THE NEXT president of the United States, in addition to dealing with the overwhelming global economic crisis, will have to contend with problems that have arisen recently in the Middle East. They include:

# The decline of America's status;

# The too-slow progress toward political stability in Iraq and the growing Iranian subversion there;

# The rising influence of the "resistance camp" - Iran and its proxies: Hezbollah, Hamas, Islamic Jihad;

# The reluctance of US allies to stand defiantly against the anti-American forces;

# The stagnation in Israeli-Palestinian negotiations;

# Iran's progress in developing a nuclear weapon, and its present long-range capacity to deliver it;

The return of Russia as an active player, especially as the main supplier of sophisticated weapons to America's adversaries.

There are two main options for dealing with these problems. One is to reach a deal with Iran, based on acceptance of its ambition for regional hegemony, through partition of the Middle East into two zones of influence - American and Iranian. The other is to confront the Iranian influence by stopping its nuclear power, combating Iranian-sponsored terrorism, and substantially empowering the moderate forces and US allies, which includes resolving the Israeli-Palestinian conflict.

The next president should choose the second option.

The Israeli-Palestinian conflict is where bold American presidential action can significantly affect the challenges in the Middle East and dramatically improve the status and prestige of the United States in the region. For two decades America has failed to bring the Israelis and the Palestinians to end their century-long conflict. The guidelines for a permanent-status agreement were drafted in 2000; both parties know them well. A majority in both communities stands ready to pay the emotional price required of each side to achieve peaceful coexistence: no return of refugees to the Jewish state, the establishment of a Palestinian capital in East Jerusalem.

The next American president should remove the two practical obstacles blocking the way to an Israeli-Palestinian agreement: relocate 120,000 Israeli settlers who now live in the West Bank in the areas that Israel will evacuate; provide new jobs, proper housing, and a better future to the hundreds of thousands of Palestinian refugees who live in poverty and despair.

These actions will deny both parties the pretexts they use to evade decisions, and clear the way to the implementation of a two-state solution to the Israeli-Palestinian conflict. These two steps would define the United States as the superpower that made the dream of a Palestinian state come true and put an end to the agony of the refugees.

The United States should lead an international effort to raise $4 billion per year over five years that would enable Israel to relocate the West Bank settlers, mainly through the development of the Negev and Galilee areas in southern and northern Israel. Twenty-billion dollars, spent between 2009 and 2013, is a relatively small amount when compared with the long-term cost of the continued Israeli-Palestinian conflict to the American taxpayers

During the same five years, the wealthy Arab states, complying with the request of the United States, should allocate the same amount of money for the economic benefit of the Palestinian refugees. These economic gains would not be attained by handout and welfare vouchers, but through economic development, which will create jobs, vocational training, affordable housing, etc. Given the current oil price, those Arab countries can easily match the American and international contribution.

Such a presidential initiative would restore the prestige of the United States in the world, strengthen the moderates in the region, encourage Israeli-Palestinian reconciliation, and deny Iran and its proxies the pretext for war mongering.

The next US president would thereby be viewed as the leader who changed the regional reality by generosity and not by military force; who aligned the moderate forces in the region for a coordinated action not as a war coalition, but as a coalition for peace and economic development.