The sweeping Israeli victory in the Six-Day War of 1967 had forced every Arab state to rethink its own foreign policy and the extent of its commitment to the cause of Arab unity. Egypt, having lost the Sinai, faced Israelis entrenched in the Bar-Lev line directly across the Suez Canal. Jordan, having lost the West Bank, faced Israeli troops directly across the Jordan River. Syria, having lost the Golan Heights, faced Israeli forces within easy striking distance of Damascus itself. The notion of united Arab armies sweeping the Jews into the sea had clearly proved to be romantic, while political unity among the Arabs suffered from the abiding division between nationalist and socialist states like Egypt, Syria, and Iraq and traditional Arab monarchies like Saudi Arabia and Jordan.

The Palestine Liberation Organization (PLO), organized in 1964 to represent some 2,000,000 refugees from the Palestine mandate who were scattered around the Arab world and from 1968 led by Yāsir ʿArafāt, was also divided between old families of notables, whose authority dated back to Ottoman times, and young middle-class or fedayeen factions anxious to exert pressure on Israel and the West through terrorism. The latter included the Popular Front for the Liberation of Palestine (PFLP), formed three months after the 1967 war. Over the next year the PFLP hijacked 14 foreign airliners, culminating in its spectacular destruction of four planes at once in Jordan. In 1970–71 the moderate King Hussein of Jordan lost patience with the autonomous PLO formations in his territory and expelled them, provoking a sharp military exchange with Syria. The PLO moved its central offices to Lebanon, whence terrorists could cross the frontier to commit atrocities against civilians inside Israel. The PFLP and other Palestinian groups also linked up with extreme leftist and rightist (because anti-Semitic) conspiracies in Italy, Austria, and Germany to form a terrorist network that left no European or Mediterranean state free from the fear of random violence. In September 1972 terrorists from an organization calling itself Black September took nine Israeli athletes hostage at the Munich Olympic Games; all the hostages and five terrorists died in the ensuing gun battle with police.

The terrorist network benefited mightily from the financial support, training, or refuge provided by established pro-Soviet states like Cuba, East Germany, Bulgaria, Algeria, Syria, Yemen (Aden), and especially Libya. In 1969 the Libyan monarchy was overthrown in a military coup led by Colonel Muammar al-Qaddafi, a fanatical adherent of Nasser’s pan-Arabism. Following Nasser’s death in 1970 and the development of rich oil deposits in Libya, Qaddafi styled himself as the new leader and financier of the radical Arab cause. In imitation of Mao, he issued a little Green Book describing his “new gospel…. One of its words can destroy the world.” The ideology was a mixture of Third World-ism, Socialism, and Muslim fundamentalism, and it called forth a “heroic politics.” In the eyes of the West, the rhetoric masked a crazed cruelty, and even in Arab eyes it seemed at best antiquated in the wake of the 1967 war.

Another new feature of Middle Eastern politics was the assertiveness of the Organization of Petroleum Exporting Countries (OPEC), composed of oil-producing countries in the Persian Gulf and Arabian Peninsula as well as Libya, Nigeria, and Venezuela. The members of this producers’ cartel accounted for a large percentage of the world’s oil reserves and wielded tremendous potential power over the Europeans and Japanese, who relied on imports for more than 80 percent of their energy needs. In the past, oil prices had been kept artificially low by the Western oil companies through bilateral agreements with producer states. By 1970, however, most host governments had taken over ownership of the production facilities, and they saw in a drastic rise of oil prices a means of accumulating capital for development and purchases of arms, as well as a way to pressure the Western states into respecting their grievances against Israel.

The most populous frontline (i.e., bordering Israel) Arab state, but one without oil revenues, was Egypt. Since 1955 Egypt had undergone a demographic explosion. Population was growing at a rate of 1,000,000 per year, and 35,000,000 people were crowded into the Nile valley and delta. The numbers and youth of the Egyptians (over half were under 25 in 1980) and the country’s economic weakness meant that frustrated and unemployed youth posed the constant threat of political instability. Certainly Egypt could no longer afford an endless crusade against Israel. These considerations dominated the thinking of Nasser’s successor as president, Anwar el-Sādāt. He could not, however, abandon Nasser’s legacy, especially with the Sinai under Israeli occupation, without losing his legitimacy at home. Accordingly, Sādāt laid a risky and courageous plan to extricate his country from its foreign and domestic stalemates. Husbanding the arms provided by the U.S.S.R. after 1967, he abruptly expelled 20,000 Soviet advisers in July 1972 and opened a secret channel to Washington, hinting that Egypt and the United States together could eliminate Soviet involvement in the Middle East. Only the Americans, he reasoned, might influence the Israelis to return the occupied regions. Then, on October 6, 1973, during the Jewish holiday of Yom Kippur, he launched the fourth Arab–Israeli war.

