With significant help from the United States and in particular, President Carter, Israel and Egypt signed a peace treaty in 1979 that ended more than thirty years of Egyptian non-recognition of Israel and the series of military conflicts between the two states in 1948, 1956, 1967, and 1973. In retrospect, the treaty seems somehow both more and less important than recognized at the time.
Each side derived major benefits from the treaty, which reflected larger strategic goals that animated their foreign policies. Egypt sought to maintain its role as a preeminent Arab power, albeit one much less economically powerful than its wealthy Arab petroleum-rich neighbors like Saudi Arabia. President Sadat's cultivation of a series of American presidents and key advisors like Secretary of State Henry Kissinger and then Carter ensured that Egypt would continue to receive aid and patronage from the world's dominant superpower, the United States.
More concretely Sadat wanted to receive back the land Egypt lost in the 1967 war with Israel. Both in real and symbolic terms, he recognized the regaining of the Sinai Peninsula as crucial to restoring Egyptian pride in the wake of its military defeat in 1967, and as such marked the continuation of the 1973 war in which Egyptian forces fought much more vigorously against Israel and began the process of raising Egyptian self esteem.
Israel also saw the treaty as pursuing and achieving a prime policy: Arab recognition of Israel as a legitimate state in international legal and political terms. Since the inception of Zionism and the Zionist movement the question of relations with local and regional Arab political communities remained: would they recognize the legitimacy of the Jewish settlement and polity?
This question and the matter of the actual relationship of Jews and Arabs vexed the full spectrum of Zionist ideologies. Rightists sought territorial maximalism and therefore dismissed Arab claims to the land and the leftist Zionists (e.g. the Labor Party) who sought a more organic relationship between the two communities as naive and encouraging Arab violence against Jews. Leftists saw such rightists as Vladimir Jabotinsky (Begin's mentor and predecessor) as playing into the hands of Arab extremists, with each side's rejectionists strengthening the hands of the other.
Given that history of Arab intransigence regarding the fundamental fact of Israel's political and legal legitimacy, this treaty's significance cannot be overstated. It literally changed the Arab narrative about its collective identity as centered around ironclad opposition to Israel. Israel now ranked as a normal state in the eyes of its largest neighbor state. No Arab could put the toothpaste back into the tube: the option of recognizing Israel now existed in the material and historical sense of things.
Each of the primary actors therefore benefited from this treaty as well as paid a price intended or not. Begin came to be seen as a peacemaker and not just a hawk, and made the rightist argument—akin to Nixon making peace with China—that peace emerges only from strength. He lost support from his right flank, angered by the withdrawal of Jewish communities in the Sinai Peninsula. Sadat paid the ultimate price of gaining peace at the cost of his life, when two years later forces of the Muslim Brotherhood, motivated in large part by his "betrayal" of Egyptian, Arab, and Islamic honor, assassinated him.
I have always found it interesting that President Carter's role failed to earn him more public acclaim. Only Begin and Sadat received Nobel Peace Prizes though it's quite likely that left to their own devices they would have failed to reach a bilateral agreement. American polls suggested that the public modestly credited him for this foreign policy triumph, if only for a short while. Yet given the traditional American relative disinterest in foreign affairs it comes as less surprising that this achievement failed to counteract his deeper policy and political woes.
The American Jewish community almost from the outset seemed somehow emotionally disconnected from the enormity of this unprecedented treaty. Begin polarized the community, seen by many—particularly liberals—as too strident and unlike the traditional sabra icon that American Jews valorized politically and stylistically. Carter too never struck a chord for many: too Southern, too Christian, too evangelically religious for Jewish American tastes.
Finally, consider the year itself, 1979. A few months later another story from the Middle East would come to dominate world news much more dramatically than this peace agreement: the fall of the Shah of Iran's regime, and the rise to power of the Shiite clerical forces headed by the Ayatollah Khomeini. We can therefore see these two events as sequential yet pointing in markedly different directions. The era of post-colonialism and modernization in the Middle East begat a series of new secular states and leaders, like Egypt and first Nasser then Sadat. Religion was dismissed by analysts and actors as secondary if not irrelevant to the progression of this new mid-century reality. Israel for its part assumed as much, calculating that its future lay with managing relationships with a largely secular set of neighbors.
But this turned out not be the case. Shiite Iran immediately declared its unrelenting hostility to Israel and to the West in general and to the United States specifically. It went to war with Sadam Hussein's Sunni albeit secular Iraq, and sought to propel its influence throughout the region. Sadat was not able to set Egypt on a stable course of modernization or secularization, a problem for which he paid with his life. Perhaps even more importantly Egypt likely exerts less influence in the region today than it did in the era of Nasser and Sadat. Other states in the region too continued to struggle with the challenges of religion and building stable civil societies and strong polities.
In that sense Israel today finds itself in a curious position. In spite of its small size geographically and demographically it ranks as by far the strongest society and state in the region in virtually all measures. It enjoys peace with some of its neighbors, and stable relations with others. Yet all of this must be qualified by the general instability of the region and many if not most of the states in it. The 1979 peace treaty then remains a huge accomplishment as a marker of traditional diplomatic notions of hitherto adversarial states making peace with one another, even as those geopolitical norms remain threatened by the rise of new social and political forces that make the region one of continuing turmoil.