US secretaries of Defense and State are using their high-profile meetings this week with Arab and Israeli leaders, in part to herald a new Bush administration strategy toward Iran: cold war-style containment.

The trip comes on the heels of a US proposal to offer $20 billion in military aid to Arab Gulf states (mostly Saudi Arabia) and a $30 billion package for Israel. Secretary of State Condoleezza Rice did not mask the purpose of the deal when she called Iran “the single most important single-country challenge to ... US interests in the Middle East.”

“The talks on Tuesday night between [Saudi Arabian] King Abdullah and US Secretary of State Condoleezza Rice were very important, as they signaled the beginning of a political showdown between the US, Gulf states, and Egypt on the one hand, and Iran on the other,” says Adel al-Toraifi, a Saudi analyst who focuses on his country’s relations with Iran.

Mr. Toraifi says since the US “surge” in Iraq is not achieving fast results, America wants to shift attention to another front.

“The Americans were waiting for the surge in Iraq to take effect, but since the surge wasn’t going very well, they decided to announce the new offensive of containing Iran. It is important for the Bush administration to [show] some achievements in the Middle East” before a congressional review of the surge planned for September, he says.

“What America is doing now is containment, saying that the peripheral states [to Iraq] that are our allies have to be protected,” says Meir Javedanfar, a Tel Aviv-based Iran expert and author of “The Nuclear Sphynx of Tehran.”

“It looks inevitable that America will withdraw [from Iraq], so it’s building a giant fence around Iraq by supporting the countries it has good relations with.”

This may lead to shoring up Sunni states – particularly Iran’s neighbors in the Gulf – who will be a main driver of US policy as an eventual draw-down of US forces in Iraq looks more likely.

Israel, which vociferously opposed US arms packages to the Saudis in the 1980s, has made it clear it’s not opposed to this current deal. Prime Minister Ehud Olmert said he “understood” the US decision, and said “there is a need for a united front between the US and us regarding Iran.”

“For Israel, the No. 1 priority is Iran, and in this case they see the Saudis as on the same side as Israel. They have a mutual interest in containing Iran,” says Mr. Javedanfar.

Analysts say Israel also has an eye on drawing Saudi Arabia deeper into peace efforts with the Palestinians – and perhaps encouraging them to become the third Arab state to recognize Israel. President Bush is proposing an Arab-Israeli peace conference to be held in Israel in the fall. Saudi Foreign Minister Prince Saud al-Faisal said his country would consider attending, but only if it addresses “issues of real substance.”

That appeared to be a reference to a Saudi proposal made earlier this year that promises peace and recognition of all Arab states in return for Israel abandoning the territory it seized in the 1967 war.

But whether the US military aid will add up to much change – in either Iran’s ambitions, or the eventual stabilizing of Iraq – remains to be seen.

Ms. Rice and Defense Secretary Robert Gate’s trip to Egypt, Saudi Arabia, Israel, and the Palestinian Authority’s headquarters in Ramallah began with potentially embarrassing comments from the US ambassador to the UN, Zalmay Khalilzad, who is the former ambassador to Iraq. He accused Saudi Arabia of undermining Iraq’s stability, an allegation similar to the ones the US has lobbed at Tehran.

After a meeting with Rice on Wednesday morning in Jeddah, the Saudi foreign minister said he was “astounded” by the criticism, and said his country was doing all that it can. Then his government agreed to a US request to upgrade its diplomatic relationship with Iraq. Rice praised the Saudis: “We are good friends, we are allies.... [But] it doesn’t mean there won’t be disagreements about policies, tactics.”

Jamal Khashoggi, editor in chief of the Saudi daily Al-Watan, said that Saudi Arabia has not helped the US in Iraq until recently as former Secretary of Defense Donald Rumsfeld made a point of telling Saudi Arabia and other moderate Arab countries to stay away from Iraq.

“While our presence is visible in Lebanon, our presence in Iraq is very limited because of the Americans, especially when Rumsfeld was the secretary of Defense. Saudi Arabia and Jordan felt unwelcome in Iraq, but the Americans are now asking for our help there,” he says.

Mr. Khashoggi says there is only so much Saudi Arabia can do to keep jihadis, many of whom are Saudi nationals, from traveling into Iraq.

He says the Kingdom has fully secured its border with Iraq, and that it was Syria that was allowing Saudi fighters to be smuggled into Iraq through its borders.

“The problem here is Syria – all the suicide bombers are going into Iraq through Syria,” he says.

The new strategy of containing Iran taking shape in the Middle East resembled the cold war standoff with the Soviet Union. At that time, the US bolstered the militaries of regimes such as Saudi Arabia and Egypt as well as the Western democracies of Europe with a twofold objective: to create powerful friends and thereby restrict that country’s territorial ambitions, and to draw the Soviets into an arms race that some strategists believed the US and its friends would be better able to afford economically than the Kremlin.

Rice, whose academic expertise was on the Soviet Union and the strategies to oppose that regime, now looks to be running Middle East policy from an old playbook.

“Iran is not the Soviet Union. In 1946, the Red Army was all the way to Berlin and had helped win the war,” says Ervand Abrahamian, an Iran analyst and historian at Baruch College in New York. “What capabilities do the Iranians have? These old cold warriors need a reality [check].”

Mr. Abrahamian also says the notion that arming Saudi Arabia and its neighbors will somehow contain Iran is inaccurate, and may in fact encourage Iran in the view that a nuclear bomb is its best guarantee of survival.

“Iran has no has no military capability outside it’s own territory, it’s military budget is the total of Kuwait’s and the United Arab Republics combined and … it has no projection ability,” he says. “Sure, Iran can support the militias in Iraq, but that’s not a threat to Saudi Arabia. I think the point is to harness in the Saudis and Gulf States diplomatically so they can say ‘Hey, we’re building an anti-Iranian coalition,’ [which] draws attention from the Iraq and Palestinian issues.”

Asked if the logic is to draw Iran into a costly arms race, Abrahamian says it might, but worries about the consequences. “I can’t imagine that Iran is not going to somehow react. The danger is if Iran is pushed into an arms race, the cheap answer to the problem is to go nuclear.”

Javedanfar also worries that any arms raise could encourage Iran in its nuclear ambitions, but has the added concern that the US is rewarding the Saudis at a time when he and many others believe that country is contributing to the bloodshed in Iraq, something which in turn could help Iran.

“Instead of selling weapons to the Saudis, the Americans should be twisting their arms, saying if they don’t contain the Sunni elements now, they get nothing,” he says.

“To give weapons to the Saudis now, while they are also part of the problem in Iraq, is going to mean a bigger mess. It’s going to strengthen the Iranian position, because the Shiites, who were hoping America would be an ally, will fall into the [Iranian camp] with more enthusiasm than before.” [Editor's note: The original version quoted Mr. Javedanfar saying that giving weapons to Saudi Arabia would push more Shiite groups into the"Shiite camp." It should have been clarified that he was specifically referring to the "Iranian camp."]

US officials appear to believe that Saudi Arabia could wield influence in Iraq to bring Sunni militants to the peace table.

Analysts in Saudi Arabia say that while the country is happy to have more aid, the Kingdom will evade outright confrontation with the Islamic Republic of Iran and is likely to take a different tack than the US. The country recently hosted a visit by Iranian President Mahmoud Ahmedinejad.

“Saudi Arabia is working to contain Iran, based on its own interests. Our policy is not to leave a vacuum for them – but [also] not to escalate things with them but to engage with them positively,” says Mr. Khashoggi

“Saudis have realized that there are two fronts in Iran – the hard-liners and the moderates,” he says.