Contrary to the common wisdom in Washington, most Arabs are poor, rational and interested in arms control. Declining oil prices, rising population, economic mismanagement and foreign policy adventurism have wreaked havoc with the economies of the Middle East, while local arms races have steadily raised the price of providing for national defense. Caught between these scissoring forces, Middle East countries are finding it more difficult to sustain their military budgets. Economic and political pressures are pushing many countries to divert funds from military to civilian investments. In the past, attempts to curb the Middle East arms race tried to begin with conflict resolution and build up to arms control. Today a new strategy is plausible: to use economic incentives to rein in the arms race without waiting upon the glacial progress of conflict resolution.
The 1991 Gulf war illustrated the destructive dangers of the Middle East arms race. It was a common observation that Iraq had “the fourth largest army in the world.” Even after its devastating defeat, Baghdad still deploys 50 percent more main battle tanks than Great Britain.  Egypt, Syria and Israel each own more battle tanks than France and Britain combined. In a war Syria could field about 800,000 men with 4,000 tanks and 550 combat aircraft. A fully mobilized Israel has more than 500,000 armed forces with about 4,000 tanks and 600 combat aircraft. If Egypt called up its reserves it would have more than 1 million men under arms, with about the same number of tanks and aircraft as Israel. 
These armories were not built in a day. For the last 20 years, the Middle East has had the sad distinction of being the world’s largest arms market. From 1979 to 1988 the region imported at least $144 billion worth of weapons.  During the 1980s, one third (by value) of all weapons traded internationally were destined for the Middle East.  By most any measure, levels of military expenditure were higher in the Middle East than any other region of the world.
Many hoped the Gulf war would produce an epiphany, a massive change of heart, that would defuse the conflicts plaguing the region. The Bush administration, after a hurried series of inter-agency meetings in early 1991, proclaimed new policy initiatives in four areas: Arab-Israeli peace talks, “free-market” economic development, collective security in the Gulf, and limits on proliferation of weapons of mass destruction.  In May 1991, President George Bush called for a regional freeze in the acquisition, production and testing of surface-to-surface missiles. He advocated a ban on the production of plutonium or any other material that could be used as fissile material for nuclear weapons. He reiterated an earlier call for an end to the production of chemical and biological weapons. Finally, he called for negotiations among the major arms suppliers to the region.
Few countries rejected Bush’s initiative, but even fewer acted on it. The US itself proceeded to announce record levels of arms sales to its clients.  Washington had arranged for arms control to be discussed during “multilateral talks” that were supposed to parallel the Arab-Israeli peace negotiations, but this linkage stifled rather than spurred arms talks. When the “multilaterals” convened in Moscow in January 1992, and the arms session was reconvened in Washington in May, discussions were desultory and inconsequential.
Negotiations among the major arms suppliers were equally unproductive. The “big five” states which supply most of the Middle East’s weapons (the US, Britain, France, the Soviet Union and China) met in Paris in July 1991, in London in October 1991, and in Washington in May 1992. They could hardly agree upon a press communique, much less a treaty. They did call for the United Natlons to maintain a registry of arms sales to the Middle East but disagreed over whether they should notify the UN before or after sales had been made. 
Washington’s arms control experts were cynical. Richard Perle, a former assistant secretary of defense who had been a major influence on arms talks for 20 years (and a prominent supporter of the US military alliance with Israel), told Congress that efforts to control the flow of weapons to the Middle East were pointless because “wars are made by men — not the weapons with which they equip their armies — and any policy that fails to comprehend that enduring truth is certain to go wrong.”  With this foreign policy analog of the National Rifle Association’s slogan (guns don’t kill people — people kill people), Perle and others urged the US instead to use arms sales to its allies to construct a favorable “balance of power” in the region. “The primary focus of US efforts in the Middle East should be those countries and groups which it does not want to see equipped with anything more than token forces,” wrote Geoffrey Kemp in a study funded by major US foundations. “Obvious candidates would include Iran, Iraq, Libya, Syria and Yemen…. The United States should be wary of multilateral control efforts that are more likely to penalize its friends than its adversaries.” 
The pattern of overlapping antagonisms that characterizes the Middle East has led some to argue that the types of arms control that have proven successful elsewhere are impracticable here. In central Europe all the states involved were clustered into two blocs that enjoyed rough military parity and were able to negotiate through normal diplomatic channels. In the Middle East, Saudi Arabia feels threatened not only by Iran and Israel, but also by Iraq and Yemen. There are no military parities: Israeli strategic doctrine insists on military superiority over any combination of Arab states. Only one Arab state has normal diplomatic relations with Israel, many have suspended relations with Iran, and virtually all have at least one Arab rival with whom they refuse to communicate.
The militarization of the Middle East has been abetted by outside powers. If the region’s major export was cotton, it is doubtful that the big powers would have the same interest in selling arms to local allies, much less in deploying hundreds of thousands of troops to defend them. Moreover, without oil it would have been quite impossible for Middle Eastern states to finance the large-scale arms imports that characterize the region. According to the International Monetary Fund, between 1972 and 1988 the states of the Middle East spent 11.6 percent of their gross domestic product on the military — more than any other region of the world. Even some Arab states that were not major oil exporters were able to spend more than 20 percent of their GDP on the military, thanks to subsidies from their richer neighbors.  Without petrodollars there might still be conflict in the Middle East, but it would be fought with hand grenades and machine guns rather than with advanced tactical bombers and ballistic missiles.
This oil dimension contains a germ of hope. If historically oil price increases have fed the arms race in the Middle East, could a decline in oil prices starve it? Petrodollars have not been the only source of funding for arms, and economic forces have not been the only factors determining levels of military expenditures. Economic crisis does not guarantee that Middle East states will become more receptive to arms control. But economic forces deserve greater attention as potential incentives for demilitarization. The following analysis will focus on conditions in the Arab world, but many of its conclusions hold true for Iran, Israel and Turkey as well.
