Hopes in Washington that President Clinton would be able to cap his presidency with a Middle East peace agreement evaporated more than a week ago as clashes between Israel and the Palestinians intensified. Yesterday, the US was faced with a much more serious crisis: the unravelling of a Middle East strategy painstakingly built up over the last decade.
The hostilities between the Palestinians and Israelis appear, say Middle East specialists, to have hardened attitudes in the Arab world, not only against Israel but against Washington. The efforts by Mr Clinton to move the US to the position of honest broker, trusted by both sides in the Middle East conflict, are unwinding, through no fault of his own.
The US has always been regarded, at best, ambivalently by many in the Arab world as the chief defender of Israel. But while the Middle East peace process seemed to be making progress and the Palestinians were moving towards statehood, that latent enmity was submerged.
"When things move in the wrong direction, then all that seems to be left is the US-Israeli relationship and the close identification of the US with Israel," said Mr Theodore Feifer, a former State Department Middle East specialist now at the US Institute of Peace.
With this as the background, the US suffered what appeared to be its worst assault at the hands of terrorists since the embassy bombings in Kenya and Tanzania in August 1998. Early reports suggested that the apparent suicide bomb attack on the USS Cole, which had made a refuelling stop at Aden, had killed at least four US sailors, with 12 still missing and more than 30 injured.
In its latest report on terrorism, released in April, the State Department said lax and inefficient security procedures in Yemen "continued to make the country a safe haven for terrorist groups".
But there is another dimension to the US policy crisis that reverberates around the region: the severe setback that Washington's containment policy against Iraq has suffered in recent weeks.
Mr John McCain, the Republican senator and one-time presidential contender, said yesterday he was concerned about more and more Arab states being sucked into the Palestinian-Israeli conflict. He told CNN: "The shadow of Saddam Hussein looms throughout."
US Defence Department officials said yesterday a crack Iraqi Republican guard division had begun moving from Baghdad in the direction of Jordan.
The US strategy has been aimed at keeping the Iraqi leader "in his box". But with oil prices high and reacting nervously to Middle East developments over concerns in part that oil may become, as it was in the 1970s, a political tool in the Middle East conflict, the economic constraints on the Iraqi leader have been significantly eased.
Official oil revenues through the UN sponsored oil-for-food programme are higher, while the government in Baghdad is also benefiting from increased income from sales of illicit oil.
Furthermore, the demonstrations of international opposition to the UN sanctions regime have grown. All of this has been seen in Washington as increasing the incentive for the Iraqi leader to wait for further erosion of the UN sanctions against him and as boosting his legitimacy in the Arab world.
The US response to the deteriorating situation has been to try to address the immediate crisis. Mr Clinton telephoned Mr Arafat and the Israeli leader, Mr Ehud Barak. Mrs Madeleine Albright urged Mr Arafat to take the steps necessary to bring "this senseless and destructive cycle of fighting to an end".