Forgive us our skepticism at this dawn of a new year, but lately the Obama administration has come to seem like something other than the clear-headed captain at the confident helm of the free world. Iranian President Mahmoud Ahmadinejad last week offered a new assessment of the Holocaust - it is a lie - and of Israel's future prospects - it will soon be removed. This came as an unwelcome reminder to the Obama administration, and to the rest of the watching world, that the United States would be sitting down in the coming weeks with a Holocaust denier bent on nuclear weaponization. We trust the Americans will try nobly to convince Mr. Ahmadinejad to do otherwise. But in between his launching of new uranium enrichment centrifuges and the arrest and torture of regime opponents, we sadly doubt the Iranian president will be persuaded. The chief stumbling block to ending Iranian nuclear weaponization is currently Russia, which is refusing all requests to halt the sale of modern high-quality anti-aircraft missiles to Iran and has even rejected the imposition of new sanctions on the recalcitrant despotism in Teheran. Speaking of Russia, the Obama administration has stunned its small but trusting East European allies by deciding to relocate the American missile defense shield - aimed at Teheran but seen by Eastern Europeans as a symbol of American protection against Russian imperial encroachment - from Poland and the Czech Republic to ships and installations closer to Iranian territory. In Afghanistan, Obama may be demonstrating some steely reserve, perhaps forced into it by the harsh reality of American blood on the line. This is commendable. It is less commendable that the administration cannot bring itself to reject outright last week's Goldstone Report, which condemns Israel for military actions both less severe and less numerous than those of American troops in Afghanistan, and does so on the basis of a grave misrepresentation of what unfolded in Gaza at the turn of the year. Faced with the realities of confronting terrorists operating on a massive scale in civilian settings, American troops have done an excellent but imperfect job of avoiding civilian casualties. Less than three weeks ago, on September 4, for example, US forces destroyed two hijacked oil tankers in a populated area on the Kunduz River in northern Afghanistan, killing at least 30 civilians who had gathered to collect oil for their homes. What will Obama do if investigations of the type conducted by Goldstone are launched against American military personnel fighting a similar civilian-embedded enemy? AS REGARDS Israel, the administration's policies to date have seen its popularity and credibility here nosedive over the past eight months. It decimated the initial goodwill and admiration Obama enjoyed among the Israeli public by instigating a diplomatic crisis over something called "a stop to settlements...without exceptions." This absolute demand was always unrealistic and therefore counterproductive. Hundreds of children are born each year in the suburbs of Jerusalem that step over the 1949 Green Line. Was the Jerusalem Municipality being asked to cease construction of kindergartens for them? Until the administration folded on this issue in July, the answer seemed to be yes. By ratcheting up his demands of Israel beyond the point of viable agreement, and then failing to obtain any substantive concessions from Arab leaders or the Palestinians in exchange, Obama actually walked into the most basic of Middle East peacemaking traps - encouraging the instinctive Arab resort to intransigence. After all, how could the Palestinians now demand less of the Israelis than the Americans? And with a full-blown diplomatic crisis apparently under way between Israel and America, what interest could Arab leaders have in ending the crisis through a diplomatic breakthrough? We might well ask why the administration is convinced that peace is being held up by settlements. Dozens of settlements have been dismantled and tens of thousands of settlers have been resettled in the Israeli withdrawals from Gaza and Sinai, while Palestinian rejection has only increased in response to apparent Israeli weakness. In a world that is wondering increasingly whether Washington is willing and able to enforce its key values and effectively promote its vital interests, Obama today plays host to Prime Minister Binyamin Netanyahu and Palestinian Authority President Mahmoud Abbas. And they will both be asking themselves a question neither would have anticipated eight months ago: Can America be relied upon and taken seriously? That uncertainty can only further undermine the prospects for a substantive Israeli-Palestinian breakthrough - a breakthrough all three players at today's summit profess to fervently desire.