For his part, Baker is trying to inject a note of realism into postwar expectations. “You’re not going to make progress on Arab-Israeli peace unless the parties themselves really want to make progress,” he said last week. In fact, Baker is already hitting snags. The gulf Arabs balk at the idea of a regional development bank for fear their money will wind up in pro-Saddam Jordan. And NEWSWEEK has learned U.S. intelligence analysts see signs Iraq may be on its way to Lebanonization at the hands of hostile neighbors. Both Iran and Syria have infiltrated armed Iraqi exiles to foment unrest. Iran has sent 3,000 armed Kurdish and Shiite rebels, according to the intelligence estimates.

Baker wants to see how serious Israel is about peace and whether Arabs have ideas for replacing the discredited Palestine Liberation Organization as the Palestinians’ interlocutor. “We’re not going out with a blueprint,” one senior U.S. official says. “The question of what is possible is a very open question right now.” Israel and the Arabs will be sizing Baker up too. Both feel the United States is in their debt. By not retaliating against Iraq, Israel believes it can ask for $13 billion in U.S. aid over the next five years. By sending 40,000 troops to fight alongside the Americans, Egypt’s President Hosni Mubarak has already earned $7 billion in U.S. debt relief. He is first in line for funds from the grateful gulf Arabs, and Egypt will participate in an Arab peacekeeping force for Kuwait and Saudi Arabia. But Egypt, bidding for leadership of the Arab world, wants one more reward from the United States: pressure on Israel to deal with the Palestinians.

Israel is already resisting the pressure. Palestinian support for Saddam, dramatized by cheering on the West Bank in favor of some 40 Iraqi Scud missile attacks on Israeli civilians, has hardened attitudes toward the Arabs in Israel. And the government of Yitzhak Shamir will press that case to Baker, arguing that the war proved instability in the Middle East comes from erratic Arab states, not Israeli occupation. Far from feeling obliged to make concessions to the Palestinians, Shamir wants the United States to push for Arab recognition of Israel. Says Foreign Minister David Levy: “The United States must tell them this is the last war, and that they must talk with Israel.”

The catch, of course, is that state-to-state talks won’t be possible if Israel doesn’t move simultaneously on the Palestinian front. Still, the United States hopes the moderate Arab states will now feel confident enough to deal with Israel. “We are talking about two tracks, and they have to move together,” said a senior State Department aide. “One isn’t formally conditioned on the other. But as a practical political matter, to make progress on one you have to make progress on the other.” Israel and Syria, which have already been tacitly cooperating against the PLO in Lebanon, have been hinting at talks about the Golan Heights, which Israel captured from Syria in 1967. The Saudis have hinted at ending their state of war with Israel. If they do, other gulf countries would follow suit.

Syria’s wily leader, Hafez Assad, looms as a potential spoiler. He has already been paid off handsomely for his stand against Iraq: the gulf Arabs have committed billions in much-needed cash; Washington gave him international respectability and turned a blind eye to his absorption of Lebanon. But he is unlikely to acquiesce as Mubarak emerges as the U.S.-anointed leader of the Arab world–a title to which Assad himself has long aspired. Despite hints at rapprochement with Israel, he could set himself up as a new avatar of Arab radicalism if he doesn’t get satisfaction on the Golan Heights.

Assad can be expected to act in tandem with Iran, his ally against Saddam Hussein for more than 10 years. The gulf war has helped Iran break more than a decade of isolation. To rebuild his own economy, President Ali Akbar Hashemi Rafsanjani needs investment and know-how only the West and the Arab gulf states can provide. The pariah wants to become a player. “Iran is the largest country in the region, and we have the longest coastline in the Persian Gulf,” says Foreign Minister Ali Akbar Velayati. “How can [the gulf states] ignore our position?” Teheran would surely oppose any Arab-Israeli peace effort that did not have broad Palestinian support. Iran wants foreign forces out of the gulf and demands a central role in postwar security arrangements–but those aims are not necessarily as disruptive to U.S. objectives as they may seem.

Only Jordan and Yasir Arafat of the PLO, who backed Iraq, are left holding no I.O.U.s. Jordan’s King Hussein may become useful again to the West and the Israelis as a go-between on the West Bank. “I have no personal animosity towards His Majesty the King,” was the most President Bush would allow King Hussein last week. Bush clearly believes it’s up to the king to make up with the West, if he still wants Western aid and diplomatic support. Arafat has been counted out before and is still popular with his people. But he may have no future in a new Middle East where anti-Iraq, pro-U.S. rulers control most of the region’s weapons, population and money–and where the most important question for years to come will be, “What did you do during the war?”

Baghdad radio claims Iraq was victorious in the gulf war. Do you think Arabs generally will see Saddam Hussein as more or less of a hero now?

17% More 73% Less

From the NEWSWEEK Poll of March 1, 1991