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Although the Crusades are often spoken about today as European or Christian religious oppression of the Islamic world, the effects of the Crusades on both Europe and the Middle East were actually largely positive economically and socially. One of the major causes of the Crusades was the oppressive behavior of the Turks, who had recently seized control of the Middle East. They not only brutally treated European pilgrims, but were at least as bad to Arabs, both Christian and Muslim, as well as Jews. Another major cause was economic, the inflation in Europe caused by money flowing to the Middle East in trade but not bringing back returns.
The Crusades led to massive increases in banking and credit in Europe, the Middle East and the entire Mediterranean area. Increased trade became more equitable between the regions, and increased the standard of living of the upper classes, merchants and the emerging banking industry. Work was provided for laborers, sailors, and tradespeople of all types. Except for the poorest peasants, the economic increase benefited all classes. The rise of the great Italian banking houses and merchants of Genoa, Verona, Venice, Milan, etc. was directly attributable to the Crusades, and the same things occured among the population of the Middle East itself.
Socially, the defeat of the Turkish forces released the Arabic population from their oppressive rule. The rise of the great medeival Islamic culture was made possible by the European victory in the First Crusade, and the locals' freedom from the Turkish regime. The Seljuk Turks were not driven out, and continued to be an important part of the culture, but were no longer an oppresive and dominant force. The great leaders such as Saladin could never have arisen under Turkish rule.
There were certainly negative effects. The Western Europeans did not get on well with the Byzantines and other powers along their way. Warfare in general is not a pleasant experience for anyone, especially the innocent bystanders. The nature of European war during the preceeding centuries had not made the knights merciful opponents. Jews were not necessarily treated well by the Crusaders, who often treated them worse than the Arabs. Although Muslim military expansionism long predated the Crusades, the Islamic world has often blamed the Crusades for nearly every cultural friction since. Taxation to provide not only military force but increasing opulence of the European ruling classes led to both an increase in the efficiency of governments and to oppresive taxation. Much the same happened in the Islamic countries.
The First Crusade succeeded because of the terrible suffering of the European forces. The vast majority died on the journey, and those who survived had adapted to the prevailing conditions. The heavy horses were gone, and they walked or rode smaller local steeds. Much of the heavy chain mail and impedimenta of European warfare were abandoned. The later Crusades failed not because Islamic armies improved or changed their tactics, but because European chivalry became less capable. The rise of the ritualistic pseudo-combat of jousting and the increasing affluence (in part caused by economic improvements caused by the Crusades) of the nobility led to a decline in martial competence, and a neglect of strategy. The mental flexibility necessary for military competence was slowly lost between the 13th and 15th centuries.
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