At a recent meeting with Americans for Peace Now board members and staff, the outgoing Saudi ambassador to Washington, Prince Turki al-Faisal, expressed his disappointment that neither Israel’s government nor the U.S. administration showed any interest in the plan for comprehensive Arab-Israeli peace that Saudi King Abdullah tabled five years ago.

The plan, later adopted by the Arab League, calls for Israel to withdraw from all territories it occupied in 1967 in return for full peace, including “normal relations” between Israel and the entire Arab world.

Obviously, portions of the plan are problematic for Israel. Although it says that a resolution to the Palestinian refugee problem would have to be “agreed upon,” it states that the issue would be addressed “in accordance” with the United Nations resolution that calls for the right of Palestinian refugees to return to the homes that they left behind inside Israel in 1948.

The governments of Israel and the United States preferred to focus on the negative in the Saudi plan rather than seriously examining the merits of a multilateral approach to resolving the entire Arab-Israeli conflict. Such an approach, which does not necessarily have to stem from the Saudi plan, could be a way for Israel to overcome the diplomatic stagnation of the past several years and to finally break its isolation in the region. At the very least, it would allow Israel to test the Arab leaders’ rhetoric and call their bluff.

After having tried bilateralism and unilateralism in striving to change its relationships with its Arab neighbors, Israel is finding that it cannot escape the involvement of regional and international players. Peacekeeping arrangements following last summer’s war in Lebanon were an example of the constructive role that America, Europe, and Arab countries can play in stabilizing a volatile situation and in subsequent security arrangements.

There is recognition in Washington that this is the time for bold diplomatic moves in the Middle East. The Iraq Study Group report well reflected this notion, which is widespread among senior officials of the Bush administration. Administration officials are increasingly concluding that if America is to effectively confront Iran and fight Islamic terrorism, it must sway the Arab world toward pragmatism and moderation. That cannot be done without addressing the Arab-Israeli conflict.

Just like their American counterparts, senior politicians and strategists in Jerusalem have been saying for some time that Israel needs a diplomatic breakthrough. Israel’s foreign minister, Tzipi Livni, recently spoke about a “kind of opportunity” that “should not be missed” to harness the moderate Arab states to a peace initiative that would hasten the implementation of a two-state solution. “Time is not on the side of the moderates on both sides. Time is working against a solution of two nation-states,” she recently said in the daily newspaper Ha’aretz. Defense Minister Amir Peretz was even more outspoken. Even Prime Minister Ehud Olmert signaled that he supports the notion of seizing the initiative and engaging in active diplomacy.

Jordan, Egypt, and Saudi Arabia, faced with the specter of a Middle East dominated by Iran and its militant allies, are more than ready to help. The Saudis successfully insisted, at every meeting of the Council of Arab States since 2002, that the Abdullah plan be ratified, Turki told us.

A grand “regional” initiative is risky. It requires careful and intense diplomacy, and even if handled carefully it very well may fail. Skeptics point out that both President George W. Bush and Olmert are weak and therefore risk-averse. They are. But both leaders could reduce the risks through working closely together, closely cooperating with Arab and European allies and setting up a structure that would entice the Palestinians and the Syrians to negotiate in good faith and to commit to a real peace for real Israeli territorial concessions.

Both Bush and Olmert could regain power as leaders through such a joint diplomatic campaign. They would both be recognized for making the most significant step possible toward tilting the region away from militancy, and they would both leave their mark in history as statesmen who did more than lead their countries to failed wars.

Israeli leaders used to resent multilateralism because they feared losing control of the process and ending up facing an international dictate. Ariel Sharon, the rancher-turned-prime minister, used to refer to such a situation as the “chute,” the narrow fenced structure through which ranchers funnel cattle to the slaughterhouse.

Done right, multilateralism is not a recipe for national devastation but could rather be a path for avoiding a regional disaster.