Remember Condoleezza Rice's comment last summer, that Israel's war with Hezbollah, the daily bombardment of Lebanon's civilian infrastructure, and the creation of thousands of homeless and refugees represented "the birth pangs of a new Middle East"? (You can be sure that the Arab world does remember.)
Richard Haas describes what that new Middle East looks like. In short, virtually every neoconservative assumption about the region has been proved wrong. Haas observes a radical reduction in U.S. influence, an increase in Iran's power, surging militant Sunni Islamism, and increased militia-ization, largely, though not completely, as a result of the invasion of Iraq.
A couple criticisms. I think Haass underplays somewhat the significance of the Shi'a revival, specifically the Arab Shi'a revival in Iraq, Lebanon, and to a lesser but still significant extent in Bahrain, which poses a challenge secular Sunni authoritarians and militant Sunni Islamists alike.
Haass also unfortunately repeats the standard Israeli line about having "no partner for peace" among the Palestinians. What that means is that Israel has no partner who is willing to acquiesce to its expansionist designs on the West Bank and Jerusalem, or who is able to control the violent extremism which that expansionism exacerbates. While Hamas and other hardline Palestinian factions may say that they want to make Israel disappear, it is Israel which has quite literally been making Palestine disappear, inch by inch, mile by mile, day by day, and year by year, as the expropriation of Palestinian land and the construction of illegal settlements and bypass roads continues without pause. Furthermore, it's simply preposterous to expect the Palestinians to sit down with the various ex-terrorists and irredentists who have represented the Israeli government, while granting Israel a veto over whomever it deems unfit to negotiate with. Like it or not (and, frankly, I don't), Hamas is the dominant party in the duly elected government of the Palestinian people, just as Kadima is of the Israelis. As has been noted repeatedly in regard to this conflict, you don't make peace with your friends. Haass seems to recognize this later on in the essay, indicating that reviving the peace process and bringing Hamas to the negotiating table is the only viable option.