When he travelled to Cairo at the beginning of June this year being president must have seemed much easier than it does now.

He gave a speech there, in a grand lecture theatre at the university, that was intended as a key foundation stone for his presidency.

It was supposed to begin to repair the damage done to America's standing in the Muslim world, and especially in the Arab Middle East by his predecessor.

Most importantly of all, it was to accelerate the president's push for Middle East peace.

The speech in Cairo raised hopes that he was going to go use his presidency to change matters for the better in their part of the world.

My notes record more than 35 interruptions for applause, that went from mild to shrieks and cheers. At one point someone in the hall shouted out: "We love you!".

The Cairo speech made a Palestinian friend of mine nervous.

"Arab expectations are way up now," he said. "And when they come down again, it is going to be with a very big crash."

The crash that he predicted is happening.

Unbreakable bond

Only a relatively short part of the speech was about the Israelis and the Palestinians.

He tried to pick out the fundamental issues in America's relationship with the Muslim world.

Mr Obama is great with words, but audiences tend to remember best the bits they like.

When Mr Obama spoke about America's "unbreakable" bond with Israel, and when he called denial of the holocaust "baseless, ignorant and hateful" the audience in Cairo was silent.

But they applauded loudly when he turned to the occupied Palestinian territories, and said that "the United States does not accept the legitimacy of continued Israeli settlements".

The Cairo speech was precisely phrased, intended to rebalance rather than revolutionise US Middle East policy. But the US president's Arab audience took away an impression that he would be tougher on Israel than his predecessor had been.

And at the time his new administration gave every impression that changing Israeli behaviour in the occupied territories, starting with freezing settlement building, was its intention.

In return, he was hoping for some minor diplomatic concessions from Arab countries.

Tough line

The foreign minister of one of America's closest Arab allies told me that a settlement freeze was necessary to defuse Arab anger after the Gaza war and to deliver them into a new peace process.

But Barack Obama's problem is that he has not been able to deliver the Israelis. They refused to stop building in Jewish settlements in the occupied Palestinian territories.

A couple of days before the Cairo speech, the US Secretary of State Hillary Clinton defined what Mr Obama meant by a "freeze".

"He wants to see a stop to settlements - not some settlements, not outposts, not 'natural growth' exceptions," she said after a meeting with her Egyptian counterpart. She said she had communicated the message "very clearly".

Mrs Clinton is in the Middle East again this weekend, still trying to get Palestinians and Israelis back around the negotiation table.

The US has adapted its policy to the fact to Israel's refusal.

Diplomatic push

But Washington's failure to deliver the Israelis has caused serious political damage to the Palestinian leader Mahmoud Abbas.

He has done what he has been asked to do by the Americans. His security forces get excellent reports from their American and European advisors and instructors.

Reluctantly, Mr Abbas agreed to a photo opportunity in New York shaking hands with the Israeli Prime Minister Binyamin Netanyahu under the gaze of President Obama.

The photo says a great deal: Mr Netanyahu, having scored a victory by resisting the pressure for a settlement freeze, has a wry smile, Messrs Obama and Abbas look tense.

Then Mr Abbas agreed to an American request to delay debate of the Goldstone report into possible Israeli and Palestinian war crimes in Gaza. In the resulting Palestinian political storm, he changed his mind. But the damage was done.

He is still insisting that he will not negotiate with Israel until there is a settlement freeze. Israel is still building in the occupied territories. The US is still trying to get them to talk.

The latest suggestion is get them, not around the same table, but in the same building. An American diplomat, probably the US envoy Senator George Mitchell would then shuttle between them.

It is still very early days for Mr Obama.

But his problem is that the Middle East does not mark time very well. The level of violence has been going up again recently. If he does not want his attempt to make Middle East peace to fail, he needs some diplomatic progress very soon.