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The American election and the return of President Bush to the White House will not change the character of the difficult problems we face in the Middle East. Nothing that President Bush said in the campaign or in the aftermath of his re-election would indicate a substantial change in American policy.

There has been some speculation that since Bush does not have to face re-election, he will now be working for the history books, and this might lead to a change in approach, if not policy, in the Middle East. But there are three problems with this thesis. Bush wants to lead the Republican Party as it seeks to solidify long-term domination of Congress and control of the White House. To do this, he has to sustain the base he appealed to during the last election, particularly the Christian right and ideological conservatives. It was that base that helped him dominate a large majority of the states. He remains convinced that the policies that won him re-election are the policies that will sustain the Republicans in office. When the President, during his recent visit to Canada, was asked about negative polls on his foreign policy, he said that the US had just gone through our own poll - the election - and the American people supported his foreign policy.

It is a strange thing about American politics: when one party dominates the Congress and the Administration, members of that party feel freer to challenge the policies of their leaders. We are beginning to see some of that today, as major figures in the Republican Party are calling on the President to engage actively on the Palestinian problem, and others are calling for the resignation of Secretary of Defense Donald Rumsfeld over the Iraq war.

A second reason I would not expect fundamental changes in foreign policy is that President Bush wants to make his legacy by accomplishing his domestic agenda. That agenda includes very difficult decisions on Social Security, legal reforms on malpractice and class action suits, and tax reform. He will need every vote in Congress he can get to pass these pieces of legislation. That means that every foreign policy decision and every National Security Council (NSC) recommendation will still have to go through the filter of Chief of Staff Andrew Card, who sits in on NSC meetings, and Bush’s political guru, Karl Rove. In this process, domestic considerations generally trump foreign policy considerations.

The third barrier to significant change is George W. Bush himself. While there will be some new faces around the cabinet table, there are no fundamental changes at the NSC table except for the departure of Secretary of State Colin Powell. The fact is that for the last few years we have been following George Bush’s game plan, not the Cheney or Wolfowitz plan, and certainly not the Powell plan. George W. Bush now can claim a clear mandate from a majority of Americans for his strategy – a mandate that will stretch out at least until the mid-term elections two years hence.

In Iraq, the current Bush objective has become democracy. Regardless of the difficulties and the costs, the President exudes confidence that his vision of a democratic state in the heart of the Arab world is attainable. Anyone who thinks that the President would settle for some kind of papered-over, face-saving, Vietnam-style retreat, leaving Iraq to a restored dictatorship, fragmentation, or the chaos of a civil war, has not been listening. If the President has any issue that will mark his place in history, it is Iraq. So the US and the international community had better get used to the idea that this will be a protracted and difficult fight that the Administration has to pursue relentlessly regardless of external or internal second-guessing and pressure.

In reality, we do not have any other option. Like it or not, Iraq has become the litmus test of American resolve and a core element of its war on terrorism. To waver now, or to be seen in any sense to be backing away from our commitment, would be a massive victory for terrorism. The message we sent in Vietnam, Iran, Lebanon, and Somalia was that if you make the Americans bleed, they will retreat. In this day of al-Qaeda and international terrorism, we cannot afford to send that message again in Iraq – to swell the ranks of the terrorists and embolden them. Iraq may not have been linked to al-Qaeda before our invasion, but it most certainly is today. Bush knows this, and it is inside Iraq that the President has to make his stand if he is to rebuild American credibility and discredit terror as a political vehicle. Iraq is where the President will have to continue to invest American military might and spend American capital as his foremost and immediate priority in the Middle East.

In Iran, the President faces a perplexing problem. He has made it clear that a nuclear-armed Iran is “unacceptable,” but his options for dealing with this problem are not very attractive. Largely because of his stand in Iraq, and to a lesser extent in Afghanistan, Bush is left with no credible military stick. While some Pentagon planners are considering air attack options for the United States or by a surrogate Israel, it is by no means clear that the proliferation threat can be effectively destroyed or delayed by air – similar attempts by the Clinton Administration in Iraq were entirely fruitless.

