ABSTRACT
As signals of a fast approaching end to the Arab-Israeli conflict have been surfacing in the past few years, public interest has shifted from the immediate consequences of longstanding animosities in the Middle East to the underlying social and economic structure of the region. Immediate observations on the regional socio-economic character were far from optimistic: the Middle East was obviously one of the most underdeveloped and isolated regions of the world economy. On the international scene the protracted ArabIsraeli conflict impeded the economic, social and, equally important, political development of the region’s countries. The economic costs associated with a continuing militarised conflict gained new momentum in the aftermath of the Cold War due to rapid technological change. This increased the renewal costs of military hardware and thus imposed a serious drain on shrinking regional resources in an era of falling oil revenues.
