SO there are limits to the magician's powers. For a moment there, when the footage from Tehran showed young women wearing Victoria Beckham sunglasses, peroxide hair poking from their hijabs, lining up to cast their votes in a record turnout election, it looked as if Iran was about to end the sullen estrangement of the last four years, turf out Mahmoud Ahmadinejad and present a new, more open face to the world.

If that had been the outcome of Iran's election, it would have been notched up, in part, as an early triumph for Barack Obama his allies would have declared that the hand the president stretched out to the Muslim world in Cairo less than a fortnight ago had unclenched the Iranian fist.

That's not how it turned out. Instead, the US president today surveys a Middle Eastern landscape that has changed over a single weekend, thanks to what looks like a stolen election in Tehran and a policy climbdown by the prime minister of Israel. These shifts raise searching questions about Obama's entire approach to foreign policy — and suggest that at least one key aspect of it is not working.

The at-a-glance view says Obama has been relying on the familiar combination of carrots and sticks carrots for Iran, in the form of dialogue, respect and personal video messages bursting with praise for Iranian civilisation; and sticks for Israel, sharpened into explicit, no-wriggle-room demands to end settlement building on the West Bank.

In this view, Obama should conclude that carrots don't work but sticks do — the latter prodding Binyamin Netanyahu to utter, at long last, the words “Palestinian state”, even if the phrase emerged from his mouth, as one Israeli commentator put it, like a rotten tooth pulled without anaesthesia. He put the squeeze on Bibi and got results, he made nice to Tehran and got nothing. Time to draw the obvious conclusion.

But it might not be quite as simple as that. Start with Iran. It's true that the Obama administration had hoped that its policy of engagement — after the outer darkness treatment of the Bush years — would bring change. If the election results were legitimate, it would mean the Iranian people had heard Obama's honeyed rhetoric and were unmoved. That is not totally ludicrous two US non-profit organisations ran an extensive, scientific opinion poll in Iran last month and did indeed find Ahmadinejad walloping his opponents.

But what if there was fraud? It certainly seems likely, given the freakish nature of some of the numbers, complete with Ahmadinejad outpolling his rivals even in their own home towns. If he, and the hardline clerical authorities whom he serves as frontman, did indeed steal the election, that confirms the nature of the regime Obama confronts. It also exposes the US president to the charge, already voiced on the right, that he was naive to think he could engage meaningfully with what is nothing more than a theocratic dictatorship.

The US administration has its counter-arguments ready. For one thing, the policy of dialogue was conceived on the assumption that Ahmadinejad would be a two-term president. True, one senior administration official confessed to me, some in the White House began to believe they were about “to catch a break” in Iran as they saw the excitement the opposition Mousavi campaign was generating they dared to hope they were about to see a repeat of this month's Lebanese elections in which the pro-western coalition defeated Hezbollah and its allies. But that feeling did not last long.

Nor are Washington's policymakers feeling queasy about dialogue with a nation that lays on an outward show of democracy — complete with rallies and debates — only to crush dissent brutally when the people vote the wrong way. Such scruples have not prevented the US dealing with China, Russia, Saudi Arabia or a long list of others. As Obama explained repeatedly through the 2008 campaign, he does not believe diplomacy is a reward for good behaviour, but a tool to advance America's self-interest.

But it's not one Washington will deploy indefinitely. “We'll see if it bears fruit,” says that official. “If it doesn't then, at some point, we'll have to try something else. It's not without limit.” When might US patience run out? The answer is the end of this year after that, western diplomats believe Tehran will reach the nuclear point of no return.

— The Guardian, London