George W. Bush has not changed his mind. Removing Saddam is the key to solving the Israeli-Palestinian conflict, writes Amity Shlaes.

To read the European papers, you would believe that the US administration reversed itself this past week on the Middle East conflict. After looking away when Ariel Sharon, the Israeli prime minister, went after Yassir Arafat, the Palestinian leader, the US then changed its mind and sought to put Mr Sharon on a leash.

This, though, is not the only interpretation of President George W. Bush's Thursday speech. Indeed, many in the administration view the speech in a different way: as the beginning of the end of Mr Arafat's leadership, and a game plan for getting past the Palestinian-Israeli conflict.

The difference in emphasis reflects two fundamentally distinct understandings of the region's troubles. The first - favoured by most European governments - says that healing the Middle East is primarily a matter of healing the relationship between Palestinians, represented by Mr Arafat, and Israel. Stability at the Israeli borders will make it possible to work on stability in the rest of the region.

This view focuses on the belief one can talk one's way to peace - a continuation of the old Zinni, Tenet, or "land for peace" negotiations. If it fails to negotiate, the US will trigger the uprising of the "Arab street" across the region.

The second view says that the Palestinian-Israeli conflict, bloody as it is, is merely a symptom of a larger problem, the same one that generated the attack on the US in September. In this view - the administration's - Baghdad has emerged as the root of the trouble. Only Saddam Hussein's timely removal will save the region.

Consider, first of all, Mr Bush's speech. In the days and weeks before it, indeed ever since suicide bombing took hold in Israel, America's European allies have been telling Washington it must work harder on brokering peace. The arrival of a heavyweight such as Secretary of State Colin Powell could show both sides that the US is serious and that Mr Sharon and Mr Arafat must take it seriously. Europe therefore views the speech as a recognition of this reality.

Not so the White House. It generated the speech to show other things. One is, indeed, that it respects its allies and will take their demands - dispatching Mr Powell - seriously. But another was to put an ultimatum before Mr Arafat. In effect, Mr Bush said: all right, we will send Mr Powell. But if Mr Arafat then continues to allow suicide bombers and other forms of violence to emanate from his territory, he will no longer be acceptable as a negotiating partner.

This is why the president said that "responsible Palestinian leaders and Israel's Arab neighbours must step forward and show the world that they are truly on the side of peace". The mention of "responsible Arab leaders" - plural - was there to show that the US is more than ready to deal with any new Palestinian leader who may emerge, and more than ready to jettison Mr Arafat.

As for the about-face on Israel, the speech did not really represent one. It referred to Crown Prince Abdullah's peace plan. But it did not refer to those aspects of the plan, or preceding Saudi plans, to which Israel retains strong objections: the right of return for Palestinian refugees who might overwhelm the Israeli population, for example.

Even the United Nations resolutions that the president cited are not deemed problematic by Israel. UN resolution 242, for example, passed after the Six Day War in 1967, demanded "withdrawal of Israeli armed forces from territories occupied" in that war. But Israel has long acceded to that because the phrase refers to withdrawing from "territories", rather than "the territories". The absence of the definite article means that Israel must withdraw from some of the territories but not necessarily all.

In other words, Mr Powell will certainly talk but the real agenda is not to allow the Arab-Israeli peace conflict to stall the momentum of the US military plan for Iraq.

There is evidence that Mr Saddam is feeding Palestinian fires: he recently increased the cash bounty he would pay families of suicide bombers who attack Israel to $25,000 from $10,000 a head. But it is the indirect influence of Mr Saddam in the region that is most destabilising. As long as he is allowed to continue to build his store of chemical weapons, to construct his missiles, and to torture his people, the region's leaders will think that the US will always flinch when it comes to serious challenges.

"His ouster would have an electric impact" on the region says one US official. It would give the region's citizens hope. The US isn't merely hawking the idea of "linkage" between Iraq and the Israeli-Palestinian conflict; it believes in it.

It is important to remember that negotiation has been tried over and again in the case of the Palestine Liberation Organisation and Israel. Following the Gulf war, the US spent close to a decade on the Oslo Accord. But the accord failed. Even after receiving the Nobel peace prize, Mr Arafat walked away from the peace offers made by Ehud Barak's government.

What is more, this lost decade helped Mr Saddam enormously in a strategic sense: it diverted attention from him and his absolute disregard for the law and demands of the international community. In showing that it would tolerate Mr Saddam, the US emboldened al-Qaeda and Mr Arafat.

In short, the fundamental question about the US posture in the Middle East is: is America after talks or is it after action? The answer is action. In this view, calls for more talks - even the Pope's call for peace - appear outdated. Indeed, to many Americans, Europe seems to be in a dreamland over Iraq.

After all, the US tried negotiations and brokering before Mr Arafat walked away from the negotiating table almost two years ago, and again before September 11. The world saw then that this approach would not work.

© Copyright 2002 Financial Times