Ah, for the halcyon days of the Middle East in early 2005. Purple fingers were in the air in Iraq. Attractive Christian youth in Beirut's Firdos Square were driving the Syrians out of Lebanon. Autocrats throughout the region felt the need to at least pay lip service to the idea of democratic reform, to the point where Newsweek could run a piece explaining "Where Bush Was Right."

But that was then. These days, the Bush administration is quietly abandoning its grandiose talk of spreading democracy. And Iran has a lot to do with it.

According to a Time profile of Condoleezza Rice in this week's issue, the most important distinction for the Bush administration isn't between autocracy and democracy. It's between "extremism" and "moderation":

In conversations with her counterparts overseas--and in two interviews with TIME in the past month--Rice has sketched out a vision of a "new alignment" of forces in the Middle East, in which a "stabilizing" group of U.S. allies, like Israel, Egypt, Jordan and Saudi Arabia, could unite to contain the "destabilizing" threat posed by Iran and radical groups like Hamas and Hizballah. "There is a recognition that things are really splitting," Rice says, "with extremists on one side and what I call responsible [governments]--because they're not all reformers--on the other side."

Once upon a time -- say, Bush's second inaugural address -- the president argued that such U.S. indulgence of Arab autocrats indirectly fostered the spread of jihadism. Some argued that such a contention was a cynical rhetorical move, borne out of the unexpected need to justify the Iraq war after the WMD rationale evaporated. But there were certainly those within the administration, particularly neoconservatives, who took the argument seriously. For them, Rice has this:

Rice told TIME that she "always" raises the issue of democracy in private meetings with Arab leaders, including Mubarak.

One regime that certainly sees a change in Bush's attitude is the Saudis. Today's New York Times reports that the Saudis, with Washington's backing, are positioning themselves as a regional counterweight to Iran:

In recent months, Saudi Arabia has also increased its public involvement in Iraq and its support of the Sunni-led government in Lebanon. The process is shaping up as a counteroffensive to efforts by Iran to establish itself as the regional superpower, according to diplomats, analysts and officials here and throughout the region. Some even say that the recent Saudi commitment to temper the price of oil is aimed at undermining Iran’s economy, although officials here deny that.

“We realized that we have to wake up,” said a high-ranking Saudi diplomat who spoke on the condition of anonymity because he was not authorized to speak to the news media. “Someone rang the bell, ‘Be careful, something is moving.’ ”

The shift is occurring with encouragement from the Bush administration. Its goal is to see an American-backed alliance of Sunni Arab states including Saudi Arabia, Jordan, Lebanon and Egypt, along with a Fatah-led Palestine and Israel, opposing Iran, Syria and the radical groups they support.

In 2005, Bush himself stated that "excusing and accommodating the lack of freedom in that region did nothing to make us safe. If the Middle East remains a place where freedom does not flourish, it will remain a place of stagnation and resentment and violence ready for export." Without much in the way of public recognition, the 2007 version of the administration has decided that Bush had it all wrong.