Obama faces pivotal week on Mideast policy

(Reuters) – President Barack Obama’s bid this week to reconnect with the Arab world after the killing of Osama bin Laden poses a daunting challenge complicated by an uneven U.S. response to the region’s uprisings and his failure to advance Israeli-Palestinian peace.

Obama on Thursday will give his much-anticipated “Arab spring” speech, the centerpiece of a pivotal week of Middle East diplomacy that also will include talks with Jordan’s King Abdullah II and Israeli Prime Minister Benjamin Netanyahu.

By laying out his own vision for a “reset” with the region, Obama aims to counter criticism that he has been slow and inconsistent in dealing with an unprecedented wave of popular revolts that have upended decades of U.S. Mideast policy.

But even as he reaches out to a wider Arab audience, he is likely to disappoint many with what will be left out — fresh U.S. proposals for breaking the impasse between Israel and the Palestinians and getting them back to negotiations.

Clashes on Sunday on Israel’s borders, where Israeli troops killed at least 13 Palestinian protesters, underscored the depth of Arab frustration over the decades-old conflict, which remains a central preoccupation in the region.

Unlike Obama’s 2009 Cairo speech that sought to win the hearts and minds of Muslims worldwide after years of estrangement under his predecessor, George W. Bush, the White House insists the address Thursday at the State Department will focus on new flashpoints in the Middle East and North Africa.

Less than three weeks after U.S. Navy SEALs killed bin Laden in Pakistan, Obama will try to tie together events in the Arab world and put the al Qaeda leader’s demise in the context of the region’s political transformation, aides say.

However, it is unlikely — according to Obama aides — that he will use the chance to articulate an overarching strategy to supplant the case-by-case approach to turmoil engulfing U.S. allies like Egypt and Yemen and foes like Libya and Syria.

“The ‘Arab spring’ has huge uncertainties,” said David Makovsky of the Washington Institute for Near East Policy, citing an Islamist rise to power as Washington’s biggest fear. “So they want to avoid a one-size-fits-all doctrine.”

IN SEARCH OF A NARRATIVE

Even before the bin Laden raid, aides were crafting a narrative on Middle East upheaval for Obama to roll out. Obama, enjoying a boost in his foreign policy standing following the risky assault, will make the case for Arabs to reject al Qaeda’s Islamist militancy and embrace democratic change.

Aides suggest Obama’s speech could carry a veiled warning to Iran, which he has said cannot be allowed to develop nuclear weapons, that he is a leader who matches words with actions.

But Obama’s push for democratic reform will remain tempered by a desire to preserve longtime partnerships with autocratic Arab governments like Saudi Arabia considered crucial to fighting al Qaeda, containing Iran and securing oil supplies.

Obama’s critics probably will not be satisfied.

“I don’t think you can get away with a Mideast policy that just cherry-picks the easy ones,” said Elliott Abrams, a senior fellow at the Council on Foreign Relations and Bush’s former deputy national security adviser.

Obama’s domestic opponents have accused him of acting too timidly in Libya to break the stalemate between Muammar Gaddafi and rebels trying to oust him, and of not being tough enough with autocratic allies in Yemen and Bahrain.

The administration also is under pressure to take stronger action against Syrian President Bashar al-Assad over his government’s violent crackdown on a pro-democracy protests.

It’s obviously a very fluid situation and every country is different,” White House spokesman Jay Carney said.

PEACE EFFORTS STALLED

Obama’s advisers had weighed using Thursday’s speech to present a new formula for restarting long-stalled peace talks between Israel and the Palestinians.

That was put on hold after a reconciliation deal between the Palestinian Authority and the Hamas Islamist movement, an accord Netanyahu denounced on Monday as a barrier to peace. The resignation last week of Obama’s Middle East envoy, George Mitchell, further underscored faltering diplomatic prospects.

Obama raised Arab expectations for a more active and even-handed U.S. role when he took office but the mood soured when he backed down from confronting Israel over settlement building in the occupied West Bank. His unmet pledge to shut the prison at Guantanamo also has drawn Muslim criticism.

While Obama is expected to recommit broadly to seeking Israeli-Palestinian peace in his speech and during talks with Netanyahu on Friday, there are no plans to seek major Israeli concessions for now. Nor has the right-wing Israeli leader given any sign concessions would be forthcoming.

Pushing Netanyahu would risk alienating Israel’s support base among the U.S. public and in Congress as Obama seeks re-election in 2012. Relations between Obama and Netanyahu already have been strained and both want to smooth over ties.

Obama will address the pro-Israel lobbying group AIPAC on Sunday to stress the “unshakeable bond” between Israel and the United States, the White House said. That gives Obama a chance to pre-empt Netanyahu’s speech to Congress two days later.

Jordan’s monarch, expected to voice Arab frustrations over U.S. peace efforts when he meets Obama on Tuesday, said in Washington the peace process was the region’s “core issue.”

With Arabs increasingly resigned to the limits of what they can expect from Obama, analysts in the Middle East question whether many will even be paying close attention on Thursday.

The White House already has cautioned against the notion that the speech — which some U.S. media have dubbed “Cairo II” — will be on par with his enthusiastically received address in the Egyptian capital nearly two years ago.

“People in the region who put a lot of hope in Obama and his rhetoric have been disillusioned by his actual policies,” said Mouin Rabbani, an independent Middle East analyst based in Amman. “They may not be interested in tuning in for more.”

(Additional reporting by Jeffrey Heller in Jerusalem; Editing by Warren Strobel and Bill Trott)

By Matt Spetalnick

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California deficit shrinking but governor wants tax hike

(Reuters) – California Governor Jerry Brown on Monday said the state’s economy was on the mend but that California still had a nearly $10 billion budget hole to close and insisted tax hikes were needed.

The Democrat said tax revenue this year and next would be $6.6 billion better than expected. But he stuck to the bulk of his proposals made earlier this year for hikes in sales and income taxes and more.

The most populous state and biggest municipal bond issuer cut several billion dollars in spending earlier this year. But politicians are at odds over whether extensions of tax hikes are required.

“The economy in California is looking pretty good … not as good as it’s been, but definitely on the mend. But we still have a $10 billion structural budget deficit and a wall of debt to come,” Brown said as he introduced the revised plan.

Brown proposed to use the unexpected bump in income taxes to scale back his tax hikes proposal and increase school funding by $3 billion. He offered more support to enterprise zones favored by local governments than in his earlier plan.

Brown said he still wants state voters to be given the opportunity to approve or reject his plan.

He gave nods to Republican calls for broader changes, saying the state needs a spending limit and that he would go forward with pension reform. But he declined to offer a “Plan B” budget plan composed only of spending cuts.

“I’m not going to give Republicans a road map to ruin,” he told reporters.

Brown said he is confident he can reach a budget agreement with lawmakers by mid-June, when a spending plan is technically due.

(Writing by Peter Henderson; Editing by Dan Grebler)

By Jim Christie

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