Washington's pundits have been describing France's new president Nicolas Sarkozy as an admirer of America's economic dynamism and predict that he will improve Paris's relationship with Washington. But very little attention has been paid in the U.S. capital to a proposal by the new occupant of the Élysée Palace that seems to set a challenge to the Bush Administration's Mideast policy: setting up a "Mediterranean Union" (MU) under which 16 southern European, Middle Eastern and North African countries bordering the Mediterranean Sea-including Turkey, Israel and its Arab Neighbors-would form a loose economic community that would focus on such policy issues as trade, immigration, security and energy.

Sarkozy's initiative, which he raised during his campaign speeches as well as in his victory address, reflects three of his more intriguing, if not controversial, policy stands. First, Sarkozy, who opposes Turkish membership in the European Union (EU), would provide Ankara with an alternative route to partnership with Europe as a pillar of the new MU. At the same time, the new French president, who has stressed his friendship with the Jewish state, wants France and the EU to play a more activist diplomatic role in dealing with Arab-Israeli problems through the MU forum.

And Sarkozy hopes that the new Mediterranean grouping would also create mechanisms to control illegal immigration from North Africa into France and southern Europe.

Turkey, which began negotiations to join the 27-nation EU in 2005, sees the MU plan as a ploy to prevent it from joining the EU, while the Bush Administration continues to support Ankara's demand for full membership in that regional club. Washington is concerned that Brussels's rebuff to the large and relatively poor Muslim country could play into the hands of the more nationalist forces in Turkey and make it more difficult to win its government's cooperation in Iraq.

And at a time when President Bush and his aides have to deal with the consequences of the collapse of the U.S. hegemonic project in the Middle East-from the war in Iraq and the tensions with Iran in the Persian Gulf, to continuing Israeli-Palestinian fighting, to the Lebanese crisis in the Levant-the MU initiative may be seen in Washington as a French attempt to exploit American diplomatic weakness in the region while extending European leadership there.

Instead, the Americans should recognize that under the current mood of the public and elites in Europe, including Sarkozy and German Chancellor Angela Merkel's strong opposition to Turkish membership in the EU, the club will indeed remain closed to the Turks and will not open anytime soon. That Sarkozy and Merkel, who are backed by large segments of European opinion, are worried that hundreds of thousands of Turks would stream into Europe to work and live after joining the EU shouldn't come as a shock to American observers. After all, would Americans agree to sign an accord with Mexico that would permit hundreds of thousands of Mexicans to live and work in the United States? (And at a risk of sounding politically incorrect, we should also admit that Americans would probably agree to sign such an accord with Canada, in the same way that the Europeans were willing to absorb, say, Poland into the EU).

In a way, the MU could do for Turkey what the North American Free Trade Agreement (NAFTA) has done for Mexico. It would help accelerate trade and investment ties and open the road for more diplomatic and military coordination between Turkey and the EU. By its sheer size and its economic success and military power, Turkey would emerge as one of the leaders of the MU and serve as a political bridge between Europe and the Middle East.

The United States should also welcome the MU initiative-bringing together Portugal, Spain, France, Italy, Greece, Cyprus, Malta, Turkey, Lebanon, Israel, the Palestinian Authority, Egypt, Libya, Tunisia, Algeria and Morocco into one regional grouping-as a way of creating a basis for renewed transatlantic diplomatic cooperation in the Middle East, which would encourage the Europeans to share more of the political and economic burdens in dealing with the problems of the Middle East, especially in the Lebanese and Israeli-Palestinian arenas.

Growing involvement by France and the EU in resolving the conflicts in the Levant, which could require the deployment of European troops to help secure future peace accords, would make it possible for the United States to consider reducing its military presence in the region as more security responsibilities start shifting to the emerging EU military forces.

Sarkozy's MU plan can be seen as an extension of the EU's own version of the NAFTA in the Middle East, the Euro-Mediterranean Partnership (EMP), which was launched in Barcelona, Spain, in 1995 to bring 12 Mediterranean countries-including the Palestinian Authority and Israel-into a free-trade zone by 2010. (Two of those countries, Cyprus and Malta, joined the EU in 2004). That ambitious effort by the EU, which has been led by France, Italy and Spain, created bilateral trade accords with several Arab countries-and pressed them to encourage free trade in the Middle East. Significantly, the EMP has become the only forum of its kind to have Israel and the Arab countries sitting around the same table.

Hence it is interesting to note that, notwithstanding the neoconservative accusations that Europe is "anti-Israeli", EU-Israeli trade has seen a threefold increase in the last decade alone. This confirms the EU as Israel's major trading partner and the number-one market for Israel's imports-surpassing even the United States in volume.

Sarkozy's support for modifying France's "Arabist" foreign policy is an indication that Europeans like him have concluded that they cannot continue to secure their interests in the Middle East-their "strategic backyard"-with which they maintain strategic, business and demographic ties, by burnishing their "pro-Arab" credentials, distancing themselves from Israel, and propping-up bankrupted and corrupt political elites.

That policy may have helped to secure short-term economic interests and re-direct the hostility of the "Arab street" against the United States. But the same policy also made it difficult for the Europeans to play the role of mediator between Arabs and Israelis. And perpetuating the rule of Arab autocrats has only helped to turn the strategic and economic periphery of Europe into one of the least advanced and most unstable parts of the global economy. The Middle East not only exports oil to the EU, but also hundreds of thousands of poor and angry immigrants that have become a demographic time bomb.

By adopting a strategy of constructive engagement in the Middle East through the MU, France and the EU could try-through the use of both diplomatic and economic resources-to achieve the kind of goals that the Bush Administration is trying to advance through the use of its military power: Challenging the status quo in the Middle East, while advancing the cause of peace and political and economic reform.

Leon Hadar is a Cato Institute research fellow in foreign-policy studies and author of Sandstorm: Policy Failure in the Middle East.