Although the primary purpose of Prime Minister Ehud Olmert's recent US visit was to address Jewish leaders at the GA meeting in Los Angeles, he took advantage of the opportunity to meet his American counterpart and consolidate relations, particularly with respect to Iran and Israel's next peace moves. Olmert visited the United States at an important juncture, just as a new balance of political power is solidifying itself in Washington and in the Palestinian Authority. The Palestinians are working their way toward a national unity government, weakening and moderating the posture of Hamas, which can potentially open the road to dialogue and negotiations between Prime Minister Olmert and PA Chairman Mahmoud Abbas. The recently declared cease-fire, plus the premier's Sde Boker speech, seems to underscore such a momentum. The shift of power in the US Congress, giving the Democrats majorities in both houses, brings with it the potential for more innovative American peace policies in the Middle East, especially given Bush's weakened position because of setbacks in Iraq. UNTIL NOW Bush has advanced a two-track policy of military activity in Afghanistan and Iraq, and diplomatic pressure vis- -vis countries like Iran, Syria and North Korea. But a fundamental shift in the definition of diplomacy must take place. Rather than diplomacy being perceived as the consequence following the use of force, diplomacy should be viewed in its classical form as a mode of peace-making. If both Bush and Olmert get behind a peace initiative in the Middle East, involving Palestinian president Mahmoud Abbas, I believe this policy could also improve their political fortunes. Indeed, time is now ripe for the United States and Israel to engage in a diplomatic initiative that will launch a peace process in the Middle East. Bush is committed to the war against terror, and peace-making in the Middle East must be part and parcel of it. DANGER IN the region and around the globe is now emanating from the fundamentalist pro-terrorist Iran and backed by Syria. For Iran, a peaceful resolution between Israel and the Palestinians is a threat that would curtail its policies of enlarging its sphere of influence into the Middle East and the Persian Gulf. Substantive Palestinian-Israeli negotiations on permanent status issues would no doubt be a blow in the face to Mahmoud Ahmadinejad. This is also definitively true for Israeli-Syrian negotiations toward a peace treaty between the two states. The latter peace process would break the axis of evil between Iran, Syria, Hizbullah and Hamas, as it would be based on the negation of terrorism. The US administration is currently awaiting the James Baker report. It is hoped that the report will include recommendations for a viable peace process in the Middle East. Former secretary of state James Baker was the architect of the first Madrid Conference that launched bilateral negotiations between Israel and the Palestinian Authority, and Israel and Syria. It may be the time for a second Madrid Conference, serving to launch similar negotiations. THE CHALLENGE lies with Bush and his new Congress. A new framework for peace negotiations must be created. I'm thinking of an umbrella structure that would negate terrorism while simultaneously encouraging and monitoring negotiations. Such talks should take place along two tracks - Palestinian and Syrian - which would enhance each other: Progress on the Syrian track would provide an incentive for the Palestinian track, and vice versa. American and Israeli peace policy should seek a comprehensive package in which Israel would enjoy diplomatic relations with all Arab countries and the Middle East would enjoy regional economic development with open borders for trade, tourism, infrastructure connections, and joint projects in the areas of water, ecology and energy. And of course security, particularly in relation to the use of terrorism, can be regionalized. Essentially most Middle East countries as well as Israel share common interests against extreme fundamentalists. Americans have traditionally supported their army in time of war and their administration in the quest for peace. This was manifest in the recent American election, where discontent was expressed with respect to what is virtually a one-dimensional military effort. It is thus time for Bush to not only be the man in command of American military efforts, but also the man in command of an American peace effort. An officer and a peacemaker.And I have no doubt that Prime Minister Olmert will go along for the ride. The writer is president of the Peres Center for Peace.