The Egyptian army moved across the Suez Canal in force and engaged the Bar-Lev line. For the first time it made substantial progress and inflicted a level of casualties especially damaging for the outnumbered Israelis. Syrian forces also stormed the Golan Heights. The United States and the Soviet Union reacted with subtle attempts to fine-tune the outcome by alternately withholding or providing arms to the belligerents and by urging or discouraging a UN cease-fire. Nixon denied Israel an airlift of arms until October 13, preventing Israel from launching a prompt counterattack and thereby signaling Sādāt of American sympathy. Once assured of U.S. aid, however, the Israelis struck on both fronts, regained the Golan Heights, and crossed the Suez Canal. Kissinger, alarmed that the Israeli victory might be so complete as to hinder a lasting settlement, quickly agreed to call, with the Soviet Union, for a UN cease-fire. The cease-fire broke down at once, and Israeli forces encircled a 20,000-man Egyptian army corps. Brezhnev curtly warned Nixon of possible Soviet military intervention, which the United States moved to deter, perhaps recklessly, with a worldwide alert of its military forces. Finally, Kissinger threatened a cutoff of arms deliveries unless Israel halted its offensive, and peace was restored.

The 1973 war saved Egyptian honour and solidified Sādāt’s prestige to the point where he could afford to be conciliatory. The United States emerged as the “honest broker” between Egypt and Israel. As Kissinger put it, “The Arabs can get guns from the Russians, but they can get their territory back only from us.” Kissinger’s “shuttle diplomacy” between Tel Aviv and Cairo secured an Israeli withdrawal beyond the Suez in January 1974, the reopening of the canal, the insertion of a UN force between the antagonists, and, in September 1975, an Israeli retreat from the crucial Mitla and Gidi passes in the Sinai. The United States flooded both countries with economic and military aid, and Sādāt repudiated Nasser’s Socialism in favour of policies stimulating domestic private enterprise.

The limited rapprochement that emerged from the 1973 war was purchased at great economic cost, for the Arab OPEC nations, led by Saudi Arabia, seized the opportunity to enact a five-month embargo of oil exports to all nations aiding Israel. More telling still was the price revolution that preceded and followed. OPEC had already engineered a doubling of the posted price of oil to $3.07 per barrel by the eve of the war. In January 1974 it nearly quadrupled the price again, to $11.56 per barrel. The importance of this sudden rise cannot be exaggerated. The resulting shortages and exorbitant costs accelerated the growing inflation in the Western world, exposed the energy-dependency of the industrial nations, created a vast balance-of-payments deficit in many industrial states, wiped out the hard-won economic progress of many developing nations, and placed massive sums of petrodollars in the hands of a few underpopulated Middle Eastern states. The political upshot was that the United States and Europe would have to pay close attention to the desires of those Arab states in foreign policy as long as OPEC unity survived.

In November 1977, Sādāt shocked the Arab world by announcing his willingness to go to Jerusalem personally to seek peace. When his talks with the new Israeli prime minister, Menachem Begin, broke down, President Carter invited them both to Camp David in September 1978. During 11 days of intensive discussion, Carter succeeded in bringing the rivals together. The Camp David Accords provided for complete Israeli evacuation of the Sinai, gradual progress toward self-rule for West Bank Palestinians over a five-year period, and a peace treaty signed by Begin and Sādāt at the White House in March 1979. This historic settlement dismayed other Arab states and split the PLO asunder, the so-called rejectionists refusing to recognize the settlement. Qaddafi purchased huge amounts of Soviet arms and expanded Libya’s training and supply of terrorists. In December 1979, 300 Muslim fundamentalists seized the holiest of all Islāmic shrines in Mecca. Sādāt himself was assassinated by Arab extremists in 1981.