During US Secretary of State Condoleezza Rice's last visit to Israel, she devoted special attention to the revival of the 2002 Saudi-inspired Arab peace initiative. As a result, expectations had been elevated that the Riyadh Arab summit might provide a mechanism for restarting the Arab-Israeli peace process. But the Arab peace initiative got off to a bad start when Saudi Foreign Minister Saud al-Faisal warned Israel that its rejection of the plan would leave its fate in the hands of the "lords of war." Rather than obtaining some flexibility, Israel was handed an ultimatum. Moreover, it came as a total surprise when Jim Hoagland disclosed in The Washington Post that Saudi Arabia's King Abdullah canceled a mid-April gala dinner with President George W. Bush at the White House. If Saudi Arabia has decided to distance itself from the US at this time, then how could Washington expect that now the time was ripe for a Saudi-Israeli rapprochement under an American umbrella? Time magazine's Scott MacLeod concluded that the Saudis had left Rice "stranded." The real problems with the Saudi peace initiative go well beyond the much-discussed issue of the "right of return." The Saudi plan demands "full withdrawal" from "all the territories" Israel captured 40 years ago in the 1967 Six-Day War. In the past, Israel did not have to pay the price of rhetorically accepting full withdrawal in order to gain a diplomatic dialogue with the Arab world. The basis of the 1991 Madrid Peace Conference was UN Security Council Resolution 242 - which does not include the description "all the territories," and which appeared in the Madrid invitation. The Madrid conference also produced a multilateral track that led to direct diplomatic contacts between Israel and the Gulf states. If 242 was sufficient in 1991, why is it not good enough for 2007? The Saudis Say "No" to the Bush Administration During Secretary of State Condoleezza Rice's last visit to Israel, she devoted special attention to the revival of the 2002 Saudi-inspired Arab peace initiative. As a result, expectations had been elevated that the Riyadh Arab summit might provide a mechanism for restarting the Arab-Israeli peace process. Certainly, Israeli diplomats had hoped that a modified peace plan might be adopted by the Arab heads of state that would leave out any references to the return of Palestinian refugees to Israel - a non-starter across the Israeli political spectrum. When that seemed unlikely, there was increasing speculation that while the formal initiative would remain unchanged, then at least some other statements would be made separately that would try to reach out to Israeli public opinion and build mutual confidence. FAISAL'S WARNING about the "lords of war" was not the style of either president Anwar Sadat or King Hussein, but rather a grossly mismanaged way of launching any modus vivendi with Israel. What Hoagland heard from administration sources was that Riyadh had decided for now to seek common ground with Iran, Hamas, and Hizbullah. It now becomes understandable why the Saudis chose to strengthen Hamas, with the Mecca Agreement, at the expense of Mahmoud Abbas, who just became politically even more sidelined. The last time the Saudi initiative was discussed during the 2002 Arab summit in Beirut, Hamas attacked the Park Hotel in Netanya during the first night of Passover, killing 29 Israelis and wounding more than 150. At that time, Saudi Arabia did not signal to Israel that it was serious about peace by cutting back its financial support of Hamas; in fact, it grew to over 50 percent of Hamas's total income in 2003. Moreover, the Saudis did not approach Israel directly, but chose to launch their initiative through the columns of Thomas Friedman in the New York Times. The medium was the message. The key figure making the press contacts for the Saudis was Adel al-Jubeir, who had been sent to Washington to coordinate the Saudis' efforts to improve their declining image in America. It was apparent that the Saudi initiative was not directed toward Israel, but rather to post-9/11 American public opinion, which had been shocked to learn that 15 of the 19 hijackers that attacked New York and Washington were Saudi citizens. ADOPTING THE Saudi plan as presented would clearly lead to the re-division of Jerusalem. It would also strip Israel of the "defensible borders" that President Bush said was Israel's right in his April 2004 letter to then-prime minister Ariel Sharon. In 2007, with al-Qaida