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Whereas the Western world regarded the creation of Israel in May 1948 as a triumph for humanity--the righting for Jews of the terrible wrong of the Holocaust--Israel’s Arab neighbours saw the event as a catastrophe. The argument of the early Zionist leaders that the Jews, through their enterprise and skill, would bring the benefits of modernization to the Palestinian Arabs was not accepted by the latter. They did not think they needed such help, and they feared the usurpation of their ancestral homeland by foreigners who were supported by the major powers--the United States and the Soviet Union in particular.

The 1947 UN partition resolution proposed to divide the territory of Mandatory Palestine--the area between the Jordan River Valley and the Mediterranean Sea--into a Jewish state and an Arab state in economic union, with Jerusalem established as an international enclave. Although the 650,000 Jews in Palestine owned only 7% of the land, 55% of it was to go to the Jewish state, whereas the 1.2 million Palestinian Arabs would receive 45%. The Arab governments and the Palestinian Arabs rejected both the concept of partition and the terms of the resolution and decided to oppose it by force. In the armed struggle that followed, the Arabs, in spite of the intervention of Arab armies, were defeated by the better organized and equipped Jews, who ended up with 77% of the land.

For the Arabs the most immediate result was the creation of a refugee problem. Some 725,000 Arab Palestinians left the area that became Israel. Such direct testimony as exists indicated that many refugees left in fear as the fighting intensified. Others were "encouraged" to leave by Israeli psychological warfare, and a substantial number were expelled by the Israeli army, sometimes brutally. Despite a number of UN resolutions calling for repatriation of the refugees after the fighting stopped, the Israelis refused to permit it. The Israelis tended to emphasize the security problem that the return of the refugees would create, but the political problem was perhaps greater. Approximately 42% of the population of the area allocated to the Jewish state by the partition resolution was Arab, and, given differences in population-growth rates, the Arabs would soon have outnumbered the Jews. As it is, the 150,000 Arabs allowed to remain in the area controlled by Israel, plus their descendants, now number nearly one million.

The Arab states reacted by refusing to accept or recognize Israel and imposed an economic boycott on that country. Although this limited Israel’s economic potential, it also imposed limitations on the Arabs. Aside from the loss of well-established markets for their produce and labour, Syria and Jordan could no longer use the oil refinery and port of Haifa, and the Iraq Petroleum Co.’s oil pipeline across the desert from Baghdad had to be rerouted. Jordan had no access to the sea except through the port of Aqaba, to which there was no paved road. Land communication between Egypt and the Arab states east of the Jordan became impossible. To avoid overflying Israel, air routes had to be changed, often at considerable expense, and the transit trade through Haifa, which had been important to Jordan and Palestine, shifted to Beirut. These obstacles were overcome in time, but it required wrenching adjustments in trade patterns and the severe loss of income to towns like Jerusalem, which had benefited from the flow of goods and tourists between the Mediterranean and the Arab hinterland to the East. Ironically, Israel, forced by the boycott to leapfrog over its neighbours to find markets, became a major exporter of technology throughout the world and in 1998 had a per capita income and physical quality of life far superior to other nations in the region.

The Palestine problem also became an overriding issue in Arab politics and a source of much tension and instability. In both Syria and Egypt, and eventually in Iraq, the incompetence of the old regime in the 1948 war was a major justification for seizure of power by the military, and Jordan’s King Abdullah was assassinated in 1951 because he had dealt directly with the Israelis on a division of the spoils in Palestine.

A desire to avenge the 1948 defeat and fears of Israeli expansionism became an obsession with the Arabs. Enormous amounts of money that could have gone to social and economic programs were spent on armaments and military preparations. Israel responded in kind, and the "Near East" (the Arab states and Israel plus Iran) became the less-developed world’s largest importer of weapons. Three major Arab-Israeli wars causing tens of thousands of casualties were fought--in 1956, 1967, and 1973--before any movement toward a meaningful peace began.