| Israel and Egypt, sharing a long and bloody history of enmity, signed a historic document in March 1979. Besides setting the groundwork for future peace in the Middle East. the Camp David Accords brought an end to their conflict and introduced cooperation into this volatile region. Both sides expected and have received security benefits from transforming military conflict into problems for diplomatic resolution, and there have been other payoffs.; The peace dividend literature is full of references to superpower competition, arms races, and reconciliation. But most of this literature focuses on the "virtual" Cold War, a war which was never actually fought. Many studies purport to prove or disprove the existence of a dividend of peace in the United States. But little research has been done in the more bloody, protracted, real conflicts taking place elsewhere in the world. If the theoretical assertions about peace dividends are correct, there should be obvious payoffs that economically enhance peace when these conflicts are resolved. Israel and Egypt have enjoyed peace dividends of different scopes and magnitudes, despite billions of dollars of U.S. aid. How these dividends have been diffused throughout each society differs substantially.; Much has also been written about defense-growth tradeoffs in different subsets of countries; developed, developing, Middle East, Africa, for example. Yet it is difficult to explain any one country's trajectory through defense-growth tradeoff or synergy because the nature of cross-sectional research design, which treats all countries as fundamentally equivalent. By focusing on two closely-linked countries, I show that costs and benefits of defense spending reach different levels depending on the level of political and economic development, stability, militarization, and the degree to which national security goals are homogeneous across society. I show that the reciprocal nature of the relationship between Israel and Egypt has transformed their arms race into a peace race, where diplomatic solutions replace military solutions and defense budgets shrink instead of grow.; After a discussion of the implications for Israel and Egypt in the near term, I speculate about the diffusion of peace and the peace dividend to Syria and Jordan. My findings indicate that because peace is fragile, peace dividends can be fleeting. |
