Shultz: Well, people frequently say that if the Israeli-Palestinian issue were resolved it would have a major impact. It might have some, but I don’t think it’s the main cause [of terrorism]. We have to dig a lot deeper.

If you look at even the conflicts in the Middle East the Iraq-Iran war had nothing to do with the Palestinian issue. The other struggles not much to do with the Palestinian issue. So it’s an important part of the problem -- an aggravation -- and something that people point to. So it would be desirable from that standpoint, let alone from the standpoint of the Israelis and the Palestinians, to get it resolved so that life can go on in a more stable, peaceful fashion.

Children running for cover from violence
in the Gaza Strip

But I still think you have to dig a lot deeper…   

Interviewer: I remember villages in middle Egypt, there’s a lot of unrest there.  They have 70% unemployment or even higher. 

Well, earlier we talked about demography. You look at the demography of the Middle East. The birth rates are very high. And there is such a thing as the curse of oil. The curse is that if, suddenly, you find oil -- and that means wealth -- and you don’t really have to do anything to have it… That doesn’t create jobs for people. So people are unemployed and they’re detached from reality. Work has a lot of attributes to it. One of them is that you get resources--you earn money. But work has the attribute that attaches you to reality, so you can’t sort of make up conspiracy theories and dream things that aren’t so. So having productive work as part of the way a society works I think is vitally important.

Interviewer: To the extent that we could pay more attention to economic issues in the Middle East such as employment?

We pay attention to this and we should [continue], The people who are responsible for these countries need to be paying [more] attention to it and trying to run their economies in such a way that [ensure] work is productive. …

The Palestinian people are really smart, industrious, hardworking people. I used to be in the construction business at one stage of my life, the Bechtel Corporation. We did a lot of projects in the Middle East and we had local subcontractors there. Terrific businessmen. Terrific workers. And if given half a chance, they’ll be productive.

This transcript has been lightly edited for readability.