Covert efforts to destabilize the Iranian regime do not appear to be any more realistic, nor would they likely remain covert. Our experience should make us realize that covert operations do not stay covert very long. No single event would trigger the strong nationalism of the Iranian people, unify them behind the ayatollahs, and preserve and extend their rule more than an American attack either by air or by so-called covert or special operations - except possibly an Israeli attack.

The ayatollahs are not without weapons of their own. Their long border with Iraq and influence therein can make problems worse for the President inside Iraq. And their control over Hezbollah and its terror capabilities could be triggered to create a new wave of significant terrorism. No one I know, in the US or in Israel, underestimates the danger to us and to Israel of an unleashed Hezbollah. It would appear that the President will need to keep pressing for a Europe-based compromise solution with Iran that is less than ideal, yet has a better-than-even chance to prevent Iran from operationalizing its nuclear capability. To do this, he may have to reverse our role as the “bad cop” with the European “good cop,” and offer American carrots he is willing to part with to make the deal more attractive while he induces the Europeans to brandish bigger sticks.

Syria also has to be on the President’s radar screen. The press is reporting a series of leaks out of the Administration about Syrian support for the insurgents in Iraq. The Administration has been careful in its formal public pronouncements not to blame the Syrian government, but it is clear that the talk is meant to convey a warning to Bashar al-Asad. Syria was, and still is, a target of the neo-conservatives. I doubt that Syria will become a focus of this President unless its cooperation with insurgents increases, cooperation on terrorism decreases, and Syrian troublemaking becomes more public. The United States does not need another fight on its hands right now. It does not have the wherewithal to engage militarily, except possibly in some cross-border raids, and neither does Israel or Prime Minister Sharon need another issue to cause political havoc in his party and coalition.

The President has to look at his problems in the region as being inextricably linked. He will have to have a very clear sense of priorities and timing to succeed. The President has been talking in more positive terms recently about the Palestinians and his Administration has now opened the door for greater direct financing of the Palestinian Authority. It is possible that the President may now recognize that the Palestinian issue could enhance his position in the region and act against the growth of terrorism. It could also increase his leverage with the Europeans and support his need for a positive outcome in Iraq.

The death of Arafat opens new doors for the Palestinians, the Israelis and the President. If the US and the Israelis play it smart, we can lend credibility to a new leadership, which adopts a commitment to real reform and opens the way for measured movement on the Roadmap. Abu Mazen does not have the credibility or constituency yet to be a strong partner for peace. If he is seen to deliver, through American encouragement and Israeli compromise, a deal on the Sharon plan for evacuating settlements that serves basic Palestinian interests, then he will gain in stature and strength and could become the partner that Arafat never was and never could be.

Nevertheless, I would not expect the President to take the lead on the Palestinian issue, at least not now, as many in the United States are urging. President Bush, from his first day in office, has had an allergy to the Palestinian problem. He has seen it as a no-win proposition that can get him into crossfire with both Israel and domestic constituencies that support Israel. At this point, both Israel and the Palestinians appear to be headed in a more positive direction. Sharon is engaged in building a coalition with the Labor party, which, if it takes, may preclude some of the worst instincts of the Likud and may moderate Israel’s policy toward the Gaza withdrawal and what happens on the West Bank.

The objective for the President should be to encourage both parties, but not try to substitute for them. If the Israelis and Palestinians are able to work out the Palestinian election process and then move to Israeli withdrawal from Gaza, then the Administration would do well to keep a low profile and let them get on with the process. There may well be a time when more active US Presidential intervention becomes necessary – but now is not the time. The regional parties - not the United States, have initiated most major agreements in the Middle East, and the Palestinian issue is not likely to be the exception.