Before the Storm
During the 1980s, oil revenues declined while expenses continued to rise, forcing the larger Arab states to borrow huge sums. Wars and the arms race devoured much of the accumulated capital. When Operation Desert Storm swept through the region, the Middle East had already become quite impoverished by many standards.  Arab petroleum revenues dropped from $178 billion in 1980 to $41 billion in 1986, affecting all the states in the Arab world.  Between 1980 and 1988 the two major Arab donors, Saudi Arabia and Kuwait, cut their foreign aid funding by 63 and 91 percent respectively. During the same period, the total value of inter-Arab aid transfers dwindled from $8.7 billion to $2.3 billion annually. 
Arab governments were slow to adjust to this decline of revenues. Population growth in most of the Arab world is higher than average for developing countries. The political stability of Arab regimes rests in their ability to meet the basic economic needs of expanding populations through state subsidies that create jobs, lower the price of food and give elites an opportunity to skim commissions off government contracts. The Arab states delayed painful spending cuts until the 1985 price collapse, and even then they did not curtail spending anywhere near enough to offset the 75 percent drop of petroleum revenues. In 1988 the Arab states were spending $2 billion more on food imports than they were in 1980. They were also still spending a billion dollars more on arms than they had been in 1980 — led by Iraq, Saudi Arabia and Syria. 
The richer states of the Gulf were able to cover the gap between what they spent and what they earned by drawing down their capital reserves; most Arab states could only meet their bills by borrowing. By 1986 the Arab states had accumulated at least $70 billion in foreign debt that cost $5 billion dollars a year to service.  Relative to GNP, the foreign debts of Egypt, Jordan, Morocco, South Yemen and Sudan were larger than those of Brazil, Mexico, the Philippines or Poland. 
Borrowing only delayed the day of reckoning. By the end of the 1980s, the hard currency earnings of the poorer states were being exhausted by debt payments. Even the rich states began to post regular budget deficits. This budget crunch eroded the standard of living for most people and triggered dangerous outbursts of popular dissent.
When the Arab political order began to fracture, it was no surprise that the first cracks appeared in Baghdad. Estimates of the military expenditures and economic damages shouldered by Iraq during the eight-year war with Iran range from $120 billion to $456 billion — even the lower figure matches the total value of Iraqi oil exports since 1973.  The Iraqi “peacetime” fiscal deficit was running at $4-5 billion each year, and an additional $5-6 billion was needed to service Baghdad’s $90 billion in debts and maintain its credit standing.  Iraq’s invasion of Kuwait was prompted almost entirely by economic desperation. Saddam Hussein gambled that he could not only wrest control of Kuwait’s banks and oilfields but pressure the other Gulf states to restrict oil production and forgive Iraq’s debts. His gambit backfired, triggering the 1991 war that ruined Iraq.
US targeting plans during the war included many economic sites — “primarily to create postwar leverage over Iraq, not to influence the course of the conflict itself,” Pentagon officials later acknowledged. “Planners now say their intent was to destroy or damage valuable facilities that Baghdad could not repair without foreign assistance.”  A classified CIA estimate calculated that repairing the physical damages suffered in the war would cost Iraq at least $30 billion.  Iraq’s own estimates of the costs of rebuilding its physical plant are higher.  The UN has saddled Iraq with indemnities of at least $50 billion.  Then there is the cost of plants idled and people unemployed, not to mention the many thousands killed and wounded and hundreds of thousands of refugees. Some experts guessed that in 1991 Iraq’s GDP fell to 5-10 percent of its pre-war value (approximately $25 billion).  By the end of 1991 the average Iraqi family, once among the most prosperous in the Arab world, saw its living standard decline to a level below India’s poverty line.  In addition to the physical damages suffered by Iraq and Kuwait, economic dislocation afflicted Arab states from Morocco to Oman. Jordan’s finance minister figured that in the first year following the Iraqi invasion the costs of the war to Jordan would total $2.144 million — the equivalent of 63 percent of GDP.  The Gulf war displaced 5 million people, and much of the economic damage suffered by Arab states resulted from the attendant disruption of the system of labor exchange between oil-rich and oil-poor countries. Some workers fled just to get clear of the combat zone, but the majority were deliberately expelled by the Gulf states. This labor crisis, combined with the loss of trade, caused a 17 percent drop of Jordan’s gross national product in 1991.  Conditions in Jordan may well worsen over the next several years as returnees use up savings or assets they brought with them.
The IMF, employing very conservative figures, estimates that for the Middle East as a whole in 1991 the Gulf crisis led to a 4 percent drop of GDP, a 2.5 percent rise in the rate of inflation and — despite a temporary rise in the price of oil — a decline of the region’s current account from a $10 billion surplus to a $43 billion deficit.  Other analysts suspect that the Arab world’s bill for physical damages, military costs and economic dislocations may rise as high as $500 billion. 
Politics of Demilitarization
The bottom line is that the Arab world today is capital-poor. Allocating revenues is a political question. As budgets tighten, leaders do not lay their axe equally on all expenditure categories. Still, the economic crisis that culminated with the Gulf war crested at a moment of unprecedented debate about the role of the military in the Arab world.
Signs of this were evident in recent parliamentary elections in Algeria, for example. The platform of the Front Islamique du Salut (FIS) was basically the same as those of other Islamist movements across the Arab world. But one of the FIS planks was unusual and noteworthy: It promised to slash the defense budget in order to make more money available for social expenditures.  This promise was not decisive in the FIS election victory, nor was it the key factor that triggered the military coup after the election. But it indicates an important change in Arab attitudes toward the military.
During the decade after 1973, the Arab states earned roughly a trillion dollars on oil exports; they spent $250 billion on their expanding militaries and another $60 billion on importing weapons. Even during these boom years, devoting a third of all revenues to the military had the effect of crowding out investment in economic and social development. During the 1970s and 1980s development in the Arab world was not impressive, even by Third World standards.  When revenues fell, military spending declined — but social investment fell even more rapidly. By the late 1980s the Syrian government was spending 19 times as much on its military as it did on health and education. In Saudi Arabia this ratio was 38:1 and in Iraq 56:1.  The root of Arab economic failures may have been misguided policies and ineffective use of the revenues available, but the stranglehold of Arab militaries on state budgets obstructed development in a particularly tangible manner. 
