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He said a precondition of any agreement is for the Palestinians to recognise Israel as a Jewish state, which Hamas has refused to do. That in turn is likely to mean that the Israelis will insist on negotiating only with Fatah, a move likely to deepen the divide in the Palestinian camp.

"Israel is going to have to take difficult steps," Obama said. "Settlements have to be stopped in order for us to move forward. That's a difficult issue, I recognise that. But it's an important one and it has to be addressed."

But Netanyahu's failure to speak of an independent state – instead talking of "an arrangement where Palestinians and Israelis live side by side in dignity, in security and in peace" – and his insistence that the Palestinians be denied certain powers, such as control over their own borders and airspace, is a reminder to Obama of the difficulties he is likely to face in dealing with Israel's well practised tactics of prevarication and obstruction.

But Obama suggested that Hamas should be brought in to the talks, when he spoke about the failure of isolation in dealing not only with the Palestinian group but also Hezbollah and Iran.

"Understand that part of the reason that it's so important for us to take a diplomatic approach is that the approach we've been taking, which is no diplomacy, obviously has not worked. Nobody disagrees with that. Hamas and Hezbollah have got stronger. Iran has been pursuing its nuclear capabilities undiminished. Not talking clearly hasn't worked," he said.

"Iran obtaining a nuclear weapon would not only be a threat to Israel and to the United States, but would be profoundly destabilising in the international community as a whole and could set off a nuclear arms race in the Middle East that could be extraordinarily dangerous for all concerned, including for Iran," Obama said.

He said the settlement of the Palestinian-Israeli conflict and the Iran nuclear issue had a bearing on each other. "To the extent we can make peace between the Palestinians and Israelis then it strengthens our hand in the international community in dealing with a potential Iranian nuclear threat."

Obama is likely to urge Arab states to recognise Israel as part of a package that would include its withdrawal, not only from the West Bank but also the Golan Heights, after they were captured from Syria in the 1967 war.

The Turkish press touts Davutoglu as "Turkey's Kissinger," and even Erdogan and Gül refer to him as "hoca" ("venerable teacher"). The country's foreign policy increasingly bears his signature. For example, at his suggestion, Turkish diplomats revived talks between Syria and Israel that had been discontinued in 2000, leading to secret peace talks that began in Istanbul in 2004. However, the talks were temporarily suspended in late 2008 because of parliamentary elections in Israel and the Gaza offensive.

Davutoglu is convinced that Ankara must be on good terms with all its neighbors, and it cannot fear contact with the countries and organizations branded as pariahs by the West, namely Syria, Iran, Hamas and Hezbollah. He believes that Turkey should have no qualms about acknowledging its Ottoman past -- in other words, it should become a respected regional power throughout the territory once ruled by the Ottoman Empire (see graphic).

Davutoglu, like President Gül, is from Central Anatolia and a member of a new elite influenced by Islamic thought. He completed his secondary-school education at a German overseas school, learned Arabic and taught at an Islamic university in Malaysia. He believes that a one-sided Western orientation is unhealthy for a country like Turkey.

Ankara is also seeking to reduce tensions in the Caucasus region, where the Turks have often acted against Russia, prompting Moscow to accuse Turkey of being sympathetic to the Chechen cause. After the war in Georgia last summer, the Erdogan government brought together officials from Tbilisi and Moscow. Turkey and Armenia are now seeking to overcome long-standing hostility by establishing diplomatic relations and reopening their shared border.

The Turks say that they achieved more during the Gaza conflict than Middle East veterans like Egyptian President Hosni Mubarak, arguing that Hamas's willingness to accept Israel's ceasefire offer was attributable to Ankara's intervention. They also say that the fact that Erdogan angrily broke off a discussion with Israeli President Shimon Peres at the World Economic Summit in Davos cemented his reputation in the Islamic world as a friend of the Palestinians. When street fighting erupted in Lebanon between supporters of the pro-Western government and of Hezbollah in May 2008, Erdogan intervened as a mediator.

Off the Horn of Africa, the US Fifth Fleet turned over the leadership of Combined Task Force 151, which is responsible for combating piracy in the Gulf of Aden and off the coast of Somalia, to the Turkish navy. At the same time, a man paid an official visit to Ankara who had not appeared in public since 2007: Iraqi Shiite leader Muqtada al-Sadr, the head of the notorious Mahdi Army militia. Davutoglu had sent a private jet to bring him to Turkey from his exile in Iran.

Critics like political scientist Soner Cagaptay describe Ankara's foreign policy as "pro-Arab Islamist." In a recent op-ed for the Turkish daily Hurriyet, Cagaptay argued that Turkish diplomats, who had once "looked to Europe, particularly France, for political inspiration" have now fallen for the Arab world, and generally for Islamists

Diplomats like Hakki Akil, the Turkish ambassador in Abu Dhabi, disagree. According to Akil, Turkey has acquired "soft power" by expanding its sphere of influence from the Balkans to Afghanistan, transporting Russian, Caspian Sea and Iranian oil and gas to the West, and building housing and airports in Kurdish northern Iraq. Europe, says Akil, ought to be pleased with Ankara's course. As Akil's boss Davutoglu said in Brussels, political stability, a secure energy corridor and a strong partner on its southeastern flank are all "in the fundamental interest of the EU."

