The statement by the U.S. administration over the weekend, which tied a major arms deal with Saudi Arabia to expanded military aid to Israel, can be understood in two ways. One involves American domestic politics and the other the balance of power in the Middle East. On the domestic side, the Bush administration is grappling with an adversarial Congress that is hounding the president over the failed war in Iraq. It is convenient for the administration to connect the sale of arms to the Saudis with aid to Israel, so as to increase support in Congress. On Friday, the New York Times reported on rising tensions between Washington and Riyadh, stemming from the latter's objections to Iraqi Prime Minister Nuri al-Maliki and from the Mecca Agreement, which the Saudis initiated between Hamas and Fatah.

Diplomatic sources in Israel said they believe the leak about tensions with Saudi Arabia had embarrassed the administration, which has had its fill of failures in the Middle East. In the regional arena, the past two weeks have seen the establishment of two rival axes in the region, led by Iran and the U.S. Each sought to strengthen its supporters with diplomatic gestures and arms supplies - as was common practice during the Cold War. On the one hand, Iranian President Mahmoud Ahmadinejad visited Damascus and held high-profile meetings with Hezbollah, Hamas and Islamic Jihad leaders. On the other hand, the foreign ministers of Egypt and Jordan visited Israel and met political leaders across the board, carrying with them a moderate message: They will not demand that Israel unequivocably accept the Arab peace initiative as a condition for progress in the peace process. They also pledged to "reward" Israel with increased normalization in bilateral relations in return for Israel's rapprochement with the Palestinians.

The American effort to save the rule of Palestinian Authority Chairman Mahmoud Abbas and Prime Minister Salam Fayad went beyond the usual declarations about the "two-state vision" and the end of the Israeli-Palestinian conflict. President Bush sees the Fatah government as an important link in the region's pro-American axis. That is why he sent one of his closest associates, State Department Under Secretary for Public Diplomacy and Public Affairs Karen Hughes, to Ramallah last week.

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The massive sale of arms to Saudi Arabia and its neighbors in the Gulf and the increase in military aid to Israel are the U.S. response to the Iranian threat, and the flow of arms from Russia to Iran and Syria. Each arms-supplying power has its own interests: the Russians want to deter the U.S. and Israel from bombing the Iranian nuclear facility - therefore, they have supplied the Iranians with advanced air defense. Such systems will also be supplied to Syria in the coming year. The Americans like to talk about democracy in the Arab world, but they believe that strengthening armies is the most efficient way to protect stability and maintain pro-Western regimes in the face of extremist Islam.

A 25-percent increase in military aid to Israel, up to $3 billion per year, was agreed on between Bush and Prime Minister Ehud Olmert during their meeting at the White House on June 19. In Israel this is considered an important achievement on the part of Olmert. The defense establishment is waiting to read the small print and to see what exactly the package will consist of.

The missing link in the regional arms race is Egypt. Congress is increasingly critical of Egypt's inability to stop arms smuggling to Gaza, and pressure is mounting to punish Egypt by cutting military aid. From the administration's point of view, such a step would harm the pro-American axis. In briefings over the weekend, U.S. officials were intentionally vague on the issue of aid to Egypt, saying only that it would be renewed, without mentioning the exact amount.