Behind the Headlines War by Other Means

For the first time since the birth of Israel in 1948, the Arabs are conducting a propaganda campaign in the West that appears to be highly successful. Their so-called peace offensive makes them seem reasonable, enlightened and, above all, deeply devoted and dedicated to peace with Israel. They seem to have taken a propaganda morsel from the favorite recipe of television’s famous personality, Morris the cat, and stopped pulling their finicky act.

Israel, by contrast, is made to appear intransigent and recalcitrant, resisting at every turn to avoid what the Arabs, especially Egypt, claim to be a serious proposal of peace. The cause of the Jewish State’s continuing and consistent search for peace is not being helped by one-sided media reports, by U.S. Congressmen on jaunts in the Middle East who report upon returning home that Egyptian President Anwar Sadat has embarked on a “new” policy or by some Israeli politicians searching for platforms as they prepare to run in next November’s general election.

The media seems to be deliberately reporting only one element of the Arab peace offensive while either ignoring or minimizing the bellicose statements. The media has also been one-sidedly depicting the Palestine Liberation Organization as a revamped peace-oriented group.

The media, for example, failed for the most part to report that even as Sadat was cooingly telling a group of Congressmen that he is ready for peace with Israel, he also announced that he would ask the U.S. for additional military hardware just in case Israel decided to get huffy. And while the media was beguilingly reporting about the PLO’s “new image” at the United Nations, it for the most part failed to report that at the same time a leading PLO official was saying in Paris that his organization intends to step up activities inside Israel in a “war of liberation.”

Nor has the media and some of the returning Congressmen consistently related the Arab peace offensive with their intransigent organized hostile anti-Israel positions at the UN, UNESCO and other world forums in which they participate and where they are certain of winning their points by the existence of an automatic majority voting in their favor regardless of the issue.

THE ROLE OF ECONOMICS

But there is, in fact, more to the peace offensive than the media’s juggling of news, the Congressmen’s apparent seduction by the siren calls of the Arab propagandists and the belated criticism by Israeli politicians of Israel’s caution but who were themselves leaders of the anti-Arab peace pack before announcing their electoral hopes.

The fact is that the Arab confrontation states, especially Egypt, are waging a peace offensive abroad but at the same time retaining a war stance at home in order all the better to keep both options open. There is no question but that the confrontation states and the PLO want and need peace at this time in contradistinction to opting for peace with Israel as a sovereign Jewish State. All of Israel’s neighbors and the PLO are either in political or economic trouble.

The key, however, to the Arab peace offensive–both by the confrontation states and some of the oil-rich countries–in relation to Israel and in terms of inter-Arab rivalries is one of economics. The search for foreign markets for investing petro-dollars and the search for foreign investments in their own economies is stymied by a continuing war atmosphere. Neither the outward flow of investment capital nor the attraction of foreign investments is possible as long as the economies are geared for war and national budgets are tied up in military overkill. Nor are investment flows in and out of these countries feasible as long as instability and uncertainty prevails.

In addition, the Arabs are beginning to realize that they cannot maintain a top-heavy military establishment without a highly developed economic base. Developing and supporting such an establishment is very much like trying to build a skyscraper on stilts. Another basic factor is the presumption on the part of the Arabs that the new Administration in Washington will be less willing to continue a policy of excessive expenditures for Mideast military spending in view of the perspective outlined by President-elect Jimmy Carter that the focus must be on America’s domestic needs.

In short, the oil-rich states are now in the same position as the Western nations: invest or die. Their economies are literally choking to death with an excess of petro-dollaras that cannot be siphoned off by buying sprees of mansions, yachts and automobiles. These dollars must find profitable investment markets. The confrontation states must reorganize their tattered economies and cannot hope to do so without foreign loans and investments. For this they need stable economic and political systems that do not threaten foreign investors with either economic chaos or revolutions.

PROMISES OF NEW MARKETS

Two events especially, in the past several weeks, confirm the economic basis for the peace offensive. One was the Arab-European business cooperation symposium at Montreux, Switzerland last month. The other was the visit last week to Paris by Lawrence R. Klein, one of Carter’s closest economic advisors.