The aftermath of the Gulf war left many Arabs wondering: Is this the level of security we paid billions for? More than 20 years ago, Sadiq al-‘Azm argued that the dismal Arab performance during the 1967 war arose primarily from the weaknesses of Arab society. The Arabs would have to learn the same lessons that Japan taught Russia in the war of 1905: Only the modernization of society at large could raise the levels of technological competence and political commitment necessary for military victory.  By 1991 many Arab officers felt that disappointing socioeconomic development was eroding their authority and, like their civilian compatriots, they saw plenty of evidence that Arab armies were still incapable of effectively performing their assigned mission: to wage war.
Is declining public support for military expenditures a politically significant trend? What is to prevent current policies from continuing? A partial answer is evident in recent developments in Syria. During the 1980s, the Syrian economy suffered from the same general crisis that plagued most Arab states, but Syria was not heavily dependent either upon trade with the Gulf states or on workers’ remittances, so the Gulf war left its economy relatively unscathed. Indeed, as a reward for joining the coalition against Iraq, Damascus received $700 million in credits from the Europeans and Japanese and more than $2 billion in cash or pledges from Saudi Arabia and the other Gulf states. 
Many in Washington assumed that this windfall would be spent on arms. US sources suggested the Syrians were lobbying Moscow for some $2 billion worth of main battle tanks, MiG-29 fighters, radar systems and an array of SAM-11, SAM-13 and SAM-16 antiaircraft missiles.  Israeli reports were even alarming.  In March, Israel announced that North Korea had supplied Syria with 24 launchers for Scud-C missiles that could carry a heavier payload than the Scud-Bs Iraq used during the Gulf war.  In May there were reports that Czechoslovakia had agreed to sell Syria 300 mothballed T-72 tanks for the bargain-basement price of $200 million. 
By the end of 1991, however, the expected massive rearmament of Syria had not materialized. The Czechs announced that they had canceled the planned tank sale, Moscow signed no new arms agreement, and stories about North Korean missile deliveries remained rumors. No one doubted that the Syrian military would have liked to go on a shopping spree, but a variety of factors crimped any binge. The Bush administration had earlier lobbied China to halt the sale of 150 M-9 surface-to-surface missiles, and the Russians maintained Gorbachev’s policy of reviewing and restricting Syrian arms requests. 
There were also domestic pressures that prevented Syria from dedicating anything like $2 billion to arms imports, mostly because cabinet ministers and bureaucrats in various ministries had successfully earmarked many government funds for non-military purposes. During the late 1980s, debt service problems had threatened to overwhelm Syria’s ability to conduct international business, civilian or military. Civilian technocrats successfully lobbied for liberalization of foreign exchange controls, incentives to lure back wealthy expatriates and a new investment law guaranteeing wider latitude for private entrepreneurs. And they made sure that debt service had first claim on government funds. 
The technocrats insisted that economic projects retained high priority even after the Gulf crisis had eased the government’s cash crunch.  They argued that investing the Gulf war windfall in the economy would ultimately generate more revenue, even for the military, than spending it immediately on arms. One minister successfully appealed to President Hafiz al-Asad to earmark $200 million for the construction of a steel plant in Hama, arguing that he could use these funds as leverage to lure Gulf governments into loaning the remaining $300 million he needed to fund the plant. 
Civilian technocrats were encouraged that if they could get the government to fund part of a project, they might be able to find private, state or foreign capital to fund the rest. In the nine months following December 1990, Syrian ministries issued $2 billion in civilian tenders. Not all of these would be funded, but the technocrats were bidding for the cash Syria received from the Gulf. They became bolder partly because many Syrians began to argue publicly that the country’s real battle was not with Iraq or even Israel; but rather, “our war is with poverty.” 
During the two years before the Gulf war, Syrians developed a more concrete sense of what the efforts to expand their military had cost them. During the 1980s Damascus had acquired $12 billion in military debts to the Soviet Union. Syria did not have the hard currency to service this debt, so in 1989 Moscow agreed to take payment in Syrian lira. As part of the deal, Damascus signed a commercial convention that permitted the Soviets to use their lira to buy and export any Syrian goods (except for oil and phosphates, which Syria could use to generate hard currency).  The Soviets began buying up fruit and vegetable crops. Syrian textile manufacturers and clothesmakers geared up to produce cheap copies of French fashions for the eastern European market. In 1989 Syria showed its first trade surplus in 30 years.  In 1991, the Soviet consul in Aleppo, who acted as his government’s agent in many large purchases, bragged that he had made “more millionaires in the last two years than the Syrian government had in the preceding 20.” 
Will the combination of public pressure and technocratic maneuvering lead to a serious reduction of Syrian military expenditures? The battle over the budget has at least seriously delayed spending these funds on arms. The Syrian officer corps will go on buying weapons, but many fewer than they had hoped or their enemies had feared.
Arab Arms Control Initiatives
Syria and other Arab states are all searching for cheaper means to provide security, and several regimes have endorsed arms control proposals. Egyptian President Husni Mubarak saw the Bush plan as a variation of his own proposal, submitted to the UN in 1990, which built on a series of Egyptian efforts to promote creation of a nuclear-free zone in the Middle East going back to 1974.  Already in the 1960s Cairo had decided that any program to develop nuclear weapons would be too expensive to sustain.  The experience of the one Arab state that tried — Iraq — testifies to the wisdom of the Egyptian decision. It is difficult to estimate the total cost of Baghdad’s nuclear program, but Iraq certainly spent at least $10 billion and probably as much as $20 billion in pursuit of a bomb during the 1980s alone.  In 1991 Iraq still did not have a workable design for a bomb and was three to five years away from having enough enriched uranium to construct a viable nuclear device. 
There is little prospect of any Arab state building its own nuclear weapons in the next ten years, but Israel has a nuclear arsenal of at least 200 weapons.  The prospect of a two-tiered Middle East, in which non-Arab states will have the bomb and Arab states will not, has made support for a nuclear weapons-free zone in the Middle East nearly universal among Arab leaders.  Iraq and Syria have offered to dismantle their arsenals of chemical weapons as part of a deal to eliminate nuclear weapons from the region.  Egypt and the other states endorsed the Bush proposal despite the fact that it would leave Israel’s nuclear arsenal intact.  The incentives for adopting arms control arrangements governing nuclear weapons have yet to be translated into practical results — with the exception of the UN program to dismantle Iraq’s weapons. Yet among both Arabs and Israelis there is fresh thinking about the importance of restraining the drift toward nuclearization of the region. 
