States and the domestic demands for reform while maintaining absolute control.

On one hand, governments have tried to discredit calls for reform by playing on public mistrust of the Bush administration. On the other hand they have taken the initiative away from the U.S. by prescribing minimal reforms. 

Poor U.S. credibility
Because Arab mistrust runs deep, any U.S. led initiative is, by definition, suspect. 

"I don't think American credibility has been at a lower level at anytime in the past in Syria," said Sukkar. 

"Proposals about democratic initiatives have no credibility whatsoever.  The U.S. doesn't tackle the Arab-Israeli conflict which is the crux of the problem," he said.

"It goes ahead and occupies another country. You cannot talk about democracy and right of self determination and invade someone's territory without legitimacy." 

To many in the Arab world, the United States is no longer the standard bearer of democracy.

"A lot of the educated people in this part of the world have always maintained that the U.S. would be the last country on the face of this planet to be engaged in this type of behavior,"  Saudi Arabia's Al Mani said.

"America to them was embodied in the thoughts of Jefferson and Wilson, in the ideas of freedom, liberty and self determination.

"Unfortunately, some people in the Bush administration were eager to establish an empire and part of that empire had to pass through the streets of Baghdad and its nearby oilfields."

Arab governments have capitalized on the upsurge of anti-American sentiment by publicizing the message that Western-style democracy is a form of cultural hegemony rather than a legitimate way to obtain political, legal and human rights. 

"Governments are trying to mobilize masses against this [reform] project because the governments will be the ones to lose. And people are easily deceived because they see it as a new form of American hegemony," Barari said. 

But while the government may have succeeded in discrediting reformists, Egypt's Gawad concedes that reform itself has made gains in the past year.

Arab leaders “introduce reforms, not sufficient to change power structure, but they are responding to some long-ignored demands from within their countries." Abdul Gawad said.  "It is not essential change, but it could not have happened without external pressure."

Cultivating U.S. relations
Under such pressure, Arab governments have decided that their interests are best served, not by forging a common Arab front, but by seeking to improve their separate relations with the United States.

"More and more regimes are accepting U.S. pressure since the war and are trying to accommodate U.S. demands instead of getting together and saying we will resolve our own problems," said Sukkar from Damascus. 

"Jordan has firmly lodged itself in the American camp," said Barari.  “The government has bet on a strategic relationship with the U.S.  Relations have been upgraded since the war." 

Barari said the same ministers who accuse the United States of having a pro-Israeli bias can be found working closely with the U.S. today. 

Meantime, anxious Arab leaders have adopted a wait-and-see attitude in terms of the future administration of Iraq.

While they hope a secular government will eventually preside over a sovereign Iraq, they fear that Iraq may disintegrate into warring sectarian and ethnic entities, or eventually become a Shiite republic. 

Although ill-prepared for the worse-case scenarios, they have hedged their bets by reaching out to Iraq's panoply of power brokers.

No longer in control of events in the region, they are accommodating the only country that is.   

Change is sweeping the Arab world, but in which direction remains an open question.

"The juncture at which we are now standing is whether developments in Iraq will lead to a process of reform and reconciliation in the region or whether failure in Iraq will strengthen the position of anti-Western anti-reform radicals,” Gawad said. "The battle is still there for those for and against reform."

Charlene Gubash is an NBC News producer based in Cairo.

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