According to a recent internal European Commission report, Turkey has made "only limited progress." Some EU countries have already abandoned the idea of accepting Turkey into their midst. In Bavaria, conservative Christian Social Union campaigners promote a message of "No to Turkey" as they make the rounds of beer tents. At a televised campaign appearance in Berlin, German Chancellor Angela Merkel and French President Nicolas Sarkozy made their opposition to EU membership for Turkey clear.

Ironically, Turkey's strategic importance for Europe "is even greater today than in the days of the Cold War," says Elmar Brok, a German member of the European Parliament for the conservative Christian Democratic Union who specializes in foreign policy issues. And then there is the paradox of the fact that the more intensively Turkey, out of frustration with Europe, engages with its eastern neighbors, the more valuable it becomes to the West. According to Brok, the West must "do everything possible to keep Ankara on board."

Brok and other members of the European Parliament envision making so-called "privileged partner" status palatable to Turkey. It would enable Turkey to have a similar relationship to the EU as Norway does today and to enjoy many of the benefits of EU membership, including access to the European single market, visa-free travel, police cooperation and joint research programs. But it would not, however, become a member.

Iran is not simply a medium-sized regional power that can be ordered around at will. Ironically, America's disastrous war in Iraq has allowed its fierce adversaries in Tehran to benefit from a massive shift of power in the Middle East.

Before his ascent to the office of president, not even diplomats stationed in Tehran and familiar with all of the ins and outs of Iranian politics were familiar with this short man with the sparse beard and piercing eyes. The fiery revolutionary, hardworking to the point of exhaustion and filled with contempt for earthly wealth, rose to power from humble beginnings and became the hope of all "Mostasafin," the disenfranchised millions without whom the Islamic Republic probably would not exist today and for whom Ahmadinejad has fashioned himself into an Iranian Robin Hood.

This places the Americans before the virtually impossible task of joining forces with Iran to resolve the classic Middle East conflict and its 30-year conflict with Tehran itself. For this reason, the Iraq question is also becoming increasingly urgent for Washington.

Obama knows that the United States could derive substantial benefits from cooperation with Tehran. Without Iran, for example, it will be almost impossible to bring peace to Afghanistan in the long term. In Afghanistan and Pakistan -- the center of conflict that Washington describes in its new strategic concept as a single unit known as "AfPak" -- the Americans and Shiite Iran have many interests in common. Tehran's rulers battled the Sunni Taliban radicals, whom they have always seen as dangerous neighbors and ideological foes, before the Americans did.

And Tehran, with the world's second-largest natural gas reserves and its third-largest oil reserves, has the capacity to do a great deal of damage to the international economy -- or help it overcome the global economic crisis.

Conversely, rapprochement with the United States and Europe would also bring enormous benefits to the Iranians. Without know-how from the West, the country will hardly manage to achieve the modernization it needs so urgently. With inflation approaching 30 percent and real unemployment exceeding 20 percent (12 percent, according to official figures), and more than a million drug addicts -- a distressing world record of addiction -- the country faces practically insurmountable problems.

Whether the internally divided Palestinians will manage to come to terms and form a unified government for the Gaza Strip and the West Bank is no longer in the hands of the inconsequential negotiators in Cairo, but will be decided instead by Hamas's patrons in Tehran. Tehran also decides whether the Lebanese Hezbollah or Hamas's extremists use primarily words to express their hostility toward Israel or, as is currently the case, resume their bloody terrorist attacks instead.

Ahmadinejad feels obligated to the permanently downtrodden members of society. As if he were one of them, he campaigned for president four years ago in Tehran's massive poor neighborhoods, traveled to the country's most remote places and promised the underprivileged their share of Iran's riches. He told them that he would fill their empty plates with the proceeds from the sale of oil, and that he would declare war on corruption and nepotism. The "era of oppression, hegemonic regimes, tyranny and injustice has reached its end," Ahmadinejad told supporters after his election.

But the political achievements of President Ahmadinejad have been more miserable than stellar. In addition to isolating his country even further in the world, he has ruined its economy with his chaotic economic policies. In the devastating assessment of Ali Larijani, the president of the Iranian parliament and Ahmadinejad's biggest domestic rival, whom he previously removed from his position as Iran's chief nuclear negotiator with the West: "The confusion is the result of the government arbitrarily dissolving offices and dismissing experts, ignoring parliamentary resolutions and stubbornly going its own way."

Nevertheless, it is quite possible that this man, who has probably done more damage to his country than any other president in the 30-year history of the Islamic Republic, will enter a second term this summer -- simply because he lacks a convincing and courageous opponent.

Moussavi is of a significantly more robust nature than Khatami. As prime minister during the years of the Iraq war, he successfully managed the country's wartime economy. Critics note, however, that Moussavi's tenure was marked by a sharp rise in arrests and repression. He has not held any public office in 20 years and is virtually unknown among younger Iranians, who make up about 60 percent of the population.