The regional economic crisis has also enhanced interest in conventional arms control. Jordan has played a leading role in this area. In 1991, Amman canceled its billion-dollar contract to purchase Mirage jet fighters from France and suspended a similar contract for British Tornado fighter-bombers. In fact, Jordan tried to find cash overseas buyers for some of the F-5 fighters and M-48 tanks already in its arsenal. King Hussein presented Parliament with a bill to abolish universal military conscription; the number of men under arms declined from 130,000 at the beginning of 1991 to 107,000 by the end of the year, and is expected to drop to 95,000 by the end of 1992. 
The Jordanians, naturally, are eager to encourage their neighbors to make similar cuts. In looking for a strategy, Jordanian leaders were inspired by the example of the Conference on Security and Cooperation in Europe (CSCE), which played an important role in negotiating mutual force reductions between NATO and Warsaw Pact forces. In 1990, Italy proposed extending the CSCE model to other regions and negotiated the formation of a parallel organization, the Conference on Security and Cooperation in the Mediterranean, which includes Algeria, Libya, Mauritania, Morocco and Tunisia.  The Jordanians have proposed building on this trend by creating another body, the Conference on Security and Cooperation in the Middle East (CSCME), to include the eastern Arab world. 
Arms for Debt
The Jordanians hope that a CSCME will permit member states to deal with a host of issues — labor migration, oil prices, water supplies, terrorism — but the centerpiece of their proposal is a plan to link debt reduction and arms control. “The successful implementation of arms control and arms reduction will release substantial funds that were previously wasted on armaments,” the Jordanians argued. “Countries abiding by such a process will qualify for the systematic and measured reduction of existing debts (most of which were accumulated through arms purchases in the first place).” 
Saddled with more than $8 billion in foreign debts, Jordan had suspended payment on bilateral debts in 1989, and had to raise more than $300 million per year just to service its multilateral debt.  Jordan adopted an IMF austerity program in April 1989, triggering five days of rioting that threatened to topple the monarchy. An arms-for-debt swap would allow the burdens of adjustment to be spread between the military and the civilian population. It would achieve debt reduction rather than just debt rescheduling. And it would transform the reduction of the military budget from a simple economic necessity into an act of political virtue.
IMF austerity programs have also triggered riots in Egypt, Tunisia and Morocco, and ignited insurrections in Algeria and Sudan.  Any proposal that would allow these states to reduce their heavy debt service burden without running the gauntlet of popular protests against austerity measures is bound to receive close and sympathetic attention.
There is also reason to believe an arms-for-debt swap will be of interest to creditors. Various proposals for debt swaps, such as debt-for-nature swaps designed to promote sound ecological policies in Latin America, have not yet been especially successful.  But in Latin America most foreign debt is owed to private lenders. Most Arab debt is owed to foreign governments, which might be more amenable to achieving a public goal like arms control. Western governments are already forgiving some Middle Eastern debts as essentially uncollectable. The US forgave $7 billion of Egypt’s debts in September 1990, and France canceled debts owed by Yemen.
There is even a prospect that this sort of program would be supported by the IMF. For years the IMF’s country assessments have been based entirely on criteria like fiscal deficit, currency values and treatment of the private sector. There is strong statistical evidence for the common-sense proposition that countries with high levels of military expenditures tend to save less, and thus their economies tend to grow more slowly.  Studies also suggest that when the IMF arranges loans or debt rescheduling for a country, military expenditures are generally insulated from the burden of adjustment. 
Michel Camdessus, managing director of the IMF, immediately after the Gulf war issued a plea for “industrialized countries to agree to a ban on export credits for arms sales” to the Middle East.  In October 1991 he reached an agreement with his counterpart at the World Bank, Lewis Preston, that both agencies would consider halting support for governments that spent too much on their militaries.  An arms-for-debt swap might prove an elegant tool through which the Fund could press its plan to reduce military spending.
The Jordanian call for an arms-for-debt swap is not yet a fully developed proposal. The details could prove extremely important. The gearing ratio of the swap — the formula specifying how many dollars of debt will be forgiven in exchange for each dollar that military expenditures are reduced — must be higher than 1:1 in order to have any incentive effect on debtor nations. Indeed, a swap will have greatest allure if it offers debtor states an opportunity to cancel their obligations in a relatively short period.
Conversely, creditor nations would want to assure that the gearing ratio is not so high as to allow states to cancel their debts quickly while making relatively small cuts in their arms programs. Sustaining cuts is important. If such reductions continue over a period of years there is a much greater likelihood that they will become institutionalized — as states in the region begin to feel more secure and civilian agencies develop effective budget claims.
A fairly moderate gearing ratio of 2:1 combined with a serious but not draconian cut of 20 percent in military spending would allow the most eager arms consumers in the region — including Egypt, Israel, Jordan and Syria — to retire their foreign debts in less than 20 years. Gearing ratios can be varied so that the poorest heavily indebted states such as Sudan and Mauritania receive enough debt relief to encourage their participation in the program.
Economically desperate but relatively secure states like Egypt and Algeria might agree to a debt swap fairly quickly, but Israel, Syria and Iraq would certainly insist that any arms reduction steps they took be linked to reciprocal reductions by neighbors. The Jordanians, aware of this, see their arms-for-debt proposal not as an alternative to arms control negotiations but as an incentive program, designed to build upon already existing economic motives for arms control.
The Saudi Exception
The oil-rich monarchies of the Gulf may prove impervious to the allure of arms-for-debt swaps. Although poorer today than they once were, these states are unlikely to need relief in our lifetime. Yet they are among the least secure, so they too have been eagerly searching for cheaper, more reliable ways of bolstering their defenses. Although the Gulf Cooperation Council has long discussed the virtues of military cooperation, the only concrete steps taken have been an air defense network and a token 7,000-man joint force called Peninsula Shield. In the aftermath of the Gulf war, Oman proposed that the GCC fund the formation of a 100,000-man joint force. The Damascus Agreement of March 1991 proposed in essence a GCC military alliance with Egypt and Syria, in which troops from these states would remain as the nucleus of a pan-Arab peacekeeping force in the Gulf. In exchange, the GCC states agreed to deposit $10 billion in a development fund that Cairo and Damascus could draw upon. 
