The recent announcement of a deal between the UAE and Israel to normalise their relationship certainly marks a big development for the Middle East and the Arab world. This makes UAE only the third Arab state – after Egypt and Jordan – to recognise Israel. And it is quite possible that other Arab states might follow suit. Naturally, the Palestinians have reacted with outrage to the news of the UAE-Israel deal. They see it as a stab in the back from their Arab brethren. So what explains this seemingly sudden U-turn among Arab states and their apparent ditching of the Palestinian cause? After all, it was the Israel-Palestine conflict that had kept the Arab states and Israel at arm’s length.

According to me, the answer lies in the transformations in Arab politics, society and economy across the region. The fact is that Arab nations – particularly the Gulf Arabs – have come to acknowledge that the days of petrodollar fuelled economic extravaganza are over. This poses a fundamental problem in these societies where the people have grown accustomed to handouts and subsidies without having to work for them. Therefore, the entire social contract of these Arab societies – which saw the rulers control the oil and provide the citizens with all kinds of largess in exchange for their loyalty – has to be rewritten. Which means that these Arab states have to put their people to work and make them pay taxes.

This is a tremendous socio-economic shift that has to be effected very carefully. For, there is bound to be criticism of the change from sections of the society. And that in turn could engender palace intrigues against the rulers from people within the inner circle who will be losing out in the changeover. Additionally, there is the threat from radical Sunni extremism which for decades has been exported by the likes of Saudi Arabia as an instrument of state policy to first fight Nasserism, then to fight the Soviets in Afghanistan and finally to counter the perceived rise in Shiism after the Islamic Revolution in Iran in 1979. But Arab states now realise the danger that such a policy poses to them as exemplified by the rise of the Islamic State terror group that had put them in its crosshairs.

Therefore, rewriting the social contract would automatically include hitting at the root of radicalism as it would involve creating a new type of citizenry which is less religious and more integrated with public life through work and social participation. In this way, Arab states would be killing two birds with the same stone. And then there is Iran. The Arab states’ regional standing was essentially a product of their petrodollars. But since the latter are on their way out, the oil-rich nations suddenly realise they have not much else by way of national power and human resources. Iran, which has been under Western sanctions for years and not been allowed to trade its oil freely, was forced to invest in other forms of national power and its human resources. As a result, if one takes away oil, Iran trumps the Arab states any day. Add to this the Saudis’ troubles in Yemen and the Arab states truly see Iran as their No.1 threat today.

Coming back to the UAE-Israel deal, Arab states are looking to warm up to Israel because of three reasons. First, they need to reorient their economies and invest in tech driven sectors. And Israel is a leader in technology in West Asia. Collaboration here with Tel Aviv will also strengthen the Arab states’ human resources and meaningfully engage the Arab youth. Second, the Arab states feel they need to counter Iran. There is a clear meeting of minds with Israel – and the current American dispensation – here. And third, the Arab states need to finish off Sunni radicalism. And they feel today that by engaging with Israel they can essentially dilute the vexed mother conflict between Israel and Palestine that has ideologically sustained radical terror groups for years. For, as per this paradigm, Israel will not be a sworn enemy and the recovery of the Palestine state not a religious cause but simply a political dispute. True, this will weaken the hand of the Palestinians. But the rapprochement  with Israel is a piece of the larger jigsaw puzzle that needs to be put together to effect the much needed socio-economic transformations within Arab societies, without which they will implode. Similarly, Iran is both a concern and a helpful object of ire as countering the Shia Republic can be used by the Arab rulers to inculcate a spirit of nationalism within their citizenry, which in turn is needed to put them to work and create a work culture. Arab rulers today want citizens who no longer ask what the state can provide them, but work to strengthen the state. This transformation is a huge challenge. Only time will tell if the Arab states succeed.