The Middle East peace process has taken some hard knocks during the past six months. It has also seen an unprecedented international effort to keep it on the rails and restore momentum. Despite the efforts of forces fundamentally opposed to the peace deal offered to the Palestinians, the dialogue has survived assassinations and terrorist attacks. But the prospects for further progress, drawing Syria and Lebanon into a comprehensive peace settlement with Israel, look less hopeful than they did.

The series or blows, which began with the killing of Israel’s Yitzhak Rabin in November by a Jewish extremist, rank among some of the worst excesses of recent years. In January, the elimination of a prominent Palestinian activist, identified by Israel as masterminding bomb attacks, was a cause for celebration in israei. it was also the prelude to a series of explosions in Israel which have claimed more than 60 lives since the end of February.

The other casualty was the Syria-Israel talks in the US, which were being conducted away from the glare of international publicity. The talks broke up in early March with no date set for their resumption. which may not be until after the Israeli general election in May. If the result of the Israeli poll is a government led by Likud, which considers the Oslo accords of 1993 to be fatally flawed, there will be serious doubts about the talks resuming at all.

If confidence in the peace process has waned among Arab and Israelis alike, so too have the hopes that a peace settlement would enable the region to radically reduce its outlays on defence. Crippling defence costs have been blamed for diverting resources from more productive purposes and distorting the economic evolution of the entire region.

Saudi Arabia, the largest defence spender in the area, devotes about a third of its annual budget to defence and security, amounting to an estimated $13,200 million in 1995, equal to 10.6 per cent of gross domestic product (GDP). Iraq built up a huge defence machine in the 1980s and is still trying to add to its arsenal, despite the best efforts of UN monitors. Israel’s defence budget in 1995 was $6,200 million or 7.5 per cent of GDP. These figures compare with defence budgets among NATO members which account for 3-4 per cent of GDP.

It might be assumed that peace treaties will neutralise external threats to security and lead inevitably to a reduction in defence outlays. However, the experience of the peace between Israel and Egypt suggests otherwise. The 1979 peace treaty led to greater spending on defence rather than less. As part of the Camp David process, the two states became the world’s largest beneficiaries of US Foreign Military Assistance (FMA). In 1995 alone, Israel received no less than $3,000 million in FMA money, including $1,800 million for equipment.

Egypt was the second largest recipient of FMA from the US last year. receiving $2,100 million of which $1300 million was earmarked for equipment Egypt has used the US funds to re-equip all its armed forces, and, also with US cooperation, has honed its military into a fighting force that Israel now regards with respect. ‘Egypt would be a very effective enemy if it chose to be one,’ an Israeli general said at a recent briefing in London. Indeed, Israeli generals consider the exclusion of arms control measures from the Camp David accords to have been a mistake and to have set a dangerous precedent. No sooner had Jordan signed a peace deal with Israel in 1994 than its wish list of US military equipment was dispatched to Washington. This year the US has offered Amman an initial package of 16 F-16 fighters and 50 tanks.

Military strategists are thinking ahead to the day when the peace process is complete. In Israel, in particular, the strategic implications of a peace settlement are seen as raising rather than reducing the threats to national security, with all that implies for spending. For Israeli defence strategists, the return of the Golan to Syria and the withdrawal of the Israel Defence Force (IDF) from the West Bank will mean the reduction of Israel to a ‘strategic tube’. This will make it more vulnerable to attack, particularly from stand-off weapons, such as the Scud missiles launched against Israel by Iraq in 1991.

Israel’s peace treaty with Egypt demilitarised Sinai, creating a buffer zone between the two states. Syria is a different matter.

Damascus is only 70 kilometres from the border and Israel accepts that it would be impossible to insist, as it managed to achieve for Sinai, on a complete demilitarisation so close to the Syrian capital. Even after an agreement, Israel expects Syria to maintain a large military machine which it will have to counter with an equally substantial force for many years to come.

‘A very aggressive structure of military establishment will have to be maintained,’ says the general. Israel is unwilling to rely on international guarantees such as US or UN forces on the Golan and will insist on retaining some advantage in any settlement with Syria, ‘because Israel faces a multidimensional threat that they don’t.’ Yet, demilitarised areas will be a key element of any settlement with Syria or an eventual sovereign Palestinian entity. The creation of such areas has many implications. As well as deterring war, demilitarised zones will determine the opening conditions of any future conflict. This is already having an impact on Israeli thinking. Israeli strategy is to develop its hi-tech, electronic warfare capabilities and integrate them with small, highly mobile units that can seize the initiative fast enough to deter enemy ambitions at the very start of a conflict.

The pre-emptive strike is alive and well in Israeli military minds.

Israel’s military strategists also fret about the changes within Israeli society as a result of the peace process. The fabled morale that was once regarded as a unique strength is being eroded. The strong blend of nationalism and religious conviction, so cherished as a unique source of military morale and motivation, is fading among the Israeli public. Most young Israelis are more concerned with personal security than the security of the state. They are also spending less time in uniform as conscription obligations are reduced.

The implications for defence spending are clear. Arms reduction may be included among confidence building measures in a final settlement between Syria and Israel.

And Israel would even welcome the retirement of some tanks and artillery as it would allow their replacement with equipment better suited to the different kind of conflict that Israel anticipates in the future. Rather than delivering a dividend, peace seems destined to come at a price, with at least as much, if not more, being spent on national defence for many years to come.