"We still attribute to the other fellow all the evil and inferior qualities that we do not like to recognize in ourselves, and therefore have to criticize and attack him, when all that has happened is that an inferior "soul" has emigrated from one person to another. The world is still full of betes noires and scapegoats, just as it formerly teemed with witches and werewolves"
Every person who is not totally enlightened and self-realised has a dualistic "ego". By "ego" I mean the illusory (in Buddhism - anatta) or false self, the narcissistic self absorption of attention in its own knot of littleness, that comes about through recoil from or non-realisation of the Supreme, God, the Absolute Reality, or whatever one wishes to call it.
This false ego or false self or "desire soul" (Sri Aurobindo's term) is full of lower emotional poison and darkness (a Christian would say "sinfulness") at its own ugliness and imperfection. But because of the egoic self-reflection of the infinitely degraded light that makes up its consciousness, it cannot acknowledge this ugliness in itself, because to do so would shatter the narcissistic illusion of its own wonderfulness and specialness, and confront it with its true nature. The result would be either madness or a spiritual self-judgment by which the ego is forced to confront its own negativity (this is basically the afterlife "judgement" referred to in Near Death Experiences and in many traditional cultures, religions, and mythologies). Therefore, in order to maintain its own equilibrium, its own sanity in other words, as psychological defense mechanism, the ego has to constantly project its ugliness onto an appropriate scapegoat.
This is how they cope with their unacknowledged and repressed psychic contents, which can only be tolerated as hatred for another, for a pereceived enemy who has slighted them or their family or tribe or culture or ethnicity or nation or religion or ideology.
Projection of the Shadow
drawing from Jung and Pagan Psychology (Temple of the Sacred Spiral)
This happens everywhere, prejudice, bigotry, intolerance, xenophobia, fear and hatred of the "other" are universal. And just because someone claims to, or is thought by others to be, spiritual, or a guru, doesn't make them free of this either. Only one who has totally gone beyond the limitation of their finite self, and realised their identity with the Supreme, will no longer project their ego-ideal onto those they identify with, and their shadow onto all those they choose to scapegoat, whether out of prejudice picked up from parents or peers or social condition, or whether these are people who have slighted or insulted the object of ego-identification, or who even if they haven't are paranoidly misinterpret as wanting to or actually doing so.
As Jung describes the Projection of the Shadow, it refers to as the principle that "[changes] the world into a replica of one's own unknown face". ( Aion - Researches into the Phenomenology of the Self, Collected Works of C.G. Jung: v. 9, Pt. 2, p.17. Princeton University Press. - this quote from The Shattered Realm blog Realization of the Shadow, Monday, 4th September, 2006)
According to Jung, the Cold War was the outer collective form of the lack of unity within the human psyche. And so what happened with the fall of the Soviet empire? A new enemy had to be created, a new war or rivalry or hatred. And guess what, muslim extremists rose to fill the bill! Thus each side hates the other, each side wants to destroy the other, each side is full of bigotry and intolerance and refusal to listen to the moderates and peace makers in its own camp, the leaders of each side playing cunningly on the fears and prejudices of the masses, manipulating them like puppets (see e.g. this comment on the Danish Mohammad cartoons), while themselves being manipulated by supra-physical adverse forces.
And after the "war on terror" or "clash of civilisations" is resolved, then a new enemy will have to ve created, and so on, as long as people are not able to resolve the duality within their own being, and go beyond the limitations of their own self-absorbed relative self.
Where there is some spiritual awakening, where the Divine Center comes to the fore, this effect is mitigated, because the Divine Self is always perfect and in accord with the Supreme. Therefore, a good sign that someone is lacking in spiritual development, that they are enslaved by lower impulses of the affective/astral reality, is that their shadow-projection is totally undiluted. It is not hard to tell such people, you just have to read their words, and see how they are always accusing their perceived or imagined enemy of everything that is actually within the darkest recesses of their own being. In the realm of cults and scets and gurus, the classic case of this is the antagonistic and even more so the slanderous devotee, who claim to follow a spiritual path or a spiritual guru, but act in a way that is against every spiritual teaching, evcen that of their own guru or tradition.
See also Projection of the Ego