The Damascus Agreement would have provided pan-Arab legitimation for the presence of Western troops in the Gulf. During the crisis, many Gulf states that had previously rejected foreign bases quietly opened their military facilities to US forces. US bases in Oman were expanded, and Bahrain and the United Arab Emirates offered facilities to ensure a regular rotation of US troops through their countries. In September 1991, Kuwait negotiated a formal security accord that called for joint exercises, training and prepositioning of US military equipment inside Kuwait, and signed similar accords with Britain and France. 
But the plans for the collective security in the Gulf soon collapsed. The most decisive obstacle was a dramatic shift by Saudi Arabia. Saudi resistance to collective security stemmed from the regime’s fear of the consequences of hosting foreign troops on Saudi soil, or even in neighboring state. During the war, allied troops were kept isolated in the desert, and elaborate rules minimized the possibility that they would infect the Saudis with alien ideas.  Despite these precautions, the simple presence of Western troops on Saudi soil bred dissent among journalists, among the Shi‘a of the eastern province and among women. Saudi liberals drew up a petition requesting that King Fahd set up a consultative assembly, modernize the legal system and put controls on the religious police. 
This stirring of demands for change elicited an even more forceful reaction from the right. In May 1991, over 400 ‘ulama’ signed their own petition to the king. They demanded the right to approve cabinet selections, a purging of “state bodies of anyone convicted of corruption or negligence,” and “rebuilding the media and all their services in accordance with the information policy adopted by the kingdom to serve Islam, express society’s morals and enhance its culture.” The ‘ulama’ advised the king to keep “the country out of non-Islamic pacts and treaties,” to diversify its sources of arms and to build up Saudi Arabia’s own armed forces. Over the following year, the conservative movement expanded its criticisms and obtained a series of key concessions from the crown. 
The political controversy confirmed the royal family’s conviction that the conservatives were right about one thing: Foreign troops threatened the regime’s security more than they bolstered it. This calculus reinforced the dynasty’s decision to expand its own armed forces rather than rely on collective security arrangements. Immediately after Iraq invaded Kuwait, King Fahd announced plans to expand the armed forces, called for a volunteer force to meet Iraqi aggression and, for the first time, proclaimed the need for military conscription. A training program was established to prepare all university graduates for military service — a revolutionary move which dispensed with the traditional recruitment of military units along tribal lines. Plans were drafted to increase the size of the regular army from 35,000 to 80,000-90,000 and reorganize the National Guard along US lines. Together these measures would triple the size of the Saudi armed forces to about 200,000 troops. 
Of course, these troops would be armed with all of the blistering wonder weapons the US had demonstrated during the war. Immediately after the war, Riyadh presented Washington with $23.5 billion in weapons orders for its ground forces alone.  The Saudis also hoped to spend $4 billion for the purchase of 72 F-15 fighters.  In July 1991, they spent $365 million on assorted sophisticated bombs and missiles.  By September they had concluded an agreement giving them access to American Global Positioning System satellites. 
This military buildup has led Riyadh to be less inclined to accommodate the other regional states. The Saudis did not want to divert funds from their own military to a large GCC joint force, nor were they interested in creating an army that might encourage any autonomy among their smaller neighbors. At the December 1991 GCC summit, Saudi opposition killed the Omani plan for a 100,000-man joint force.  They also showed much less enthusiasm for the Damascus Agreement: Egyptian or Syrian troops in the Peninsula presented the same threat of ideological infection as US troops — only the danger was Arabist rather than liberal.
The US had expected to be able to regularly rotate planes and ships into Saudi bases and to preposition enough military supplies in the kingdom to outfit at least a division.  Instead, the Saudis refused to permit stationing troops, resisted prepositioning and declined to sign a “status of forces” memorandum that would have defined the US military’s rights of access.  The Saudis did not think they could dispense with US protection, but they did want greater control over any decision to summon the Americans. 
Saudi Arabia’s project has undermined hopes for arms control programs for the region as a whole. The smaller Arab Gulf states were naturally alarmed and eagerly began enlarging their own armed forces. US Secretary of Defense Richard Cheney returned from a Gulf states tour in May 1991 with orders for over 200 Apache attack helicopters, almost 400 Abrams tanks and nearly 1,000 Bradley fighting vehicles.  Arms procurement officials from the Gulf states swamped the Le Bourget and Dubai Air Shows in the fall of 1991 to bid on aircraft like the Tornado, the Eagle and the Hornet; on helicopters such as the Gazelle and the Apache; and on munitions such as the GBU-28 “burrowing bomb.”  Kuwait decided to double the size of its air force and the 1991-1992 Kuwaiti budget called for a six-fold increase of defense spending, rising to 43.4 percent of its total budget.  Gulf arms purchases are used to justify demands for an upgrade and modernization of the Israeli arsenal, scuttling finance ministry plans for reduced military spending.  Iran will feel similar pressures to increase its military spending. 
As for poorer Arab states, they can purchase cheaper variants of advanced conventional weapons systems, some of which are available from non-Western producers — witness the Syrian rush to acquire ballistic missiles. While less effective and precise than aircraft, missiles offer a means of delivering munitions that is much more difficult to intercept. The poorer Arab states cannot hope to acquire sophisticated weapons technologies with the speed or in the numbers that the Gulf states and Israel can. But with patience and enough time, they can re-equip themselves for a future of advanced conventional warfare.
Implications for Arms Control Strategy
The option of choosing the road toward demilitarization, toward a diversion of funds away from the military, appears more viable today than at any time since the 1967 war. Budget restraints and the low prestige of Arab militaries have already slowed the growth of military budgets in some Arab states and produced an unprecedented level of interest in arms control throughout the region. Yet inertia, if nothing else, favors the continuation of past trends by buyers and sellers alike. If the Gulf states continue down the road to rearmament, it will be hard for their neighbors to resist following them. In a few years the economic pressures for demilitarization may ease. The “window of opportunity” for arms control may well close.
