Then around 800 years ago it all seems to have gone wrong. "Trouble in the Middle East" has been a newspaper headline since the invention of the newspaper. Personally I would love to know what changed 800 years ago as it might give a clue as to how to make it right again.
I know I'm going to get mod-bombed to hell and gone for this, but christianity happened. There's an old African proverb, "Once we had the land and the white man had the bible. Now we have the bible and the white man has the land." The Arabs were busy unlocking scientific secrets and storing up knowledge during that time out of necessity -- it's not a forgiving land. It has limited resources, and if you aren't smart about managing it, you die. Generations of resource scarcity meant that their culture stressed history. The first written languages came from the same region. Moving from a barter economy to a cash economy also came from there. And the thing is, this knowledge was shared -- it wasn't kept secret, or considered blasphemous per-se. Not like it was in Europe where the idea that the Earth wasn't the center of the universe nearly got Copernicous nailed to a cross anyway.
The Christians made numerous attempts to send armies into their lands -- and failed each time. But although the military campaign failed, the cultural changes that contact with them brought was ruinous to their civilization in the long-run. Think of it as being a bit like how America reacted to the terrorist attacks of 9/11 -- they really hadn't much exposure to terrorism before, so their first real taste of it caused a massive overreaction that has crippled the economy, sent millions into poverty, and triggered far-reaching changes in their way of life. But in reality, it was just a couple dozen guys who knocked down a few buildings. It did more damage though than fifty hurricanes.
There's plenty of other historical examples too -- Japan and China's isolationist policies, for example. When America steamed into Japan, they forced them to open their borders, and thousands of years of culture caught fire and burned in a matter of years. Similar things have happened to China repeatedly when people have crossed the mountains into their territory.
Cultural contamination is what brought them down -- specifically, from European christians.