Iranian President Mahmoud Ahmadinejad's grand entrance into the Gulf Cooperation Council's annual summit in Doha, Qatar last week was a remarkable moment. With a broad smile, the Iranian leader entered the main foyer walking hand in hand with his unlikely host, Saudi leader King Abdullah who probably would have been happier had his Iranian guest accidentally tripped, hit his head, and died on the spot. But Abdullah's last minute invitation to Ahmadinejad, and his public cozying up to the Iranian at a moment when Iran threatens to replace Saudi Arabia as the new hegemon in the Middle East could be the latest signal of how terrified the Sunni Arab establishment is - and the Gulf states in particular are, of Iran's rising power. It is also seems a graphic indication of Saudi and "Gulfie" nervousness over their perception of America's growing weakness and loss of political will opposite Teheran. On the face of it, Ahmadinejad's key note address - the first for any Iranian leader to the Sunni Gulf Cooperation Council - that included Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates (UAE) and Oman seems counter intuitive. Wasn't the GCC created to offset the very threatening Iranian regional influence it now appears the Gulf States are ready to honor? In fact, as the Washington Institute's Simon Henderson points out in a December 7 analysis, the UAE set a precedent in November by impounding an Iranian-bound shipment of undisclosed material banned by UN Security Council Resolutions 1737 and 1747 because of its potential use for nuclear weapons or missile programs. The Washington Institute brief also notes that Bahrain's crown prince for the first time openly accused Iran in a recent interview of seeking nuclear weapons. And didn't the same Saudi Arabia, Oman, Qatar and other Gulfies send senior officials to Washington's Annapolis conference two weeks ago, to show the Iranians that the US could lead a coalition of Arab Sunni states to Isolate Teheran's Islamo-fascist mullocracy? So how can what looked like the beginning of a kiss and make up session last week between Iran's Ahmadinejad and Iran's Sunni Gulf rivals be understood? FOR STARTERS It was little coincidence that the Abdullah-Ahmadinejad photo op took place on the same day and virtually in tandem with the release of the US National Intelligence Estimate. The reports assertion "with a high level of confidence that Iran ceased its nuclear weapons program in 2003" vindicates Iran's declarations that it maintains no nuclear weapons program. Arab leaders don't believe that for a minute. Middle East scholar and Council on foreign Relations fellow Max Boot noted in a Wall Street Journal article this week that a senior Arab official warned him during a recent trip to the Gulf that "accepting Ahmadinejad with nuclear weapons is like accepting Hitler in 1933." Broad Arab participation at the Annapolis conference exemplified their heightened fears. Now, for Arab Sunni Gulf States who are worried about Iran's ascendancy under a nuclear umbrella, the National Intelligence Estimate underscores growing confusion, disunity and discord in Washington. While former UN ambassador John Bolton blasted the report as "politics masquerading as intelligence," to worried Arab leaders, the apparent lack of US unity and purpose opposite Iran spells weakness and a lack of political will. Some leading Islamic affairs experts inside and outside the Beltway have been issuing this warning for some time. IRAN, MEANWHILE, continues to charge ahead with its atomic weapons plans while destabilizing the region via proxy terror groups in Iraq, in Lebanon via Hizbullah, via Hamas, and Palestinian Islamic jihad in Gaza, all the while promising to liquidate Israel, the US's key Middle East ally. So despite palpable Arab fears of Iran - particularly a nuclear one - as Jordan's King Abdullah II first publicly expressed in 2004 when he coined the term "the Shi'ite crescent" - to refer to Iran's arc of control, Professor Bernard Lewis, the world's leading scholar on Islam and the Near East, has long reminded the West that Arab political culture runs with the winning horse. THIS IS the also the context in which the recent US hosted Annapolis conference should be considered. Instead of pressing for victory against Iran, Bush's summoning much of the international community to Washington to advance Palestinian-Israeli peace and to send a message to Iran was likely perceived somewhat differently in the Middle East. In the context of Lewis's "winning horse" analogy, Bush in the Arab and Persian mind may have appeared more like the school weakling who needed to turn to the rest of the class to back him opposite the class bully, in this case the 120 pound Ahmadinejad. So with the US National Intelligence Estimate weakening US diplomatic efforts to mobilize the international community against Teheran, Arab states prefer to mingle with Iranian power rather than risk American uncertainty. THE NIE report also jeopardizes Israel militarily and diplomatically. First, the chances of an American-led attack against Iranian nuclear installations now are far less likely. That could leave Israel alone to defend itself militarily against a nuclearizing Iran. It's not a dissimilar position in which the Jewish state found itself in June of 1981 when it faced the prospect of an atomic Iraq under Saddam Hussein. Diplomatically, Israel has already "eaten straw" even before the post-Annapolis diplomacy gets underway opposite the Palestinians. For months Israel's political leadership has indicated privately and hinted publicly that its readiness to pursue bilateral peace talks under US sponsorship is a diplomatic quid pro quo for US efforts to create a broad international coalition against Iran with the support of Saudi Arabia, Egypt, Jordan and the Gulf States. Last week's National Intelligence report undermines the very foundation of American pressure on Jerusalem and Olmert's agreement to do a "dance" at Annapolis and solve the Palestinian issue by 2008. But despite the American administration's appearing at least half castrated opposite Iran and with the Gulf States reengaging with Ahmadinejad, Israel will still be expected to make far-reaching concessions to the Palestinians to keep its part of the bargain. However, pressure on Israel to solve to Palestinian issue without commensurate US leadership to neutralize Iran reinforces the fatally mistaken message encapsulated by the 2006 Baker-Hamilton Report and illustrated to many at Annapolis: That solving the Palestinian- Israeli conflict instead of first neutralizing ascendant Iran seeking nuclear weapons is the key to peace and stability in the Middle East. The writer is director of the Institute for Contemporary Affairs at the Jerusalem Center for Public Affairs.