Further militarization is not inevitable, but it is likely unless strong initiative is shown today. Jordan’s proposal for an arms-for-debt swap, Egypt’s call for a nuclear-free zone and various collective security plans are all attempts to galvanize political energies for demilitarization. But the Arab leaders who have floated these proposals have done so from a position of weakness. Economic crisis and military impotence have eroded their popularity.
The US and the West are in a much stronger position to offer such leadership — if Washington were serious. The Bush arms control proposal of May 1991 proved poorly designed to catalyze Arab interest in arms control. Instead of loosely linking arms control and the peace process, so that progress in either sphere would encourage advances in the other, the Bush administration had sequenced them so that serious arms control concessions could only become practicable after a breakthrough in the peace talks. 
If the Bush initiative constructed too strong a linkage between arms control and the peace process, it posited too weak a linkage between arms control and regional security in the Gulf. The question of arms control apparently never came up during the talks between Washington (represented by the Pentagon, not the State Department) and Riyadh about the defense of Saudi Arabia. American negotiators, eager to acquire rights to bases or at least to preposition military hardware in the kingdom, consistently tried to “sweeten the deal” by offering to sell the Saudis advanced weapons systems. They made similar offers to Kuwait, Bahrain and the UAE. 
To a large extent, this reflects the fact that military hardware is one of the few manufacturing export sectors in which the US is still internationally competitive. Washington, furthermore, has not abandoned its traditional reliance on military sales as a means to influence foreign governments. The result has been an escalation rather than a moderation of US arms sales, including some of the most sophisticated weapons in the American arsenal. In January 1991 the White House notified Congress that it was considering $23 billion worth of weapons sales to the Middle East for that year alone.  US officials assert that “there is absolutely no contradiction between arms control and arms sales.”  But this official formula is high hypocrisy. US arms sales have deeply damaged the prospects for arms control in the region. Progress in conflict resolution is not only a desirable objective in its own right; it is an essential part of the scaffolding needed to hold arms control arrangements in place. But it would be a mistake to think that conflict resolution is the only strategy for advancing arms control. Today the strongest forces promoting interest in arms reductions in the Middle East are economic. The most powerful strategy for luring Middle Eastern states into arms control talks would be to enhance and reinforce these economic trends. The Jordanian arms-for-debt swap offers a model of how such a strategy might work by making civilian investment more attractive and military budgets less so. Offers to exchange arms reduction in the Middle East for the opening of export markets in industrialized states or facilitating technology transfer could operate according to the same logic. Grants of economic aid can be made conditional on arms reductions (although the value of foreign aid to Middle Eastern states, Israel excepted, is tiny compared to the cost of their debt service).
All of these “incentive programs” enjoy distinct advantages over “epiphany-based” strategies for fostering disarmament. They would reinforce the weight of economic factors rather than trying to invent pressures from scratch.
Some sort of restraint on the flood of advanced weapons to Gulf states is also necessary. At issue is not just the political economy of the Arab world, but also the US domestic political economy and foreign policy, for which arms transfers continue to be a central element. What Middle Eastern states lack today is not visions of arms control arrangements, but adequate incentives for implementing them.
 Financial Times , October 4, 1991.
 Economist, February 9, 1991.
 Natalie J. Goldring, Arms Transfers to the Middle East (Washington: Defense Budget Project, April 2S, 1991), pp. 16-17.
 US Arms Control and Disarmament Agency, World Military Expenditure and Arms Transfers 1989 (Washington: US Government Printing Office, October 1990), pp. 73-76.
 These policy initiatives emerged from an inter-agency commission chaired by Deputy National Security Adviser Robert Gates that was convened after the air war against Iraq opened. The conclusions of the commission were presented before Congress on February 6, 1991, by Secretary of State James Baker. See Middle East Policy Survey, February 1, 1991, and Carroll Doherty, “US May Have To Start From Scratch In the Volatile Postwar Arab World,” Congressional Quarterly, February 23, 1991.
 William Hartung, “The Boom at the Arms Bazaar,” Bulletin of Atomic Scientists 47 (October 1991); and “New World Orders: Arms Transfers to the Middle East,” Arms Control Today (March 1991).
 “US Arms Transfers to Middle East Dampen Prospects for Paris Meeting,” Arms Control Today (July-August 1991); J. A. C. Lewis, “UN Five Agree to ‘Big Five’ Weapons Exporters: More Talks, More Sales,” Arms Control Today (November 1991); New York Times, May 31, 1992.
 Defense News, May 6, 1991.
 Geoffrey Kemp, The Control of the Middle East Arms Race (Washington: Carnegie Endowment for International Peace, 1991), p. 181.
 “Military Expenditures in the Developing World,” Finance and Development (September 1991).
 See Yahya Sadowski, “Arab Economies after the Gulf War,” Middle East Report 170 (May-June 1991).
 OPEC Annual Statistical Bulletin (Vienna: OPEC, 1989); and IMF.
 Middle East Economic Digest, December 21, 1990.
 Compiled from tables in UN Food and Agriculture Organization, FAO Trade Yearbook (Rome: 1986 and 1989); and Arms Control and Disarmament Agency, 1989.
 Middle East Economic Digest, March 24, 1989.
 World Bank, World Debt Tables, 1990-1991, vol. 2 (Washington: 1990), p. xxiii; for an even more dramatic set of figures, see Middle East Economic Digest, January 12, 1990.
 The most precise calculations of Iraq’s war damages are by Kamran Mofid, The Economic Consequences of the Gulf War (London: Routledge, 1990), who thinks they totaled $4S6 billion. Also see Anthony H. Cordesman, The Iran-Iraq War and Western Security, 1984-1987 (London: Jane’s, 1987), p. 9.
 Middle East Economic Digest, May 24, 1991.
 Washington Post, June 23, 1991.
 New York Times, June 3, 1991.
 Middle East Economic Digest, May 24, 1991.
 Washington Post, May 15, 1991; and Middle East Economic Digest, May 17, 1991.
