Prepared by 15 experts at the Brookings Institution and the Council on Foreign Relations, the report recommends restoring balance to U.S. strategy and making more use of diplomacy in the Middle East.
For the past six years under President George W. Bush, U.S. foreign policy in the region has been dominated by Iraq, said Martin Indyk, director of the Saban Center at Brookings, and Richard Haass, president of the Council.
Instead, they said, the U.S. focus should be on curtailing Iran's nuclear program and on promoting peace agreements between Israel and its Arab neighbors, Syria in particular.
"The Syrian government is in a position to fulfill a peace agreement, and the difference between the parties appear to be bridgeable," said Indyk, a former U.S. ambassador to Israel.
That could weaken Iran's influence and reduce support for both Hezbollah and Hamas, two militant anti-Israel groups, and improve prospects for stability in Lebanon, Indyk said.
The report, "Restoring the Balance. A Middle East Stategy for the Next President," in preparation for 18 months, suggested that the Obama administration support conciliation between Fatah, the Palestinian group with which Israel has negotiated, and Hamas, which controls Gaza and has refused to recognize Israel's right to exist.
That new U.S. strategy would diminish the Hamas militants' incentive to undermine peace negotiations with Israel and force Hamas either to accept a peace agreement that supports Palestinian rights or lose the backing of the Palestinian public, said Steven A. Cook, of the council, and Shibley Telhami, of Brookings.
"We suggest before the president does anything at all, the president should put forward a new framework for security and peace in the Middle East," Telhami said in an interview.
At the same time, he said, the Obama administration should have Saudi Arabia and Egypt encourage the Palestinians to have a "national unity" government that would negotiate with Israel.
"You have to try it, and you will be surprised how flexible diplomacy can be," said Telhami, who also teaches at the University of Maryland.
"At a minimum, you will have created a different environment, a different public opinion," he said. "Eighty-eight percent of the Arab public thinks the United States is the biggest threat to them," he said. "That's frightening."
On Al Qaeda, the report calls for pressure for political reform in the area and not only focusing on the terrorist network. Weak and failing states are the breeding grounds for terrorist activity, the report concluded.