Since the end of Ottoman control, Middle East has experienced a large number of conflicts. The arrangements made at the end of World War I are often blamed for these conflicts. Arbitrarily drawn borders and the creation of influence zones between Great Britain and France without paying attention to religious and ethnic divisions present in the region are seen at the source of today’s conflicts. Arangements such as the Bunsen Committee report, Sykes-Picot agreement, and Hussein-McMahon correspondence shaped the region after the war, but none of these were successfully implemented due to changing circumstances, and their contradicting nature. This study argues that even though these constituted the first step in the creation of the modern Middle East, the real cause of today’s conflicts lie in the creation of a stratified politicized identity system that emerged through stages over the past century. These stages were marked by the conflicts between Arab nationalism and nation state identities; the politicization of sectarianism; and finally the emergence of ethnicity in politics.