 Middle East Economic Digest, November 29, 1991 and May 24, 1991.
 Jean Dreze and Haris Gazdar, Hunger and Poverty in Iraq, 1991 (London: Suntory-Toyota International Center for Economics and Related Disciplines, September 1991), p. 52.
 Al-Ra’y, September 20, 1990, cited in Foreign Broadcast Information Service, September 20, 1990; and GDP figures from Middle East Economic Digest, September 20, 1991.
 Middle East Economic Digest, September 7, 1991.
 International Monetary Fund, World Economic Outlook (October 1991), p. 22.
 Ibrahim Oweiss, “Economic Impact of the Gulf War with Special Reference to the Economies of Selected Arab Countries,” (Georgetown University, April 19, 1991); and Anthony Cordesman, “No End of a Lesson? Iraq and the Issue of Arms Transfer,” Royal United Services Institute Journal (Spring 1991), p. 3.
 Washington Post, January 12 and January 13, 1992.
 See Yahya Sadowski and Martha Wenger, “Rich and Poor States in the Arab World,” Middle East Report 170 (May-June 1991).
 ACDA, World Military Expenditures and Arms Transfers 1989 (Washington: US Government Printing Office, 1990); ACDA (1982); and UNDP (1991), pp. 156-157.
 For examples of such reasoning, see Gamal Zayida, “Sira‘ al-Silah wa al-Tanmiya fi al-Sharq al-Awsat,” al-Ahram al-Iqtisadi, January 28, 1991; and Rafaat Soliman, “Slow Rate of Arab Social Development,” al-Ahram Weekly, January 9, 1991.
 Sadiq al-‘Azm, al-Naqd al-Dhati Ba‘d al-Hazima (Beirut: Dar al-Tali‘a, 1969).
 Daniel Pipes, “Is Damascus Ready for Peace?” Foreign Affairs 70 (Fall 1991), p. 41.
 Defense News, July 8, 1991.
 New York Times, March 4, 1991; Yediot Aharonot, October 29, 1991; cited in FBIS, October 30, 1991, pp. 35-36; and Jerusalem Post, November 22, 1991.
 Eric Silver, “Within Striking Distance,” Jerusalem Report, March 28, 1991.
 Washington Post, May 7, 1991; Wall Street Journal, October 16, 1991.
 Ehud Ya’ari, “No M-9s to Syria,” Jerusalem Report, January 9, 1992; Washington Post, February 2, 1992; and Financial Times, November 20, 1989.
 The chief technocrat responsible for pushing liberalization was Minister of Economy Muhammad ‘Imadi; see “Suriya Tatahahawwil ila Iqtisad al-Suq al-Hurra min khilal al-Qanun Raqm 10,” al-Majalla, January 1-7, 1992.
 Middle East Economic Digest, May 17, 1991 and August 30, 1991.
 Both Saudi Arabia and Kuwait established bilateral economic commissions with Syria after the Iraqi invasion. While these agencies were not interested in delivering cash aid to the Syrian government, they were eager to help raise finance for development projects. See “Kuwait to Finance $250 Million in Projects,” Damascus Domestic Service, April 21, 1991, cited in FBIS, April 22, 1991.
 The quotation is from a Syrian engineer; see Wall Street Journal, October 29, 1991. For similar sentiments, expressed more tactfully, see the open letter to President Asad from ‘Umran Adham, a Syrian expatriate businessman, in al-Hawadith, cited in Middle East Economic Digest, April 5, 1991.
 US Embassy, Commercial Section, Syria’s Commercial Setting and Trends, September 13, 1991; and Independent, July 6, 1989.
 Middle East Economic Digest, October 12, 1990.
 Interview, Damascus, September 1991.
 On the Mubarak plan and its antecedents, see Mahmoud Karem, A Nuclear Weapons-Free Zone in the Middle East: Problems and Prospects (Boulder, CO: Westview Press, 1988); and Mohamed Nabil Fahmy, “Egypt Disarmament Initiative,” Bulletin of the Atomic Scientists (November 1990); and UN General Assembly, Establishment of a Nuclear Weapon-Free Zone in the Region of the Middle East A/45/435, October 10, 1990.
 Yoram Nimrod, “Arms Control or Arms Race?” New Outlook (September-October 1991), p. 17.
 Mark Hibbs of Nucleonics Week and Betsy Perabo of the Monterey Institute of International Studies supplied invaluable information for these estimates. Also see Jonathan Broder, “Saddam Hussein’s Bomb Is Still Ticking,” The Jerusalem Report, February 6, 1992.
 The most reliable assessments of the Iraqi nuclear program can be found in three articles by David Albright and Mark Hibbs in the Bulletin of the Atomic Scientists: “Iraq and the Bomb: Were They Even Close?” (March 1991); “Hyping the Iraqi Bomb” (March 1991); and “Iraq’s Bomb: Blueprints and Artifacts” (January-February 1992).
 See Anthony Cordesman, Weapons of Mass Destruction in the Middle East; Leonard Spector, “Nuclear Proliferation in the Middle East,” Orbis 36 (Spring 1992); and Seymour Hersh, The Samson Option: Israel’s Nuclear Arsenal and American Foreign Policy (New York: Random House, 1991), pp. 198-200.
 Even such ostensibly “radical” states as Syria support the proposal; see Nimrod, pp. 15-18.
 New York Times, January 8, 1989; and “Chemical Arms Ban Still Uncertain,” Science, January 20, 1989.
 Some Egyptian and Palestinian officials argue that leaving Israel with a capped quantity of nuclear weapons might make Israel more willing to relinquish Arab lands occupied in 1967. This same thesis has been advanced by Israelis. See Shai Feldman, Israeli Nuclear Deterrence (New York: Columbia University Press, 1982); Yohanan Ramati, “Israel and Nuclear Deterrence,” Global Affairs (July 1988); and Avner Cohen and Marvin Miller, “Nuclear Shadows in the Middle East: Prospects for Arms Control in the Wake of the Gulf Crisis,” Defense and Arms Control Studies Working Paper (Cambridge: MIT, December 1990).
