Violence on the ground - growing unease in Washington
US officials have welcomed Israel's partial withdrawal from Palestinian-controlled areas - but are continuing to press for a full and immediate pullback.
Israel has said it will only complete its withdrawal if the Palestinian Authority cracks down on known militants.
Israelis initially thought the events of 11 September would bind Israel and America more closely together.
Having argued for years that they were engaged in a long and lonely fight against terrorism, they now believed they would win more support and sympathy from Americans than ever before.
But the picture quickly changed as it became apparent that President Bush badly needed the support of Arab and Muslim states in his campaign against the Saudi-born Islamist leader Osama Bin Laden and the ruling Taleban movement in Afghanistan.
Scarcely a day went by without one or other Arab leader telling the Americans that the Arab world wanted to see more active US involvement in efforts to end Israeli-Palestinian violence.
'Unacceptable' analogy
Two events underlined that US-Israeli relations were entering choppy waters.
The first was Ariel Sharon's impassioned declaration that Israel would not become another Czechoslovakia. In other words, it would not be sacrificed as Czechoslovakia was to the Nazis in the run-up to the Second World War.
American officials were stung by the analogy, which a White House spokesman described as "unacceptable".
The second important event was the assassination of a right-wing Israeli cabinet minister, Rehavam Zeevi, by a radical Palestinian group in revenge for the killing of its leader by the Israelis a few months earlier.
Vowing that "everything had changed", Mr Sharon launched the biggest Israeli offensive against Yasser Arafat's Palestinian Authority since the PA's establishment in 1994.
American officials watched aghast as Israel moved its troops and tanks into Palestinian-controlled areas.
In the week that followed the Israeli minister's assassination, Israeli forces killed some 40 Palestinians, shattering the prospects for reducing the violence and reviving the peace process - the two stated goals of US policy.
Shock and anger
Using unusually strong language, the State Department called for an "immediate" Israeli withdrawal and condemned the loss of Palestinian lives.
The New York Times called the Israeli military offensive "ill-advised" and warned Mr Sharon against actions which would undermine Mr Arafat's authority.
The Washington Post went much further, declaring in an editorial: "Israel increasingly appears to be embarked not on a legitimate action of self-defence but a destructive campaign of aggression."
Israel's Foreign Minister, Shimon Peres, who visited Washington while the offensive was still under way, was told repeatedly of the sea-change in American priorities since 11 September.
The Middle East was an unwelcome distraction. It was up to Israeli and Palestinian leaders to reduce the level of violence, resume security co-operation and begin the long-delayed implementation of the Mitchell report - the proposals put forward by the former US senator George Mitchell in the spring.
A week after the offensive had begun, Israel officials announced a conditional withdrawal. But most analysts believe the atmosphere is now so poisoned that the violence will continue and any ceasefire will be as meaningless as those which have preceded it.
Anti-Israel, anti-American
One widely-shared concern is that while the more dovish Shimon Peres is more amenable to American warnings, the more headstrong Ariel Sharon wants to keep up the pressure on the PA - even if that means it is undermined to the point of collapse. Opinion polls in Israel suggest his tough stance is supported by two-thirds of the Israeli public.
The other main concern is that, as the violence continues, Yasser Arafat's ability to control the anger and frustration of his own people will be diminished even further.
Anti-American and anti-Israeli sentiment is not confined to militant Islamic groups but widely shared within Mr Arafat's own nationalist constituency.
And especially in Gaza there is popular support for Bin Laden - despite Mr Arafat's efforts to suppress any public demonstration of that support.
One way or another, the Middle East seems set to remain an unwelcome distraction for George Bush.
Unless his administration can find a more effective means of restoring calm in the region, Israeli-Palestinian violence will continue to cast a long shadow over his efforts in Afghanistan.