When he first entered the White House in 2001, President George W Bush had little idea, and less intention of, becoming involved in the complicated politics of the Middle East. However, as he starts his last year in office, the United States’ foreign policy agenda remains dominated by three parallel crises in the Middle East the outcome of each of which could have a lasting effect on American global strategy.

The first is often referred to as the Global War On Terror (GWOT) fought in a number of countries, including Algeria, Somalia, Turkey, Iraq and Afghanistan, in the so-called Arc of Crisis.

Of the various theatres of this war, Iraq has attracted the most attention if only because it is there that American involvement in terms of military power and political commitment has been the most significant.

At the end of 2007, the tide of the war against terror appeared to have turned in favour of the United States and its allies, notably the new Iraqi regime. Levels of violence against US troops and Iraqi civilians were significantly down compared to 2006 while losses sustained by Al Qaeda and its local Iraqi allies were higher than any point at the start of the insurgency in the autumn of 2003.

Nevertheless, good news from Iraq has to be tempered with developments that appear less encouraging: The alliance of the willing, initially starting with 40 nations in 2003, was down to just 30 at the end of 2007 with important allies, notably Australia and Poland, under new left-of-centre governments, also preparing to withdraw. Even the United Kingdom, which has had the second largest contingent after the US in Iraq, has announced that it would cut the number of its troops to just 1500 next year.

The Iraqi government of Prime Minister Nouri al-Maliki, a Shiite dominated coalition, and the Iraqi parliament have failed to enact crucial legislation needed to promote national reconciliation, create new federal structures, and regulate the sharing of oil revenues on a regional basis.

It had also failed to set a date for the all-important municipal elections, needed to propel the newly emergent leadership elite of the country into positions of local power, thus providing effective government presence at all levels.

In the new year, the Bush administration needs to do a number of things if it is to bequeath a reasonably stable Iraq to its successor. The administration must negotiate a new basis for the US military presence in Iraq.

This means doing away with the current United Nations’ mandate by signing an accord with the Iraqi government. Most experts agree that while the need for a large US force will diminish in the next year or so, stability in Iraq would continue to require some American military presence for at least another decade. Such a US commitment, however, should not be granted without a quid pro quo in the form of the political reforms needed in Iraq. The US might even want to insist that the date of the next general election, scheduled for 2009, be brought forward to allow the new emerging political elite to seek representation at central government level.

As Iraq seems to be slowly moving towards stability, Afghanistan appears to be entering a new phase in its war against insurgents. The Taliban’s defeat by NATO forces in the crucial province of Helmand, in the southeast, in a straight military battle last summer has forced the terror movement to seek other methods, including suicide attacks.

To prevent Afghanistan from sliding into greater instability, it is vital to create a central mechanism to coordinate the military, political and economic policies needed to fight the insurgency. At present, however, Afghanistan looks like a patchwork of separate commands with the United States, NATO, the United Nations and the government of President Hamid Karzai in Kabul conducting different, and at times contradictory, tactics.

The second crisis that the US faces is related to the perennial Israel-Palestine conflict. While the so-called “peace conference” held in Annapolis, Maryland, last November, might provide a framework for resuming negotiations between Israel and the beleaguered Palestinian Authority President Mahmoud Abbas- something welcome on its own- prospects for an agreement on the creation of two states in just 14 months remain unpromising, to say the least.

The third, and potentially the most important crisis, stems from the Islamic Republic of Iran’s challenge to the United States’ leadership in the region.

While Tehran’s nuclear ambitions provide the focus of that challenge, its more immediate effects are felt in a number of other domains.

The Islamic Republic, under its radical President Mahmoud Ahmadinejad, is emerging as the central plank of a new “Rejection Front” opposed to President Bush’s two-state solution for the Israel-Palestine conflict. Ahmadinejad and committed Tehran to the creation of a single state in the historic Palestine is a roundabout way of calling for the destruction of Israel.

Under Ahmadinejad, the Islamic Republic has become the principal source of support for Hamas, the Palestinian Islamist movement that also rejects the existence of Israel.

Tehran is also challenging Washington’s position in Lebanon. Tehran may be prepared to push Lebanon into a new civil war to prevent pro-West forces from maintaining their hold on the government in Beirut.

The current view in Tehran is that the United States has lost its will to fight for its interests, let alone its purported values, and that, once George W Bush is out of the White House, a new administration would respond to the public mood by scaling down American involvement in the Middle East. That, in turn, would enable the Islamic Republic to assert its position as regional “superpower” setting the agenda for the region.

What is needed is a comprehensive debate in the US concerning a region that all American presidents, since Franklin D Roosevelt, have regarded as vital for American interests. Over the past quarter of a century or so, the Islamic Revolution in Iran, the end of the Cold War, the war of Kuwait, and the liberation of Afghanistan and Iraq have shattered the regional status quo. As long as no new balance of power is established, the region will remain in crisis with inevitable consequences for American economic, political and geo-strategic interests.

At the end of 2007 the key question is: who will set the new status quo in the ‘Arc of Crisis’? Will it be the United States and its Western and moderate Arab allies or the Islamic Republic as the leader of a new coalition of radical forces?