The Montreux conference, attended by 1600 bank presidents, bankers, manufacturers, consultants and traders from 40 countries, was organized by the European Management Forum and sponsored by 100 West European and Middle East banks. David Baird, reporting on this conference for the Belgium-based bi-weekly magazine, “To The Point International,” noted that “cooperation was the keynote” of the meeting.

This was illustrated by the variety of schemes put forward, including the creation of a technological development bank, owned and financed by nationals and governments of developing countries with surplus financial resources; a Euro-Arab investment company, shares to be held by the Organization of Petroleum Exporting Countries and the European Economic Community; and a committee open to all enterprises interested in Arab-European business which could help broaden business prospects.

EAGER TO AID SAGGING ECONOMIES

Cairo bound, with so much money floating around–investable surpluses from the oil states is expected to be more than $45 billion this year–everyone had an interest in making the event a success.” In addition to this investable surplus, the European countries are eager to get some of this to help bolster their own sagging

Burhan Dajani of Jordan, secretary general of the Union of Arab Chambers of Commerce, made it clear in an interview with the Belgian magazine when he stated: “I would say that the Arab is less suspicious of the European than ever before….It is with the Americans that we have a problem, because here we have a complicated situation (economically and politically)….But I think the Europeans stand a very good chance of winning the confidence of the Arabs.”

From the European point of view. Lord Selsdon, advisor to Britain’s Midland Bank, summed up the problem of the continent by stating: “There is a growing realization by the Arabs that, without proper cooperation with the West, particularly Europe, they will not be successful….Unless we can find the right platform for cooperation our own economies will suffer and probably the world economies as a whole.”

Klein, whose visit to Paris coincided with an important meeting of the Organization for Economic Cooperation and Development, at which 24 member nations from Europe, North America and developed Asia were dealing with prospects for 1977, noted that the U.S. had to “take a leadership role” in the struggle to improve economic prospects by pumping at least $10 billion back into the economy. This was undoubtedly a cue to European financiers that the U.S. is not about to tie up its financial resources in foreign military ventures which help the economies of arms manufacturers but drain the total economic structure of profitable ventures. Internationally, since war materiel is neither investable capital nor a longrange investable market.

NEW MOVES TO ISOLATE ISRAEL

To develop a resurgence of trade on the part of the U.S. and West Europe in a virtually untapped Arab market and the concomitant need of the Arabs to find an investment market is the overriding need. Saudi Arabia, for example, plans to spend $2.7 billion in the next five years for telecommunications alone. Tenders for a huge microwave system have been invited from 11 companies, five of them outside Europe. Saudi Arabia, therefore, cannot afford to tie up its capital in military budgets for other Arab states.

In addition, Chase Manhattan is negotiating a $250 million loan to the Egyptian government to be shared by a number of Western banks, including Chase. This is bound to fall through unless there is a revamping of Egypt’s economy that would guarantee new tax advantages, the repatriation of capital at the same rate it is brought in and the liberalization of other economic policies. Egypt cannot do this if it is geared for war. A task force of the American side of the Egypt-United States Joint Business Council, formed last year to promote U.S. investment in Egypt, might begin looking elsewhere in the Mideast for market possibilities.

Meanwhile, a number of East European governments are seeking to borrow hard currency from the oil-producing states in the Mideast to buy advanced technology. Rumania, for example, is negotiating a large loan with Kuwait and Yugoslavia earlier succeeded in obtaining credits from Kuwait.

The peace offensive, therefore, has a dual objective: to entice trade and investment and to provide the political veneer for the Europeans and Americans to turn off to Israel. That is why it is essential for the Arabs to make Israel appear as a nation devoted to war and therefore a non-profitable market; a country which can only force American business enterprises and government to fritter away its financial resources in non-productive fields.

So while the Arabs talk of peace they are also devising new ways to further isolate Israel from the international economic community. Having fought what now appears to be a losing battle on the boycott front, the Arabs are embarking on a course of economic solidarity with the corporate giants of West Europe and America. The Arabs, stockpiled with armaments in ready against Israel, can now afford to talk of peace. But they are in effect conducting war by other means.