What if Barack Obama can make peace between the Arabs and Israel? It's easy to see how he might fail. But what if he succeeds and really does create a "new beginning between the United States and Muslims"? Here is a first draft of history for the next 20 years. The events are fantasy, of course, but the logic is based on four big trends:

First, Islam will slowly work out what it is for instead of simply what it is against. It will stop being used as an anti-western ideology but will remain a destabilising force, mobilising people against tyranny and corruption. Second, Arab nationalism will finally be buried after decades of failure, and non-Arab identities will re-emerge. Arabism powered the struggle for independence from colonialism and then the fight against Israel, until political Islam overtook it in the 1980s. But it suppressed the real religious, ethnic and cultural diversity of the Middle East. As Arabism declines, urban elites will become more cosmopolitan but local and minority identities will sharpen, some to the point of violence.

Third, democracy will advance but only slowly and patchily. Without an Arab-Israeli conflict, autocrats will find it tougher to justify represssion by citing national security. Rulers in countries such as Egypt, Saudi Arabia, Tunisia and Algeria will no longer be able to assume US support. However, oil revenues will free many governments from any need to consult their citizens. No taxation, no need for representation. Intelligence services and armed forces will shore up rulers so they themselves can continue to enjoy power and wealth.

Last, Middle Eastern economies will boom. Three of the potentially most dynamic economies in the region have been crippled by war and/or political sanctions: Israel, Iraq and Iran. All three have a skilled, entrepreneurial middle class, and Iraq and Iran have oil. Stability and open borders will make possible waves of investment in infrastructure, property and services. Growth will be dragged down, though, by corruption, cronyism, and a chronic shortage of water made worse by climate change. Rising prosperity will barely keep up with rapid population growth and the chasm between rich and poor will not narrow.

So imagine the unimaginable, Barack Obama at a ceremony on the White House lawn signing a comprehensive Middle East peace agreement. It's still only January 2010. This could be the future:

2010: Marwan Barghouti, jailed by Israel in 2002 for leading the second intifada, is elected the first president of an independent Palestine. The Israeli prime minister Tzipi Livni announces that Russian billionaire Roman Abramovich will fund reconstruction of the oil export pipeline from Kirkuk in northern Iraq to Haifa, closed since 1948.

2011: Property prices in the West Bank triple in a year as former Palestinian refugees buy or build houses with payouts of $100,000 per family from the new Palestine Refugee Compensation Fund.

2012: Kurds vote to secede from Iraq and establish an independent state. Kurdish peshmerga forces seize the disputed city of Kirkuk, centre of Iraq's northern oilfields. But Israel joins Turkey and Syria in blocking Kurdish oil exports through pipelines to the Mediterranean coast and after three months, Kurdish resistance crumbles. A peace agreement gives the Kurds control of Kirkuk, but keeps Kurdistan as a semi-autonomous region within a federal Iraq.

2013: Turkey, Syria, Lebanon, Israel, Palestine, Jordan and Iraq establish the Middle East Water Community (MEWC). Its first project is a giant pipeline network to carry water from the Tigris and Euphrates rivers in southern Turkey to Israel, Palestine and Jordan.

2015: Revolution in Egypt. President Gamal Mubarak (son of the late Hosni) escapes by private jet to Jeddah after three weeks of million-strong pro-democracy demonstrations paralyse Cairo. An emergency committee led by the once-banned Muslim Brotherhood announces that presidential and parliamentary elections will be held within three months.

2018: Zahra Rahnavard is elected Iran's first woman president, succeeding her husband Mir-Hossein Moussavi. The slogans "Death to America, Death to Israel" are banned from Friday prayers. The other original revolutionary chants, "Death to the Shah" and "Death to the Soviet Union", have long since come true.

2020: The Gulf Co-operation Council (Saudi Arabia, Kuwait, the United Arab Emirates, Bahrain, Qatar and Oman) merges with the Middle East Water Community to form the MEC, the Middle East Community, a free trade area in which citizens of any member state may live, work and buy property in any other member state. Egypt, Sudan and Yemen immediately join the new grouping. The Arab League is dissolved and its 1950s headquarters in Cairo leased to Arab Disney as the hub of a new entertainment complex.

2022: After closely-fought referendums, voters in the 16 MEC countries agree to admit Iran. Saudi Arabia's vast solar power arrays in the desert will now be linked with Iran's five nuclear power stations in a grid which will halve electricity prices across the Community. Cartoonists mock the MEC's grandiose new solar-powered parliament building in Baghdad as a modern Tower of Babel, where every document and debate now have to be translated into Arabic, Hebrew, Kurdish, Turkish, Farsi and Aramaic at great expense. In practice, most Community business is done in English.

2026: Crude oil production in the Middle East falls below 20m barrels a day for the first time this century as climate change policies across the world cut fossil fuel demand and reserves in smaller producers run out. The total labour force, though, in MEC countries has doubled since the turn of the century to 200 million, 60 million of whom are unemployed – 7.5m of those in Saudi Arabia alone. Former US President Barack Obama accepts an honorary doctorate in law from the University of Tehran. A woman driving a car is arrested in Riyadh.

2030: Osama bin Laden dies in North Korea. Al-Jazeera reports the news half way down its evening bulletin, below items on the evacuation of yet another Nile Delta town after the collapse of shoddily-built defences against the rising level of the Mediterranean and the award of the 2034 World Cup to Jerusalem.