Despite widespread predictions that the march of American forces into Baghdad would unleash either a wave of democratization or a plague of protest and repression throughout the Middle East, the more prosaic reality is that most Middle Eastern states are too preoccupied with their own domestic problems to be moved profoundly by events in Iraq. Indeed, the region seems likely to experience political evolutions rather than revolutions, small steps forward (or back) rather than sudden leaps into a new world of Middle Eastern democracy or brutal retreats to dictatorship.

Iraq’s main impact on the region will be political. The creation of a durable democracy will strengthen reformists and thus encourage more political liberalization. But if democratization provokes conflicts between Kurds, Sunnis, and the dominant Shiites (60 percent of Iraq’s population), or if it produces a new Shiite theocracy, rulers from Rabat to Tehran will point to Iraq as good reason to avoid political reform.

The possibility of ethno-religious conflict highlights Iraq’s psychological importance in the region. Iraqi President Saddam Hussein’s rule showed that when ethnic, tribal, religious, or secular segments of society cannot peacefully resolve their differences, a strongman can at least repress them. And for all Saddam’s exceptional brutality, autocrats throughout the Middle East have also used his model of trying to “resolve” identity conflicts by imposing order from above. If Iraq’s new leaders learn to address such conflicts democratically, they will not only achieve more stable results, but their example could then inspire proponents of ethno-religious accommodation everywhere.

Iraq’s neighbors are watching the dramatic reemergence of the country’s Shiite majority to see whether it will learn to tolerate diverse views and cooperate with the Sunni and Kurdish communities, or whether it will instead be authoritarian and intolerant. Radical Shiite clerics may be a minority, but because they are organized, they might impose their views on the wider Shiite community. The radicals know that Najaf, historically the most important Shiite city, will eventually reemerge as a center of Shiite scholarship. If they dominate this dynamic, the radicals will inspire fundamentalists everywhere. But if Najaf becomes a center of religious pluralism, advocates of a more tolerant Islam, particularly among the Arab world’s Shiites, will take heart.

As a neighboring state where Shiites hold sway, Iran is key to the course of this transition. Well before the Iraq war began, some of Iran’s radical clerics expressed happiness about an American-led campaign. They assumed that it would inadvertently bolster Iraq’s radical clerics and thus create a new regional ally for Iran’s own hard-liners. To fill the postwar vacuum before more moderate voices could organize, Iran sent Revolutionary Guardsmen to Iraq immediately after Saddam’s fall. Iran’s reformists, on the other hand, hope that Iraq’s moderate clerics will survive and establish a base in national politics, minimizing the effective convergence of radicals in Iran and Iraq and thus strengthening the political leverage of Iran’s own moderates. Still, given the divisions among the reformists and the entrenched power of the security establishment and conservative judiciary, the most feasible positive outcome in Iran would be a protracted and bumpy liberalization, even if Iraq’s moderate Shiites prevail.

In turn, all Arab states with significant Shiite populations will take cues from events in Iraq: Bahrain’s Shiite majority is ruled by a Sunni monarchy. Many Shiites were disappointed with the reforms initiated by the monarch and boycotted the semicompetitive elections of October 2002. A radical clerical victory in Iraq would embolden those Bahraini Shiites who accuse the king of promoting a fake democracy. Conversely, a pluralistic Iraq might promote an accommodation between the regime and the opposition that makes further liberalization possible.

In Kuwait, relations between Sunnis and Shiites are more cordial, in part because Kuwait’s Shiites constitute an influential community (some 30 percent) that has representation in the parliament. With Iraq no longer a threat, the authority of Kuwait’s parliament might increase. But if Shiite radicalism prevails or provokes internal conflict in Iraq, tensions will rise between Kuwait’s Shiite community and the royal family, and between Sunni and Shiite members of parliament, thus diminishing the parliament’s influence.

Saudi Arabia’s royal family has announced a reform program that will enhance the authority of the unelected Consultation Council. Inspired by events in Iraq, Saudi’s small Shiite minority is clamoring for more rights. Saudi reformists may address these demands, but they will be careful not to antagonize the conservative Wahhabi establishment. If Shiite radicals prevail in Iraq, it is difficult to imagine any meaningful political reform in Saudi Arabia.

In Lebanon, Hezbollah’s authority as spokesmen for the Shiites will be enhanced regardless of whether Iraq emerges as a democracy or a theocracy. Either way, the ties between Lebanese and Iraqi Shiites will be reinvigorated. Yet how Hezbollah projects its influence at home and abroad, particularly in Israel, will depend heavily on Syria. If the Bush administration convinces Syria to stop backing Hezbollah, space might open up for a more moderate Shiite leadership in Lebanon. But the prospects for such moderation will depend heavily on a revival of the Arab-Israeli peace process, since only a comprehensive peace that includes Syria will give Damascus cause to rein in Hezbollah.

Elsewhere in the Arab world, events in Iraq will be less significant, although hardly irrelevant. In Jordan, the paralysis of the peace process, rising Islamist passions, and economic crisis have prompted King Abdullah to reverse an earlier political liberalization. A resumption of trade with Iraq and, even more, the creation of a pluralistic regime in Baghdad, will set the stage for the holding of elections in Jordan, which as of this writing had been postponed twice. But if Iraq fragments or if radical Shiite clerics triumph, the king will carefully manage these and any elections to ensure that Iraq’s malaise does not spread southward.

Egypt’s leaders knew that the creation of a pro-Western Iraq would undermine Egypt’s geo-strategic position. They have pushed to accelerate economic reform and to reinvigorate the semiofficial National Democratic Party. President Hosni Mubarak and his allies are determined to ensure the state’s control over all further political reforms.

Further west, Iraq becomes less relevant. Algeria is still recovering from civil war and is unlikely to move much beyond its state of fragmentation. As for Morocco, until the recent terrorist bombings in Casablanca, further political liberalization seemed in the offing. But the pace is likely to slow, especially if the government senses that the rising power of mainstream Islamists is serving as a cover for radical Islamism.

Such reforms are unlikely to produce fully competitive democratic regimes. What we have in much of the Arab world are semiauthoritarian “liberalized autocracies.” Such regimes allow for a measure of pluralism and political competition that they then use to prevent a wholesale democratization of the political system. Even if a Jeffersonian democracy emerges in Baghdad, Arab rulers will not forgo the benefits of such mixed regimes any time soon.

For Arab states to contemplate moving beyond the old “liberalization game” would require a climate of regional stability that discredits Islamist extremism. Success in Iraq will help, but real political reform hinges on a comprehensive solution to the Arab-Israeli conflict that allows for an independent Palestinian state living in peace with Israel. The Bush administration has endorsed the Middle East road map for peace—a document that envisions the establishment of an independent Palestinian state by 2005. But will Bush take the kinds of domestic political risks for Palestinian-Israeli peace that he was ready to run for Iraqi freedom and democracy? If he doesn’t, even the sweetest political victory in Iraq won’t inspire the kinds of political changes in the wider Middle East for which the president and his advisors have hoped.

Originally published July/August 2003 in Foreign Policy