After watching this short clip of Nasser's take on the Muslim Brotherhood ( https://www.youtube.com/watch?v=_IH_NzbA-xY ), I decided to ask this question.
Any literature about this too? I'd love to read about it.
It's a couple things, but more than anything it was the repeated failures of "Pan-Arabism" to militarily defeat Israel (1948, 1967, 1973), and then the split in the pan-Arab movement created by the Camp David accords (1978), where Egypt (under Nasser's successor, Anwar Sadat) made peace with Israel in exchange for getting the Sinai back, but the rest of the Arab world did not. This also galvanized the islamists in Egypt, and led to them assassinating Sadat not too much later (1971 1981).
Secondary causes included the rise of Palestinian nationalism (Especially after the "Black September" conflict between Jordan and the PLO), which turned the conflict into less of an Israeli-Arab conflict and into more of an Israeli-Palestinian conflict (especially after Jordan relinquished its claims to Palestine, and then later made peace with Israel itself in 1994); and the heavy handed reactions of the Arab leaders to the islamists, as their crackdowns bred resentment and created martyrs for the movements.
TL;DR Saudi Arabia and its allies among Islamist monarchies came out on top after the Arab Cold War, and subsequently were able to export Islamist ideology with the help of oil rents and "crowd out" secular and leftist ideologies in the region.
The fall of secular and left-leaning pan-Arabism and Arab Nationalism, and the rise of Political Islam and similarly religious and theological movements, is heavily rooted in how the Arab Cold War played out. The Arab Cold War was a regional struggle for hegemony and influence between newly ascendant republics run by military officials that were formed in the aftermath of overthrown monarchies in the Middle East (notably, Nasser's Egypt), and the surviving monarchies (notably King Faisal's Saudi Arabia). An important thing to recognize here is that Saudi Arabia relied heavily on backing conservative Islamic movements and organizations as a way to counter Arab Nationalism (as well as Marxist and Communist groups that were in tension with both Arab Nationalist and pro-Monarchy movements), even when certain groups--like the Muslim Brotherhood in Egypt--advocated a kind of Islamism that was anathema to Saudi elites.
Like some others have already pointed out, the failure of Nasser to lead an Arab victory over Israel in the 1967 war was a huge blow to both Nasser's image and the continuing appeal of Arab Nationalism, but also to the general economic stability of Egypt (Nasser had also become trapped in a quagmire during his intervention in Yemen). He subsequently had to mend ties with Saudi Arabia to get access to much-needed financial aid, and died shortly after; his successor, Anwar Sadat, had much closer ties with the Saudi Arabian regime and increasingly Islamized Egyptian society and allied with Islamist groups. Another important event would be the survival of the Jordanian Hashemite monarchy against Palestinian rebels during Black September, which was another critical blow to secular/leftist Arab Nationalist movements.
Thus, going into the 1970s, Arab Nationalist movements were starting to recede. But what really clinched the ascendance of political Islam was the enormous profits from oil sales that accrued to the Gulf States after the 1973 oil embargo and the spike in oil prices during the next ten years or so. The budgets of the monarchy, especially that of Saudi Arabia, boomed, and the Saudis were subsequently able to export their own particular brand of fundamentalist and ultra-conservative Islamic theology like never before--and support Islamist organizations in influencing society and politics. This was also encouraged by certain Western policies geared toward fighting Marxist and Soviet influence in the Middle East and larger Muslim world; the CIA's director in the '80s, for example, thought that religious education was an important weapon against Soviet atheism.
A great example of this is the rise of fundamentalism in Pakistan--Saudi funding was instrumental in the rise of Jamaat-e-Islami in Pakistan during the '70s, which supported the dictatorship of General Zia after he seized power in 1977. Saudi funding (along with CIA funding) was also instrumental in the rise of the Inter-Services Intelligence (ISI) as a kind of Islamist deep state within Pakistan, with deep ties to regional Islamic militant and terrorist networks, and which would become embedded into Pakistani political economy and play a key role in regulating Pakistani politics. And similarly, in neighboring Afghanistan, Saudi funding would prove critical in supporting the victory of Islamist groups over rival Marxist and communist groups.
Now, there are some complexities here that need to be addressed, because there are important theological and socio-political differences between the official Wahhabi ideology of Saudi Arabia, and properly "political" Islamist movements like the Muslim Brotherhood, and especially when compared with the revolutionary Islam of Khomeinism that was brought to the world stage after the 1979 Islamic Revolution in Iran. But despite the 1979 Iranian Revolution being a Shia-based revolution, it was still inspiring to many fundamentalist and radical Sunni groups because it was a solid example of an Islamic state being established, and inspireda and funded Shia groups like Hezbollah. And it was at this time that it seems that Saudi's religious exports became more sectarian in nature, as a way to counterbalance revolutionary Shiism with a pro-Saudi religious ideology (but lets save that for another time).
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