jihadism pouring out of western Iraq and Iran and on the ascendancy across the region, Bush's security assurances have only grown in importance. The assurances contained in the Bush letter are critical for Israel and had constituted the main quid pro quo that Israel had gained for the Gaza disengagement. Yet now the letter seems to have been forgotten. Indeed, there was a glaring contradiction between the Bush administration's new embrace of the Saudi initiative and the written assurances it gave Sharon only three years ago. Even the peace that the Saudi initiative presents in exchange for full withdrawal is not what it might seem to be to the uninitiated. It promises "normal relations" with Israel - a Syrian diplomatic term from the 1990s which was intended to be a watered-down alternative to the European-style peace implied by the term "normalization" (tatbiyan in Arabic). Nonetheless, the Saudi initiative came to be known as a grand bargain between Israel and the Arab world: full withdrawal for full peace with the Arab world as a whole, even if there are serious questions as to whether that was the Saudis' real intent. TODAY, AS IN 2002, peace with Israel is not likely to be at the top of the Saudi agenda. The paramount problem of Saudi Arabia is not the Israeli-Palestinian conflict, despite King Abdullah's strong ideological identification with the Palestinian cause in the past. What is shaping Saudi Arabia's new diplomatic activism is the rapidly expanding Iranian threat and the weakness of the Western response. President Mahmoud Ahmadinejad had committed himself to a second Iranian revolution: that means a revival of Iranian efforts to export revolutionary Shi'ism, wherever possible. In some Sunni-dominated countries, like Sudan and Syria, the Iranians hope to convert Sunnis to Shi'ism. In the Gulf, there are already substantial Shi'ite populations. Indeed, Saudi Arabia's main vulnerability is in its oil-rich Eastern Province, which has nearly a majority of Shi'ites. Neighboring Bahrain, now connected to Saudi Arabia by a bridge, has an 80-percent Shi'ite majority. The potential for revolutionary subversion is enormous. In 1979 and 1980, revolutionary Iran backed Shi'ite uprisings in Saudi Arabia's Eastern Province. According to US court documents, the 1996 attack on Khobar Towers in eastern Saudi Arabia was conducted by Hizbullah al-Hijaz, a Shi'ite terrorist group under the direct control of Iranian officials. WHAT CAN the West do? It needs to assure its Gulf allies by being more assertive about countering Iranian power. Rice's instincts to seize the moment of a shared threat that both Israel and the Sunni Arab states perceive are essentially correct, but must be directed in totally different channels. When Saudi Arabia is facing its own Sunni Islamist threat from within and a Shi'ite threat from without, it is not surprising that the last thing it needs is planeloads of Israeli negotiators and journalists in Riyadh. And with Hamas in power among the Palestinians and building its military strength daily in Gaza, Israel does not need to experiment with new withdrawals. Under such circumstances, quiet contacts between Israel and its neighbors make far more sense than grandiose public diplomacy. In peacemaking, timing is everything. What would those quiet contacts involve? First, finding ways of building on those Palestinians who are ready to distance themselves from Iran. And if no Palestinian leadership emerges, encouraging Egypt and Jordan to take a more constructive role in eliminating the present chaos by helping counter the growth of terrorist armies that are in the territories. At present, there are no indications that anything like this is happening. But if Saudi Arabia seeks to present itself as a constructive force, it must use its political and financial clout behind the scenes to neutralize those groups seeking to undermine the stability of the Middle East. Only then will it be possible to explore building the foundations of a regional peace. Right now, however, Saudi Arabia's priority is re-establishing a minimal Arab consensus for dealing with the Iranian challenge in the future. The Saudis want to draw Hamas into that consensus - and not build up anyone who is more moderate to confront Hamas and then set the stage for renewed peace negotiations. As long as dealing with Iran is far more important for Saudi Arabia than Arab-Israeli peacemaking, Washington should not be surprised by the outcome of Arab summit conferences.