On the surface, the elegant Moussavi would undoubtedly represent Iran more effectively on the international stage than Ahmadinejad. He appears to be more open to negotiations with the Americans. And yet, when it comes to the central nuclear conflict, the new candidate is just as obstinate as the current president. At a press conference in Tehran just last Monday, he noted that he too would not back down on the issue.

Which candidate the powerful religious leader Khamenei ends up supporting will likely be the decisive question. When Ahmadinejad came into office, he kissed Khamenei's hand. The two men were long considered extremely close ideologically, although since then Khamenei has more or less openly criticized Ahmadinejad's economic policies. Only recently, however, the religious leader spoke so positively about the president that many interpreted his words as an endorsement of his candidacy. Many observers of Iranian politics believe Ahmadinejad, because of his lasting popularity in rural areas, will be elected to a second term.

There are no questions that the Iranian president does not answer with questions of his own. He insists, most of all, on a few core concepts. One of them is justice, but he defines what justice is. Another is respect. He claims that he and his country are not afforded sufficient respect. This desire for recognition seems almost insatiable.

In Ahmadinejad's view, "hagh chordan," or the act of trampling on the rights of the Iranians, is a pattern that constantly repeats itself and comes from all sides, leading to a potentially dangerous mix of a superiority and an inferiority complex -- but not the irrationality of which the president is so often accused, especially by the Israelis.

The Mullen-Ashkenazi axis, like similar axes between heads of the two countries' intelligence communities, allows the Americans to sense the genuine atmosphere beneath the public propaganda disseminated in Israel and to understand the extent to which Israel is really concerned about the Iranian nuclear threat. It also affords them the opportunity to reassure, to delay and, at the very least, to walk the hidden line between the desire not to officially know in advance, in order to safeguard the ability to shrug off responsibility, and the need not to be surprised.

Make no mistake about the Obama administration, when it comes to Iran: Its policy differs from that of the Bush administration only in style, not in content. Its officials express themselves in positive terms, cloaked in an expression of conciliation, as opposed to the angry face worn by president George W. Bush - but the conclusions are similar, as are the results. Gary Samore, who Jones put in charge of coordinating the issue of weapons of mass destruction, said often, before his appointment, including during a speech at the Herzliya Conference in 2007, organized by Uzi Arad (today Benjamin Netanyahu's national security advisor), that the Iranians will continue their efforts to obtain nuclear weapons and that economic and diplomatic pressure will not help.

Ashton Carter, recently nominated by the president to be under secretary of defense for acquistion, technology and logistics, offered a similar analysis for the Bush administration, when he outlined three alternatives to confronting Iran. Plan B3, the military option, also entailed a possible bombing of Iranian oil installations, which are not protected and concealed like components of the nuclear infrastructure. The prevailing balance of power within the Obama administration tends to favor attacking Iran's nuclear installations, or to tolerate an Israeli attack. A prominent opponent of using military force against Iran, Charles Freeman, who had been slated to head the U.S. National Intelligence Council, was dropped under pressure of Israel's American supporters.

Obama will wait - not only for Iranian elections, scheduled for June (and those in Lebanon, that same month), but also for September's elections in Germany, and for Britons to vote at more or less the same time (elections have yet to be scheduled), in order to know who will stand by his side in the trenches. In that way 2009 will pass without a decision, but not all of 2010, because come that November, Congressional elections will be held, immediately after which the Democrats will begin organizing Obama's reelection campaign. The summer of 2010 will be critical, because by then the evacuation of most of the American forces from Iraq will be completed and fewer exposed targets will remain for Iranian revenge attacks.

The development of the Iron Dome system for intercepting Katyusha rockets, whose first battery will protect the environs north of the Gaza Strip (Ashkelon, Sderot), is expected to be completed by the summer of 2010. That will make it difficult for Hamas to open another front to harass the IDF on Iran's behalf. In the coming months, the tests of the Arrow missile defense system will continue, in a scenario that simulates an attack by a long-distance Iranian missile. The tests will be carried out in cooperation with American systems, including the large radar facility at the Nevatim air base. Preparations for defence against a radioactive attack will also improve, at an event to be staged at either an Israeli or an American port, as will preparations for a plague of smallpox, in a joint exercise involving Israel and one of NATO's important European member states.

In the Pentagon's most recent report about the strengthening of China, Israel receives a pat on the back, of the kind given to a well-behaved child: It has been cured of the habit of providing air-to-ground Harpy missiles to China, which extend the Chinese air force's operational range, and has also enforced stricter export supervision. The Americans are displaying a false naivete: Nothing has changed except for two offices having been moved around administratively. The decision to launch a military operation against Iran, particularly using American-made planes (such as the F-16, whose supply was suspended after Israel's 1981 attack on the Iraqi nuclear reactor), will have to be preceded by feelers to discern where Obama stands exactly on the continuum between approval and opposition. Apparently Israel wants Obama to emerge sufficiently strengthened from this week's NATO summit, but still too weak to say no to Israel.