In Iraq, Iran, among the Palestinians, and throughout the Arab world, the President has maintained a constant approach toward democracy and reform. His rhetoric and the rhetoric of some others in the Administration might lead one to believe that the United States would make a major push to trigger reform in the region and to force the pace. Some even feared further military action to impose reform. But the rhetoric of the Administration outpaces its actions. The Broader Middle East and North Africa Initiative and the Forum for the Future, which met in Morocco on December 11, have been a pale copy of what they might have been, or what they were initially promised to be. Objections from the Arab world and doubts in Europe have forced the Administration to step back.

Several problems have resulted in the Administration’s scaling back its earlier rhetoric on reform and democracy. First, the cool reception that the President has received in the region to his ideas about democratization have convinced some in the Administration that if we try to take the lead on this initiative, we will actually set back the process of reform in the region.

Second, the lessons of Iraq have given the Administration pause and led to recognition that what looked easy was not. There is growing realization that democratization is not the principal need or immediate demand of a majority of people in the region; economic growth and jobs, according to the polls, seem to be the overriding motivating factor for reform.

Third, some in the Administration who are concerned about the growth of terrorism in the region are worried that pushing reform and democratization too fast will have the effect of empowering the very radicals we are trying to curtail. The objective is not to destabilize moderate regimes, but only to encourage them, in their own interest, to engage in reforms that will provide jobs and instill hope for the future among their people. People realize that unemployment, although it may not be the cause for terrorism, can be a contributing factor.

Fourth, no one wants to see another example like Algeria, where premature embrace of the trappings of democracy led to significant reverses. This is a problem the Administration has begun to see in Iraq. Given the current instability and security situation, a rush to democracy will have unpredictable results. This is becoming increasingly apparent as Iran has become more active in Iraqi politics.

Early on, the Administration said it would not accept a religious state in Iraq. But given the power of Shi’ite clerics and the Shi’ite majority, the outcome of a democratic process in Iraq is not at all certain. Under any circumstances, even if a secular state evolves, the influence of religious figures, as well as Iraq’s powerful neighbor, Iran, is going to be very strong. At the same time, the only way the Administration can begin to withdraw its forces from Iraq is if a strong Iraqi central government is built. In short, the Administration may be compelled by its desire to reduce its presence in Iraq and its commitment to democracy to adjust its expectations for an Iraqi democracy to accommodate a strong Islamic influence.

Finally, there is no money for a major US initiative on democracy. The original Middle East Partnership Initiative has struggled along with no more than $125 million for its programs across 22 countries. And people who are running the program have said they do not even have that amount. That is not a very big sum to cover the “broader” Middle East. As for new money, Congress is seldom enthusiastic about aid money and with the budget deficit still growing, key domestic programs being scaled back, and Iraq costing more every day, it is not very likely that the Administration will get a sympathetic hearing for substantial new resources.

For all these practical reasons, the Administration appears to be scaling back its efforts for political reform and to be concentrating increasingly on economic reform. It is more willing to pass the lead to the European Union and the World Bank. The Administration has also seen the problems in the region increasingly tied to trade rather than aid. The regional free trade area remains an Administration objective and has just seen another step forward as the Special Trade Representative announced last week an agreement with Egypt to form four qualified industrial zones with Israeli participation, giving import free tax benefits to Egyptian products manufactured in these zones. This is an opening toward the broader free trade area that Egypt hopes to negotiate with the United States.

Free trade areas always face hurdles with US industry and in Congress, particularly when sensitive US industries like textiles are involved. Our industry worries about predatory use of FTAs by countries like China to launder their products and duck under our trade barriers. But smaller countries, like Bahrain or Morocco, or countries closely linked to Israel, like Jordan, and increasingly, Egypt, have a distinct advantage when it comes to securing free trade status. While countries like Oman have to be careful in such negotiations and not expect results overnight, the prospect of an FTA is realistic and, if properly negotiated, can be a great asset for both countries.

As I said in the beginning, do not expect a revolution in US foreign policy in the second Bush Administration. But it would be equally wrong to expect President Bush to engage in risky adventures or to ignore reality. While ideology is still at the core of the Bush Administration’s foreign policy, it is now an ideology that is bound by realities and limitations. As a result, we may have a more productive relationship in the region than we had in the first four years. Let us hope so.