"When we look at the Middle East and beyond it to Pakistan or Iran and elsewhere, it isn't just a vast unfathomable mess with no end in sight and no one worthy of our support," he said in a keynote speech here.
Blair, who was UK premier from 1997 to 2007, urged western nations to realise they must take sides and if necessary make common cause with Russia and China in the G20.
The envoy for the Middle East Quartet of the UN, the EU, the US and Russia, added, "It is in fact a struggle in which our own strategic interests are intimately involved; where there are indeed people we should support if only that majority were mobilised, organised and helped."
"But what is absolutely necessary is that we first liberate ourselves from our own attitude. We have to take sides. We have to stop treating each country on the basis of whatever seems to make for the easiest life for us at any one time.
"We have to have an approach to the region that is coherent and sees it as a whole. And above all, we have to commit. We have to engage," Blair said.
He stressed that the region's chaos is not a battle between Sunnis or Shias, or primarily due to the lack of economic opportunity, but due to "a common struggle around the issue of the rightful place of religion, and in particular Islam, in politics".
"There is a titanic struggle going on within the region between those who want the region to embrace the modern world - politically, socially and economically - and those who instead want to create a politics of religious difference and exclusivity.
"This is the battle. This is the distorting feature. This is what makes intervention so fraught but non-intervention equally so. This is what complicates the process of political evolution. This is what makes it so hard for democracy to take root," he said.
Blair also defended the coup that ousted the government of Muslim Brotherhood leader Mohammed Morsi in Egypt last year, accusing it of "systematically taking over the traditions and institutions of the country".
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