Earlier this year we characterized President Bush’s foreign policy emphasis as looking for a “win” even at the expense of his underlying ideology. The US strategy on North Korea – with its many recent compromises from earlier tough positions – supports this formulation. The same is true regarding Iraq where US troops are now on a timeline for reduction. On Iran, this pattern is consolidating. The Administration’s decision to allow a senior US diplomat join the European-led nuclear talks with Iran represents a break from its previous policy of refusing direct contact with Tehran until it has ceased its uranium enrichment activities. Secretary of State Rice has emphasized her commitment to diplomacy. White House contacts explain this decision to us as drawing on a greater degree of optimism about the Iranian willingness to negotiate meaningfully. A further – not publicly expressed – factor is that Washington needs Tehran’s cooperation over Iraq. With the rapid deterioration of the security environment in Afghanistan, the US faces the need to transfer units from Iraq to Afghanistan. A Pentagon officer commented to us privately: “As we draw down in Iraq, we want Tehran to keep its proxies like Moqtada al-Sadr under control. So we are making a good will gesture to them on the nuclear front.” We continue to discount the likelihood of US military action. Israeli attitudes, however, remain less transparent. As for foreign policy generally, economic challenges continue to weigh heavily. Treasury officials tell us that, while they have avoided an immediate financial crisis, the future is highly problematic. They are warning against any major initiatives that might cause energy prices to rise or the US dollar to come under pressure.