Now that the Democratic Party will control both houses of the U.S. Congress next January, Middle East analysts say they expect changes in policy on the war in Iraq and the Arab-Israeli conflict. The analysts say, however, the Democratic leaders will be cautious when making new proposals, as they look ahead to the presidential elections in 2008.

Analysts at a discussion sponsored by the Middle East Institute and the Israel Policy Forum predict that when the new Congress convenes in January there will not be an immediate transformation in U.S. policy toward the region.

The president of the Arab American Institute, James Zogby, says, however, there will be a renewed sense of hope for people who live there.

"The new Congress, of course, is not going to make any dramatic difference, but I still think that there will be an opportunity here with the election of a new Congress, not because there are new ideas coming forward, but throughout the Middle East there will be a sense of an opening," said James Zogby. "There might be change."

Both Republicans and Democrats are waiting for recommendations by the Iraq Study Group, a bi-partisan panel chaired by former Secretary of State James Baker and former Congressman Lee Hamilton.

A member of the group, former CIA director Robert Gates, has been appointed by President Bush to replace Donald Rumsfeld as Secretary of Defense.

James Zogby says the Study Group's recommendations may be the catalyst for change in the Bush administration's policy on Iraq.

"It is hoped that the Baker-Hamilton report is the first acknowledgment that we have a problem and a mistake," he said. "My sense is that if we begin to move in the more thoughtful way that Secretary Baker understood the region years ago we might find a way to begin to get out of this hole. But make no mistake, it is not going to be easy, and the 2008 election will see us dealing with the very same issues."

Mara Rudman, a senior fellow at the Center for American Progress and a former chief of staff for the National Security Council, says the Baker-Hamilton report could create new opportunities in the Middle East.

She expects the recommendations will not only address the war in Iraq, but other regional issues, including Israel and the Palestinians.

Rudman says, however, both sides in the Israeli-Palestinian conflict currently have little incentive to get back to the bargaining table and deal with the serious issues that divide them.

"When you have no political horizon, when you have no sense that the United States is going to be actively involved in getting to a political horizon you have much less incentive for good behavior by anyone involved," said Mara Rudman. "I think you do face a situation right now where your players on the Palestinian side are much weaker. Frankly, you also face a situation where your leadership on the Israeli side is much more transitional."

President Bush says he is committed to a settlement that will result in two democratic states, Israel and Palestine, living together in peace and security. Mr. Bush says reaching that goal is one of the highest priorities of his presidency.

Joshua Muravchik, a resident scholar at the American Enterprise Institute, argues that even with a new Congress, the chances for an Arab-Israeli peace agreement are slim.

He says there is a rising sense among some Arabs that armed resistance is a successful way to change the status quo.

Muravchik argues because the Palestinians have witnessed the insurgency in Iraq, what he calls the perceived defeat of the Israelis by Hezbollah in Lebanon, the perception that Israel was forced to withdraw from Gaza, the rise of Iranian influence and the election of Hamas in the Palestinian territories, the chances for a peaceful solution with Israel have gotten worse.

"The sense that resistance, jihad, is triumphant and on the upswing is absolutely a killer to any evolution of sentiment among the Palestinians toward being willing to accept the reality of Israel as a permanent reality and to go on and make peace," said Joshua Muravchik.

On Iraq, Muravchik says the Democrats controlling Congress will be careful when proposing any changes in policy.

He says they will be positioning the party in an attempt to win the White House two years from now.

"I think the last thing the Democrats want to do is to assume responsibility for Iraq," he said. "If they really unified and rally themselves to impose some change of policy on the country it is very hard to see how things would get better in Iraq and then the mess in Iraq becomes the Democrat's fault at least as much as the Republicans, and they lose this issue for 2008. So I think they can't and they don't want to, for understandable political reasons."

The Iraq Study Group is expected to release its findings in the coming weeks.

Members of the panel have declined to discuss specific recommendations, but say they want to be in complete agreement with no dissenting views when the proposals are unveiled.