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It was always going to be a struggle for the U.S. to dissuade its Arab allies from going ahead with a U.N. Security Council resolution condemning Israeli settlements. But last week's "people power" rebellion in Tunisia has made Washington's effort to lobby against the plan more difficult. Tunisia has given the autocratic leaders of countries such as Egypt and Jordan more reason to fear their own people. For those regimes, symbolically challenging unconditional U.S. support for Israel is a low-cost gesture that will play well on restive streets.

Going ahead with the resolution, which was discussed on Wednesday at the Security Council and demands an immediate halt to all Israeli settlement construction in the West Bank and East Jerusalem, is, of course, a vote of no-confidence in U.S. peacemaking efforts. And it creates a headache for the Obama Administration over whether to invoke the U.S. veto — as Washington has traditionally done on Council resolutions critical of Israel. The twist this time: the substance of the resolution largely echoes the Administration's own stated positions.(See pictures of settlements in Israel.)

Washington had hoped that signaling its intention to veto such a resolution would force the Palestinians and their Arab backers to hold it back. But they went ahead and placed it on the Council's agenda (a vote is unlikely for a few more weeks), putting the U.S. on the spot. After all, the Obama Administration has demanded that Israel end settlement construction to allow peace talks to go forward. After a 10-month partial moratorium expired last September, Israel resumed vigorous construction, and has resisted pressure from Washington for any further freeze. U.S. Deputy U.N. Ambassador Rosemary DiCarlo said on Wednesday that the U.S. opposed bringing the settlement issue to the Council "because such action moves us no closer to a goal of a negotiated final settlement" and could even undermine progress toward it. But that argument is unlikely to convince most of the international community, given the obvious stalemate in the peace process — there are no negotiations under way, and the Palestinians have refused to restart them until Israel halts its settlement construction. Initial responses at the Security Council reflect unanimous international support for the demand that Israel stop building settlements. If a vote were held today, the U.S. would be the only possible nay.

Long before the Tunisia events, the Arab leaders most invested in the peace process had begun to realize that the strength of Israel's support in U.S. domestic politics had undermined Washington's ability to operate as an evenhanded peace broker. The move to the U.N. has actually been months in the making. That, and the growing chorus of countries in Latin America and elsewhere recently recognizing Palestinian statehood on the 1967 borders reflect a mounting international frustration with a U.S. peace effort whose operating principle has largely been to remain within the bounds of what the Israeli government will accept.

The Security Council resolution is not an alternative to peace negotiations, its sponsors say. In fact, the text urges the parties to resume final-status talks based on existing frameworks, which require a settlement freeze. The Obama Administration has repeatedly described the ongoing settlement construction as illegitimate and an obstacle to peace. The resolution uses the term illegal because existing Security Council resolutions have declared all Israeli construction in the West Bank and East Jerusalem to be in violation of international law. But whether the Obama Administration vetoes a resolution whose contents it is substantially in agreement with may be settled by a domestic political debate. (See "What if the Palestinians Turn to the U.N.?")

A bipartisan group of 16 U.S. Senators, led by New York Democrat Kirsten Gillibrand, has urged Secretary of State Hillary Clinton to veto the resolution: "Attempts to use a venue such as the United Nations, which you know has a long history of hostility toward Israel, to deal with just one issue in the negotiations, will not move the two sides closer to a two-state solution, but rather damage the fragile trust between them."

But a number of senior former U.S. diplomats and officials, including former Reagan Defense Secretary Frank Carlucci and former Assistant Secretaries of State Thomas Pickering and James Dobbins, have written to President Obama urging him to support the resolution, which they argue is not incompatible with negotiating an end to the conflict nor a deviation from the U.S. commitment to Israel's security.

"If the proposed resolution is consistent with existing and established U.S. policies," the former officials write, "then deploying a veto would severely undermine U.S. credibility and interests, placing us firmly outside of the international consensus, and further diminishing our ability to mediate this conflict." (Comment on this story.)

Whichever way the U.S. elects to vote on the resolution, the episode is another indication that events in the Middle East are rapidly slipping beyond Washington's control. Whether the evidence is in the formation of an Iraqi government or the collapse of a Lebanese one, it has become palpably obvious to friend and foe alike in the Middle East that the U.S. influence in the region has sharply declined. In fact, Washington could ironically help its Arab allies by wielding the veto to protect Israel from U.N. opprobrium on the issue of settlements — by offering them a low-cost opportunity to grandstand in defiance of the U.S. That won't solve the domestic crises in those countries, but it will play well on Arab streets, where symbolically standing up to the U.S. and Israel is precisely what has made Iran's President, Mahmoud Ahmadinejad, and Turkey's Prime Minister, Recep Tayyip Erdogan, more popular than any Arab leaders are with the Arab public.

