Another day, another massacre in Iraq. Sunni fanatics bombed a Baghdad street market on Thursday, slaughtering 70 Shi'ites. The latest bloodletting comes just as 133,000 US combat forces are to be withdrawn from Iraqi population centers, on Tuesday. The troops will be out of the country altogether in two years. While world attention has been focused on Iran, Iraqis have continued to kill each other and Americans. In Mosul, the coach of the national karate team was killed; a spate of violence earlier in the week claimed dozens of victims in Baghdad. A truck-bombing in Kirkuk on Saturday took 70 lives. Nor is the situation stable even in Fallujah, pacified at great cost in American lives and treasure. The Sunnis responsible for recent attacks are mostly locals, not jihadis from abroad, and American intelligence believes that the chances of renewed sectarian warfare are receding. The official US line is that the war in Iraq is winding down and American forces there will be reassigned to Afghanistan. US DEFENSE Secretary Robert Gates called on a Washington gathering of top military officers from friendly Arab countries to help stabilize Iraq and Afghanistan. He said that Washington's overtures to Iran notwithstanding, America would stick by its Arab allies. America's dependency on imported petroleum, along with other geostrategic considerations, makes the need for good relations with the Arabs perfectly understandable. Still, isn't the administration curious about why it must work so hard to convince them to do what is in their own interest? After all, were Iraq (with its Shi'ite Arab majority) to fall completely into Iran's (Persian Shi'ite) orbit, this would be a bad thing for the predominantly Sunni Arab states. Likewise, a nuclear-armed Iran would most immediately threaten the Arabs. On Thursday, Jerusalem Post diplomatic reporter Herb Keinon analyzed the approach Washington has been taking to bolster its credentials with the Arabs. By driving the settlement issue to the forefront, wrote Keinon, President Barack Obama has, paradoxically, made it next to impossible to resume Palestinian-Israeli peace talks. The Palestinians insist they will not negotiate without a settlement freeze. And the Obama administration seems to have bought the assertion, reiterated at Wednesday's Arab League meeting in Cairo, that if only Jewish life over the Green Line was placed in suspended animation, Palestinian moderates would make a dash for peace. There are some 550,000 Jews living beyond the Green Line: 300,000 in 120 communities in Judea and Samaria, the rest in metro-Jerusalem. Notwithstanding the shared Israeli and American desire to create a climate conducive to productive negotiations, it makes little sense to many Israelis that the US is demanding a freeze inside the strategic settlement blocs Israel is consensually insistent on retaining, and the extension of that demand to Jewish neighborhoods in post-'67 Jerusalem is still more problematic. Furthermore, all Israeli communities on the Palestinian side of a permanently agreed border would be relocated under the terms of a final status deal. We suspect the Palestinians do not want to negotiate in good faith - otherwise why did they reject an offer by Ehud Olmert that would have given them the equivalent of 100 percent of the West Bank, plus Israel's agreement to international oversight of Jerusalem's holy basin? And why is Mahmoud Abbas still insisting on Israel agreeing to absorb millions of Palestinian "refugees" - thereby asking us to commit demographic suicide? In Jordan this week, Saeb Erekat crowed that it was Palestinian negotiating obstinacy that had impelled Olmert's generous offer. The longer we hold out, he said, the better the offers get. In that context, American pressure for a complete Israeli settlement freeze seems likely to deepen Palestinian obduracy, not reduce it. Fixating on settlements gladdens Arab hearts, no doubt. It will not, however, bring stability to Fallujah or Kabul. What will? Perhaps a sense of certainty that America will not waver in its determination to lead. Even then, though, Arab collaboration on Iraq, Afghanistan and Iran will still be influenced by factors beyond Washington's control, such as the internecine struggle between Islamists and relative modernizers. When the Arabs study Washington's handling of Iran's post-election upheaval, or how it's responding to the mullahs' quest for atomic weapons and to North Korea's brinkmanship, will they take heart from Obama's commitment to multilateralism and his dexterous employment of soft power and suasion? Or will they, looking at the results, hedge their bets and disingenuously attribute their vacillation to Jewish settlements on the West Bank?