The Bush administration has unveiled a four-part plan to rescue its overall Middle East policy, from Saudi Arabia to Iran/Iraq and Israel/Palestine.

Unhappy with Saudi resistance to the Shiite-led government in Iraq, and worried that the Saudis are trying to destabilize it, the President has announced a multi-billion dollar arms sale to Saudi Arabia and other Gulf states. The arms sale is designed to encourage the Saudis not to make trouble in Iraq by aiding radical Sunnis and also to reassure them of US friendship. It sends a message that we are in the Gulf and we’re staying there (regardless of what we do in Iraq).

To neutralize any Israeli opposition to the Saudi sale, Israel is also getting a significant increase in military aid as is Egypt (whose aid levels are tied to Israel’s as a result of agreements reached following the Camp David peace treaty).

The Iranian threat is not being overlooked either. The arms sale to the Saudis is, in part, designed to allay Saudi nervousness about Iran’s nuclear program and to remind King Abdullah that the Kingdom is under American protection and that he should not think it must have its own nuclear arsenal even if the Iranians succeed in developing one.

The centerpiece of the whole effort will be a peace conference on Israel/Palestine which the administration intends to convene this fall. Until this Wednesday, it looked like a non-starter. With the only Arabs in attendance being the Palestinians, Egyptians and Jordanians, it promised to be nothing more than a reprise of previous similar confabs which ended with handshakes, embraces and pledges that were never kept.

But things are changing. First, Secretary of State Condoleezza Rice is clearly determined to achieve a major agreement on Israel/Palestine before she leaves office.

And, unlike her predecessor General Colin Powell who was equally determined, she does not have to overcome the opposition of a neoconservative Secretary of Defense. Donald Rumsfeld had no use for Israeli-Palestinian negotiations and joined with Vice President Cheney and Cheney’s neocon Deputy Scooter Libby to thwart peace efforts. Rumsfeld’s replacement, Robert Gates, is of the Brent Scowcroft school. He believes in diplomacy and, like every Secretary of Defense prior to Rumsfeld, understands that the Israeli-Palestinian conflict jeopardizes vital US strategic interests in the Middle East.

People who know him well tell me that he strongly believes that America must return to the role of honest broker between Israelis and Palestinians or watch our ability to affect events in the region erode even below the dismal levels of today.

That is why Rice could say, as she did yesterday with Gates at her side, that the “President of the United States has no desire to call people together for a photo opportunity. This is to call people together so that we can really advance Palestinian statehood,' she said.

But back to what happened Wednesday. The Saudis announced that they would be willing to attend the US-sponsored conference.

This followed Rice’s re-statement of US support for the Arab League peace plan (the former Saudi plan). That means that the Saudis are agreeing to attend a conference which has at its centerpiece a plan which offers Israel full peace, security and normalization of ties with the entire Arab world in exchange for a Palestinian state and some solution to the refugee problem. The Saudis are not interested in attending a conference about the number of illegal outposts Israel will again agree to dismantle and the latest measures the Palestinians will claim to be employing to defeat tunnel smugglers. For them to attend, the conference has to be the real deal.

Saudi officials say that the four major “final status” issues must be on the table. These are the borders of a Palestinian state, the status of Jerusalem, settlements, and refugees.

“We are interested in a peace conference that deals with the substance of peace, not just form,” Saudi Arabia’s foreign minister, Prince Saud al-Faisal said Wednesday.

Prime Minister Olmert responded positively, more or less. But Defense Minister Ehud Barak (lately moving rightward again) demanded that the Saudis declare their “recognition of Israel as a Jewish state,” as a condition for inviting them to the conference. He even got into a big argument with Rice on the subject of removing roadblocks. But the most significant response came from Israeli Foreign Minister Tzipi Livni. “It’s not wise,” she said, “to put the most sensitive issues out first. “

But why not?

Oslo’s downfall was that it saved the contentious issues for last. Final status issues were kicked down the road for five years, by which time Palestinians (who had seen few benefits from the peace process) had lost their enthusiasm about it and Israelis had begun to take the absence of terrorism for granted. By 1999, the safest year in Israel’s history thanks to Oslo-mandated Israeli-Palestinian security cooperation, many Israelis had concluded that they could have security and the territories too.

With neither side ready for the tough sacrifices peace would require, everything blew up in 2000.

It would be one thing if Israelis and Palestinians were not well acquainted with all the issues dividing them (as was the case when Israelis and Palestinians first started talking in the early 1990’s). They are. Israelis know the Palestinian position on every critical issue and vice versa. Both sides even agree on what a final status agreement will look like, i.e. the so called Clinton Parameters of 2001.

Why would they want to start from square one unless square one is also their preferred final destination?

Imagine if the United States and the Iranian government began comprehensive negotiations tomorrow. Would anyone propose that they first discuss cultural exchanges and reopening embassies and then only much later start discussing Iran’s nuclear program and the threats against Israel? When the United States began its engagement with Libya, they did not start off discussing a Qadaffi visit to Washington or even the imprisoned nurses but the most important item on the agenda: an immediate end to Libyan support for terrorism.

In today’s Middle East, saving the key issues for last makes no sense. Tackle the big ones first, see how much progress can be made, and proceed from there. It could be that differences over refugees or Jerusalem are insurmountable. If so, why not know that from the get go.

The bottom line is that the Arab-Israeli and Israeli-Palestinian situations are too volatile to spend time and effort on baby steps.

It’s like a bumper sticker I once saw. “Life is uncertain. Eat dessert first.”