Could the economic crisis have a Middle East peace dividend?

A presentation from Citi to its private banking clients in the UAE yesterday highlighted the possibility that President Obama’s peace mission in the Middle East could bring a new era of peace and prosperity to the region.

This proposal will be ridiculed by older hands with longer memories. But perhaps that is the point. The Obama administration represents the hopes of a new generation.

The obvious parallel is Northern Ireland and Tony Blair. Before the charismatic Mr Blair became prime minister the thought of talks with the Irish Republican Army terrorists was unthinkable. Yet his government not only put peace on the table but turned it into a reality.

Irish parallel

The conflict in Northern Ireland was even older than the traumas regarding the creation of Israel and the ejection of many of the original inhabitants. And few who dealt with the Irish factions would deny that their intransigence and hatred fell far short of anything found in the modern Middle East.

Yesterday’s meeting between President Obama and Israel’s new prime minister Benjamin Netanyahu was hopeful, with both politicians far too skillful to show the slightest public loss of face. We can only guess at their true discussions of more than two hours behind closed doors.

But it appears that Mr Netanyahu has gone along with US plans to try a serious attempt at engaging Iran in a dialogue on its nuclear program, at least until the end of this year. There was no commitment, however, to ceasing the construction of West Bank settlements or embracing a two-state solution.

The world will have to wait for President Obama’s visit to Cairo next month for a more definitive statement on his administration’s policy. But as Citi managing director of economic and political strategies, Tina Fordham told a client briefing in Dubai, ‘the economic crisis might actually help them to reach a political solution on this geopolitical issue’.

Economic crisis

Her argument is that all regional nations, including Israel, are reeling from the impact of the global economic crisis, and one way to significantly boost regional economic growth would be a peace settlement.

It is true that with a comprehensive peace treaty in place the gates would be open for a flood of inward investment and development activity. But this is not a new observation, and the search for a peace dividend has been extremely elusive in the Middle East.

But President Obama strides the world with considerable political capital right now, and that could indeed be gainfully invested in a peace dividend.