While the Egyptian masses are uprising in unprecedented ways across the country against a Western-backed dictator, Israel fears the worst.

The country’s President Shimon Peres said last week that, “no matter what they say, we owe Mubarak true gratitude for being as steadfast as a rock and for working towards peace and stability in the Middle East.”

Former British Prime Minister Tony Blair told CNN that Mubarak was “immensely courageous and a force for good” for the Israeli/Palestinian “peace process.”

The Israeli mainstream media is filled with apocalyptic visions. Ben Caspit writes in Maariv that, “Al-Jazeera has become the greatest enemy of the old world, the world of stability and moderate Middle Eastern regimes.”

Truly free speech in the Arab world threatens Israel because a wide diversity of views, including Islamists and critics of Zionism, will be more loudly heard and necessarily incorporated into the political mainstream.

The American media and our own are filled with neo-conservative doomsayers who argue the Muslim Brotherhood is on the verge of taking over Egypt though there is no evidence for this.

Indeed, Washington and Britain have a history of working alongside Islamists in their battles against Communism and the years after September 11, 2001.

Israeli-connected “experts” routinely feature in our media despite having no success in bringing peace to the Middle East. Here in Australia, last week’s ABC TV’s Lateline interviewed former American ambassador to Israel Martin Indyk though he wasn’t once asked about Israel.

What we are seeing is nothing less than a profound identity crisis for the Zionist state. The region is awake and Israel fears losing its mantle as the “Middle East’s Only Democracy” Inc.

Naomi Klein tweeted last Wednesday: “Israel, call your brand managers, the whole world sees your claim to being ‘only democracy in ME’ relies on supporting dictatorship.”

Jewish Israeli blogger Magnes Zionist articulated the sentiment well a few days ago :

“For if the price to pay for a Jewish state is acquiescing in tyranny and injustice for reasons of realpolitik – as Israel did with apartheid South Africa – then arguably that price is too high…”

Washington, via its mouthpiece the New York Times, has essentially acknowledged that the Egyptian crisis for them is all about Israel.

Daniel Levy, a former Israeli peace negotiator, told The New York Times what was keeping Washington up through the night: “It really can be distilled down to one thing, and that’s Israel.”

For decades Israel has maintained regional hegemony through a combination of US protection and bribery. Jordan, Egypt and Saudi Arabia are relied upon to take American money to maintain the fiction of peace with the Jewish state while abusing the Palestinians living within their borders.

Indeed, mainstream Jewish writers in the US have been continuing this delusion, stating that Egypt’s “moderation” under Mubarak allowed Israeli/Arab peace to develop. Leslie Susser wrote in JTA that President Obama was sending the wrong message to “moderate” Arab regimes such as Saudi Arabia that they “might be as peremptorily abandoned in time of need.”

Women can’t work or drive in “moderate” Saudi Arabia.

Middle East “stability” has led to this: the West Bank occupation has deepened, fascism has gone mainstream within Israel, the siege on Gaza continues (with Egyptian help) and Israel’s Jewish mainstream increasingly turns away from democratic norms (a new study found more than half polled would limit media freedom if Israel’s image was being threatened).

Mubarak has provided false comfort for too long. He was feted by every Israeli Prime Minister since the 1980s, happy to collude with the ongoing degradation of the Palestinian population because he was paid to do so. He wasn’t an independent actor – alongside Jordan and Saudi Arabia’s leaders – because he knew his role and received countless billions to fulfil his mission.

Egypt has been the second highest recipient of US aid after Israel for years and money has bought him Western political elite legitimacy. But his people largely loathed him (something I heard time and time again during my various visits to Egypt).

The brutal siege on Gaza, maintained by Israel and Cairo, is a discriminatory policy designed to crush the Hamas party that rules there. But the opposite has happened; the Islamist group has been strengthened. Israel is now even demanding that whatever new Egyptian government may emerge must recognise the peace treaty with the Jewish state, regardless of what it has done to the Palestinians under occupation.

Thomas Friedman in the New York Times is urging the Israelis to do a deal with the Palestinians in light of the Egyptian uprisings, as a way to save the Jewish state. The wishes of the Palestinian people are clearly secondary. Egyptians (or Palestinians for that matter) can never see the West as an honest broker when their opponents are funded and armed to oppress them.

Some in Israel are realising an opportunity. Haaretz has editorialised that Benjamin Netanyahu should prepare for a “new regional order…in which the citizens of Arab states, and not just tyrants and their cronies, influence the trajectory of their countries’ development.”

Anshel Pfeffer argued in Haaretz that Israel’s image, by so closely backing a brutal Arab regime, is shown to be saying that only the Jewish state deserves choice and freedom from authoritarianism:

“But even if it is difficult for us to accept it, Israel was simply not a factor in the whole Egyptian saga of the past week. And there is no reason that it should be. True, they don’t like us, and why should they? They are Arabs and Muslims, and rightfully or not, they see Israel as an occupying country, and they want an Egyptian government to do more to right the wrong. Been to Europe lately? They don’t like us much there either, for precisely the same reasons — but the Europeans apparently deserve democracy more than Egypt. After all, we were happy when the Berlin Wall fell.”

Israel fears losing its status as the Middle East’s brave island of democracy. The threat of a true Arab democracy, writes Yoav Fromer in Tablet, is “the chance that a genuine Arab democracy might raise the bar for Israel and prompt international calls for it to get its own democracy in order, end the occupation of Palestinian territories, and amend its discriminatory policies toward its Arab minority.”

*Antony Loewenstein is an independent journalist and author of My Israel Question