 Alon Pinkas, “Time to Talk Arms Control,” Jerusalem Post, November 22, 1991; Hirsh Goodman, “Tick, Tock, the Nuclear Clock,” Jerusalem Report, December 19, 1991; Dore Gold, ed., Arms Control in the Middle East (Boulder, CO: Westview Press, 1990); and Ahmad Khalidi, “Middle East Security: Arab Threat Perceptions, Peace and Stability,” in Middle East Security: Two Views, International Security Studies Program, American Academy of Arts and Sciences Occasional Paper 3 (May 1990).
 Middle East Economic Digest, September 6, 1991; Defense News, November 25, 1991; and Ehud Ya’ari, “Less Guns and Butter,” Jerusalem Report, March 12, 1992.
 Le Monde, October 29, 1991.
 The Gulf Crisis: Incremental Financial Impact on Jordan and Regional Security (Amman: November 1990).
 Looking Beyond the Gulf War: A Conference on Security and Cooperation in the Middle East (Amman: March 1991), pp. 14-15.
 Financial Times, September 3, 1990; Middle East Economic Digest, September 14, 1990.
 David Seddon, “Riot and Rebellion in North Africa: Political Responses to Economic Crisis in Tunisia, Morocco and Sudan,” in Berch Berberoglu, ed., Power and Stability in the Middle East (London: Zed Books, 1989), pp. 114-135.
 J. Eugene Gibson and William J . Schrenk, “The Enterprise for the Americas Initiative: A Second Generation of Debt-For-Nature Exchanges, with an Overview of Other Recent Exchange Initiatives,” George Washington Journal of International Law and Economics, pp. 1-70.
 Daniel P. Hewitt, “Military Expenditure: International Comparison of Trends,” IMF Working Paper WP/91/54 (Washington: Fiscal Affairs Department, 1991). Also see idem., “Military Expenditures in the Developing World,” Finance and Development (September 1991), pp. 22-25.
 Pauls De Masi and Henri Lorie, “How Resilient Are Military Expenditures?” International Monetary Fund Staff Papers 36 (March 1989), pp. 130-165.
 Financial Times, March 20, 1991.
 Washington Post, October 18, 1991.
 Middle East International, March 22, 1991; Rida al-Laythi, “Qira’at li-I‘lan Dimashq,” al-Ahram al-Iqtisadi, March 18, 1991; Washington Post, April 6, 1991; Middle East Economic Digest, May 3, 1991; and Abdel-Ati Mohamed, “$10 Billion Arab Aid Fund,” al-Ahram Weekly, December 26, 1991.
 New York Times, September 4, 1990, March 25 and May 10, 1991; Middle East International, November 22, 1991; Washington Post, September 8, 1990, February 25 and September 6, 1991; FBIS, October 4 and 15, 1991.
 Washington Post, September 13, 1990. Also see “Touchy Topics in the Gulf,” Harper’s (November 1990).
 Financial Times, August 20, 1990; Wall Street Journal, November 16, 1990; New York Times November 7, 1990; Economist, January 26, 1991; Washington Post, April 16, 1991.
 Al-Sha‘b, May 21, 1991, cited in FBIS, May 23, 1991; Middle East International, June 14, 1991. A second petition, circulsted in August, contained even more scathing criticisms of the dynasty’s policies; see al-Quds al-‘Arabi, August 1, 1991, cited in FBIS, August 22, 1991. Also see The Middle East (November 1991), pp. 17-18; al-Jumhuriyya, November 23, 1991, cited in FBIS, November 26, 1991; and New York Times, March 9, 1992.
 New York Times, September 5, 1990; Financial Times, December 12, 1990; Washington Post, April 21, 1991.
 Defense News, July 22, 1991. Later estimates were that the Saudis would spend $14 billion on upgrading their ground forces; see Defense News, August 26, 1991.
 Washington Post, January 24, 1992.
 Defense News, July 30, 1991.
 Jane’s Defense Weekly, September 14, 1991.
 Middle East International, January 10, 1992.
 Washington Post, April 21, 1991; Wall Street Journal, September 20, 1990.
 New York Times, October 13, 1991; Washington Post, October 20, 1991; and Middle East Policy Survey, March 15, 1991.
 New York Times, April 29, 1991; Middle East Policy Survey, July 1, 1991; Jerusalem Post, July 31, 1991.
 Middle East International, June 14, 1991; Jane’s Defense Weekly, June 15, 1991; Defense News, July 29, 1991.
 Hartung, “Boom at the Arms Bazaar,”; and al-Majalla, October 30-November 5, 1991.
 Jane’s Defense Weekly, October 26, 1991; Middle East Economic Digest, January 17, 1992.
 The Israeli economy was in almost as bad shape as its Arab neighbors, and there have been similar calls for a diversion of funds from military spending to economic investment. See FBIS, September 9, 1991, pp. 27-28.
 Wall Street Journal, March 18, 1992. Despite repeated CIA alarms about the menace of an Iranian arms buildup, Iran’s declared military budget for 1992 is only $295 million when calculated at parallel exchange rates. Compare this to annual budgets averaging $1.5 billion during the Iran-Iraq war, or $8.4 billion during the final years of the Shah’s rule. See Financial Times, February 6, 1992.
 One Israeli observer advocated that Israel cede parts of the Occupied Territories to those Arab states willing to make arms cuts. See Daniel Trapper, “Arms Cuts for Land,” The Jerusalem Post, January 16, 1990.
 The Bush initiative had originally been conceived as an effort to stem the proliferation of weapons of mass destruction in the Middle East. This narrow focus helps to explain why the flood of sales to the Gulf triggered few alarms inside the administration. On the structural incentives behind US arms sales, see William Hartung, “Breaking the Arms Sales Addiction,” World Policy Journal (Winter 1990-1991); and “Curbing the Arms Trade,” World Policy Journal (Spring 1992).
 Carroll Doherty, “The Dilemma of Mideast Arms Sales,” Congressional Quarterly, March 9, 1991.
 “US Arms Transfers to Middle East Dampen Prospects for Paris Meeting,” Arms Control Today (July-August, 1991). Also see Wall Street Journal, March 4, 1991; Defense News, June 3, 1991; and New York Times, May 31, 1992.