Obama had to choose between two priorities: either achieving progress in resolving the Mideast conflict, or stopping Iran's quest for nuclear weapons. The second issue directly affects U.S. national security; the first does not.
The Saudis are a key player behind the scenes on both issues. They have a common interest with Israel and the United States in thwarting Iran. They have also invested many, many years in the Mideast conflict - politically, that is; not militarily.
By making the Mideast conflict his first priority, and by demanding that the Israelis halt all new settlements, despite the agreement reached with the Bush administration, Obama apparently expected the Saudis to respond by being 'helpful,' according to this article. Yet the opposite has happened. The Saudis don't want to make any concessions until all settlement activity is halted - something that will not happen. And they are trying to make sure no other Arab country is forthcoming either.
In the space of a few short months, the Obama administration has managed to fail to exploit the reports of growing convergence between Israel and its Arab neighbors regarding Iran. It has also made an unachievable (and nonsensical) goal the sine qua non of its Mideast policy. It will take a while to dig out of this hole.
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