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He definitely would have had first hand experience in that whole debacle. In fact, that experience almost ruined his career. The British handling of the Middle East around that time was ..... pretty much a failure (my opinion). I like Churchill too, but his quotes/writings are just his opnion on things.
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Actually that quote pre-dates the Mandates. That quote was at the same time in which Lawrence of Arabia was stirring up the Arabs to fight against the Ottomans in a revolt. He realized how quickly the average Muslim answered the call for Jihad, and realized the possible impacts of it later on.