President Barack Obama will face a series of challenges in the Middle East demanding urgent attention: an Iraq that could still unravel, an Iran approaching the nuclear threshold, a faltering Israeli-Palestinian peace process, and weak governments in Lebanon and the Palestinian territories challenged by strong militant Islamist groups. He will also discover that time is working against him. But with changes in policy, the incoming president can capitalise on new opportunities rather than be overwhelmed by old realities in this critical and troubled region.

For six years, US policy in the Middle East has been dominated by Iraq. This need not and should not continue. The Obama administration will be able gradually to reduce the number of US troops in Iraq and shift responsibility to Iraqi forces. The drawdown will have to be executed deliberately so as not to risk undoing recent progress.

The improved situation in Iraq allows the new US administration to shift its focus to Iran, where the clock is ticking on a dangerous nuclear programme. While failing to head off this programme, President George W. Bush succeeded in removing Tehran’s most threatening enemies – the Taliban and Saddam Hussein – inadvertently opening the door to an Iranian bid for regional primacy.

The initial aim of the Obama administration should be to limit Iran’s nuclear programme rather than remove or isolate the regime. Mr Obama should offer direct official engagement with the Iranian government, without preconditions, along with other diplomatic, energy, economic and security incentives, to turn Tehran away from developing the capacity to rapidly produce substantial amounts of nuclear-weapons-grade fuel. He should also lay the groundwork for an international effort to impose harsher sanctions on Iran if it proves unwilling to change course – sanctions that will have more bite now that the price of oil has dropped below $50 a barrel. The entire package should be made public so that Iran’s leaders are forced to explain at home why they would choose their nuclear ambitions over a better standard of living for the Iranian people and greater international acceptance.

Preventive military action against Iran by either the US or Israel is an unattractive option. But it needs to be examined carefully as a last-ditch alternative to the dangers of living with an Iranian nuclear bomb – dangers that include putting the region on a hair-trigger, further emboldening Iran and prompting several Arab governments to pursue nuclear programmes of their own. Some of these effects could be ameliorated by providing missile defence and security assurances to regional allies and making a clear declaratory warning to Iran.

The Iran issue cannot be dealt with in isolation. The US president should spend political capital trying to promote peace agreements between Israel and its Arab neighbours, in particular Syria. Damascus is currently allied with Tehran, so an Israeli-Syrian deal would dilute Iran’s regional influence and reduce external support for Hamas and Hizbollah. What is envisaged is not so much an exchange of territory for peace as territory for Syria’s realignment. This is not an argument for a “Syria first” approach – prioritising Syria over the Palestinian issue – but it is a call for a “Syria also” approach.

On the Israeli-Palestinian front, there is an urgent need for a diplomatic effort to achieve a two-state solution while it is still feasible. Divisions on both sides and the questionable ability of the Palestinian Authority to control any newly-acquired territory make a sustainable peace agreement unlikely for now. But these factors argue not for abandoning the issue but for laying the foundation for future success by improving Palestinian security forces, strengthening its economy and halting Israeli settlement activity while continuing final status negotiations. The Arab states need to do more to bolster Palestinian moderates and convince Israelis that what is on offer is in fact a 23-state solution, in which every Arab state would recognise Israel. Progress here, and with Syria, could have the additional benefit of creating the sense in Tehran that rather than dominate the region, it could be left behind by it. This should increase Iran’s incentive to take seriously the US offer of normalised relations in exchange for normalised behaviour.

What all these initiatives have in common is a renewed emphasis on diplomacy. The US can no longer achieve its objectives without the backing of regional partners as well as China, Europe and Russia. Getting Russia to support what the US regards as its vital interests in the Middle East will require that Washington be prepared to take Russian interests elsewhere into account. An effective foreign policy requires prioritising. The US should agree to put on hold plans for missile defence in Europe if Russia demonstrates a seriousness about resolving the Iranian nuclear threat. Similarly, Nato expansion to include Georgia and Ukraine could be slowed.

Launching three simultaneous diplomatic initiatives in the Middle East will be a tall order for Mr Obama. All are worth trying and progress on one can generate pressure for progress on the others. Aside from the chance that they will succeed, the attempt itself will leave Mr Obama better placed to build support at home and abroad for necessary alternatives should they fail.