The meeting in the White House Monday between President Barack Obama and Israeli Prime Minister Benjamin Netanyahu clarified significant differences as well as deep convergences in the two countries’ approaches to two major sources of tension and conflict in the Middle East - the Iranian nuclear sector and the Arab-Israeli conflict.

The convergences are well known, but the new gaps are the important element to watch in the coming months for they reveal much about changing conditions in the Middle East, especially American threat perceptions and policy options that see Washington moving towards the centre in the Arab-Israeli conflict - and towards negotiations with Iran and Syria.

The major differences between the United States and Israel include the outcome of any peace talks in the region: the US favours Israeli and Palestinian sovereign states living side by side, while Israel wants the Palestinians to “enjoy” a self-governance that is less than sovereignty and statehood.

Israel and the United States also have different views on the Iranian nuclear issue and how to deal with it.

The Middle East is in a very different configuration today than it was even six months ago, due to simultaneous changes in Israel, the United States, the Arab world and Iran.

The Arab world’s internal ideological balance sheet has changed due to the wars that Israel fought with Hizbollah and Hamas, respectively in Lebanon and Gaza, during the past three years. Also, Islamists have made gains in areas where conflict and tensions persist. Centrist and pro-American Arab forces have lost credibility and power in tandem with the rise of these militants.

Iran, for its part, promotes and exploits the gains of Arab groups who define themselves primarily by their “resistance” role - as Tehran markets itself as the mother of all resisters by defying the United States and the West on uranium enrichment.

Israel sees both the Arab and Iranian trends as worrying and existentially threatening, but cannot muster any response other than a continued popular shift to the right and militarism. The result is ever more hardline governments such as Netanyahu’s.

All of this has created a worsening cycle of extremism and confrontation that touches most parts of our region. Centrist and pro-American Arab governments have responded by relaunching the 2002 Arab Peace Initiative that offers Israel comprehensive peace and coexistence. They believe that resolving the Arab-Israeli conflict would cool down other tensions in the Middle East and reduce Iran’s ability to penetrate Arab societies.

Obama has a much better understanding of these realities than his predecessor, and quickly launched a policy review that put US interests in the Middle East at the centre of things (rather than Israeli fears or American neoconservative ideological experiments).

Obama’s last Monday meeting with Netanyahu clarified the new American insistence on addressing Iran and Arab-Israeli peace making on the basis of four important principles: emphasising negotiations rather than confrontational militarism; paying simultaneous attention to Iran and Arab-Israeli peace-making; committing to deep, sustained American diplomacy; addressing the legitimate grievances and rights of all parties, rather than making American or Israeli needs the beginning and end points for all encounters.

The opening negotiating positions of all parties are now on the table, and the hard bargaining will now begin - with some pushing and shoving and the occasional walking out of the room. Revived American diplomatic engagement is the most significant new factor, and it is easy to understand why the Obama team has slowly shifted US policy towards a more centrist, engaged, equitable and diplomatically activist approach.

The most telling example I personally encountered of why the United States is changing course in this region happened at the World Economic Forum Middle East gathering in Jordan last weekend. When Iraqi Vice-President Adel Abdel-Mahdi was asked in a plenary session what he would say to Obama, he mentioned four things: the US should withdraw fully from Iraq by the 2011 deadline; it should pressure Israel to accept the Arab Peace Initiative; it should engage Iran diplomatically to resolve outstanding issues; it should deal more decently and fairly with Muslims in the United States and around the world.

It is hard to find a better reason than this for the United States to review and revise its failed policies in the region: a senior Iraqi official, who is in office largely thanks to the American-led invasion and regime change in his country, suggests four policy moves that in one way or another criticise or require changes in Washington’s policies.

The fact that Obama’s team seems to be making these adjustments is an important sign that real change may be on the way, and the Israeli government for now seems to be the odd man out in a region that seems to be groping towards new relationships and realities.