See pictures of young Palestinians in the age of Israel's security wall.

See "Israeli Leftists Show Alliance in Wake of Palestinian's Death."

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The most daunting piece of real estate in modern American politics is any podium right after Bill Clinton has relinquished it. The guy is on fire these days, freed from the constraints of elective office and the shackles of the prepared text. And so no one who attended the memorial service for master diplomat Richard Holbrooke envied the lot of Hillary Clinton, who had to follow her husband to the podium and conclude a program that Holbrooke — a fervent connoisseur of speechifying, especially about himself — would have loved. She had to do this jet-lagged out of her skull, having just returned from an intense six-day swirl through the Middle East, and after delivering a monster speech about China that morning at the State Department.

She more than held her own, if a bit more formally than her husband; she is, after all, the nation's highest ranking diplomat these days. But she was a stalwart friend and defender of Holbrooke's, and she communicated her appreciation elegantly. She was also extremely funny — an underused weapon in her arsenal — describing the infamous Holbrookian persistence: "He would follow me onto a stage as I was about to give a speech, or into my hotel room, or on at least one occasion, into a ladies' room in Pakistan." (See pictures of Hillary Clinton on her diplomatic mission to Russia.)

All of which started me thinking once more about Hillary Clinton's character and career trajectory. She is one of those politicians you can actually watch grow in office. She begins each new assignment quietly, studying the territory, making a few mistakes along the way, but then she gradually gains control of her portfolio and masters it. This was true of her stint on the Senate Armed Services Committee: the most forbidding panjandrums of the uniformed military came to respect her expertise, especially David Petraeus, a particular favorite of hers. It was also true of her presidential campaign, in which she started off stiff and wound up kicking back whiskey shots in steelworker taverns, a woman of the people. (See pictures of Hillary Clinton on the campaign trail.)

And it's certainly true now, as Secretary of State. She began the assignment with some well-acknowledged skills. After her globe-trotting years as First Lady, she knew how to be an effective public diplomat. But she still had a lot to learn about diplomatic strategy and negotiation. She made mistakes and still does on occasion. (Her Middle East trip was marred by her statement that Jared Lee Loughner was "an extremist.") But her confidence has grown, and her public statements are sharper. Indeed, she has — belatedly — emerged as the Obama Administration's leading voice on human rights. During the week that ended with the Holbrooke memorial, she told the leaders of the Middle East that their countries were "sinking into the sand" by not moving toward democratic reforms (a timely message given the upheaval in Tunisia). And then, in a particularly gutsy moment, she lamented, "The longer China represses freedom ... the longer that Nobel Prize winners' empty chairs in Oslo will remain a symbol of a great nation's unrealized potential." (She was referring to China's refusal to allow the imprisoned Liu Xiaobo to accept the Nobel Peace Prize.) (See pictures of Liu Xiaobo.)

There is talk now that Clinton's next step will be to slide over to the Pentagon and replace Robert Gates, who is expected to resign as Secretary of Defense later this year. It would, in some ways, be a natural progression for her. It would be another first — the first woman SecDef. It would be an extremely valuable credential if she chooses to run for President in 2016. She certainly has the respect of the military and knowledge of the issues. (Comment on this story.)

I think it would be a bad move, though, for two reasons. The first is that the Secretary of Defense is going to have a lousy, nuts-and-bolts job over the next few years, very much caught up in budget cuts and fighting the military-industrial-congressional complex. There are other candidates better suited to do this. John Hamre, a former deputy secretary, knows the Pentagon's innards as well as anyone. CIA Director Leon Panetta may be best suited of all, with his real-time knowledge of our national-security problems and his history as a fervent budget cutter in Congress and as Bill Clinton's budget director. (See "Clinton Visits Countries WikiLeaks Tattled On.")

But there is a more important reason Clinton should stay at State. "Diplomacy saves lives," Bill Clinton said in his eulogy. "In the end, what matters [about Holbrooke] is that there are a lot of people walking around on the face of the earth" because of his diplomatic triumphs. Hillary Clinton's stature lends gravitas to the work of diplomacy, an art that was denigrated during Bush the Younger's first term and remains sorely undervalued now. As the wars in Afghanistan and Iraq wind down, as relationships from China to Pakistan to Iran fester, this is the moment for diplomacy to be restored to center stage, as senior partner to our military might. That was Holbrooke's obsession. It should be her legacy.

See why Richard Holbrooke was the archetype of U.S. diplomacy.

See the top 10 political gaffes of 2010.