This was not a good week for the Obama administration's Middle East peace efforts. Speaking alongside Israeli Prime Minister Netanyahu in Jerusalem last Saturday, Secretary Clinton seemed to be praising the distinctively partial limitations that Israel was willing to implement on settlement non-expansion. During the following days in Morocco and Cairo, she walked those remarks back, but the damage had been done.

By Thursday, the American-sponsored Palestinian President Mahmoud Abbas was sufficiently exasperated to announce that he will not be standing for re-election, and all week the media and political commentary on the U.S. approach was scathing about America's efforts--even by Middle East standards.

Speaking to the Washington Post, I described the U.S. approach of the past days as amateurish--a perhaps harsh, but unfortunately apt, label. On the positive side, I think the administration folks are themselves aware that this is not going swimmingly. The overall administration scorecard on Middle East peace is slipping into the red.

But first, let's be fair about that record.

The Obama administration merits significant credit for having acknowledged from the get-go that advancing a solution on Israel-Palestine, or at least reaching a post-occupation equilibrium, is a key American national interest--a realization that was belatedly groped at by the Bush administration and was set forth from day one by its successor. That displays a keen understanding of the centrality of how the Israeli-Palestinian issue impacts America's standing and ability to advance its goals, including the push back against extremism in the region and beyond. National Security adviser General Jones repeated the assertion last week at the J Street conference. Credit, too, for the administration for acting on this. A senior envoy, Senator Mitchell, was appointed on day two, and deployed shuttling back and forth to the region. The President delivered a ground-breaking speech in Cairo, the Arab world was deeply engaged (unlike the past), and a marker was set down on settlements. It was on this latter issue of settlements, however, where things began to unravel.

The Obama team's call for a comprehensive settlement freeze was consistent with past U.S. policy (notably Bush's Roadmap of 2003), although it was perhaps treated with more seriousness coming from the new 'hope and change' President. The Israel Prime Minister's answer came in June, and it was a rejectionist one: no full freeze, and no limitations whatsoever on settlements in East Jerusalem. That is when the malaise set in.

The administration had three possible options in responding:

1) Stick to its guns and calibrate a set of escalating consequences in response to possible ongoing Israeli recalcitrance.

2) Make a smart pivot by declaring, for instance, that if Israel could not for its own reasons freeze settlements, then this would make all the more urgent the need to quickly define and agree a border for an Israel-Palestine two-state solution. And the U.S. could reasonably have adopted a formula regarding that border (such as based on the 1967 lines, minor mutual modifications to accommodate settlements close to the Green Line in a one-to-one land swap). The U.S. could have explained to its Israeli friends that absent a defined border, the settlement freeze would have to be comprehensive, but in the discussion on borders, there could be more flexibility given the one-to-one land swaps.

3) Dig themselves into a hole. Insisting on a freeze, heightening expectations, without a plan for achieving that end, and by then acceding to talks with the Israeli government over koshering aspects of settlements expansion.

It is certainly legitimate for the administration to have not chosen option one, and to have decided that this was the wrong issue and/or wrong timing to escalate with the Netanyahu government. My own preference would have been for option two, and indeed, the administration could reasonably be perceived to have laid the ground deftly for such a pivot. Unfortunately, they went for option three, and it all came crashing down around their feet this week.

The Secretary's last minute stop in Cairo to round off the trip said it all. The Mubarak regime tried to help salvage some American pride, lining up behind the Secretary's efforts. Except that it is precisely the Mubarak government whose credibility is so severely questioned in the region, it is the largest Arab recipient of American financial assistance, and is obsessed with leadership succession--in short, getting a smile out of the Egyptian leader doesn't even register on the congratulatory charts.

There is nonetheless potentially good news in all of this. Those who are writing off the administration's peace efforts, friend and foe alike, are being premature in the extreme. This is a benefit of starting on day one--you can acknowledge the need for a course correction in month ten. In fact, it is not the new approach of the Obama administration that has failed, but rather, this is a moment of clarity regarding the bankruptcy of the old approach that has guided policy for over a decade and that the Obama team had inherited and embraced.

As Rob Malley and others have argued, what is needed now is a review (as has been conducted in other foreign policy areas) and a testing and likely abandonment of many of the prevailing policy assumptions. These might include the notion that one can incrementally build confidence between the sides when the prevailing reality is one of occupation, that bilateral negotiations between representatives of an occupied people and the occupying party can deliver de-occupation, that Palestinian political division should be encouraged (not overcome), or that proven self governance capacity under occupation is a precondition for freedom and independence.

If the goal still is Israel's security, recognition, and a guaranteed future as a democracy and a Jewish national home, alongside a secure, viable, and post-occupation Palestine and advancing America's national interest, and this should be the goal, then a new path is needed for reaching that destination. It will certainly require more international and U.S. lifting.

The Obama team is perfectly capable of charting a course from a bad week to a game-changing success, but more of the same won't get them there.