WASHINGTON - The diplomatic crisis prompted by Israel's raid on a flotilla of aid ships bound for the Gaza Strip confronts President Obama with a second major test by the Israeli leadership and presents yet another blow to his goal of brokering peace with the Palestinians.

Also taking a hit: the president's effort to improve the U.S. image in the Arab world.

Muslim countries, even U.S. allies Turkey and Egypt, are strongly criticizing Obama over his measured reaction to the raid. Egypt is breaking ranks - temporarily at least - with Israel in their joint blockade of Hamas-ruled Gaza. Still to be seen is whether Cairo permanently opens its border with Gaza.

Going in to a meeting with Secretary of State Hillary Rodham Clinton, Turkey's Foreign Minister Ahmet Davutoglu declared that Ankara was deeply dissatisfied with the American response to the Israeli raid.

Breaking the blockade

Thus, Turkey, by sanctioning the aid flotilla and putting one of its flagged vessels in the lead, and Israel, by launching the bloody confrontation with the convoy, are testing American diplomacy to the utmost.

The aid convoy was intent on breaking Israel's three-year blockade of the Gaza Strip, imposed after the Palestinian extremist group Hamas seized control of the tiny Mediterranean territory in 2007. The blockade, along with Israel's fierce offensive against Gaza in the winter of 2008-09 to stop Hamas rocket fire on Israeli villages, already had fueled anti-Israeli sentiment around the Arab world and in some quarters in Europe.

At the same time, the convoy, led by a Turkish-flagged ship and condoned by the country's government, was clearly a provocation. Israel took the bait, then argued that the raid was a matter of self-defense.

Tuesday afternoon, Obama called Turkish Prime Minister Recep Tayyip Erdogan to express "his deep condolences" over the Israeli military operation." Obama also said he was "working in close consultation with Israel to help achieve the release of the passengers."

Immediately after the raid, Erdogan accused Israel of "state terrorism." On Tuesday, he said that "today is a turning point in history" and demanded that Israel immediately halt its "inhumane" blockade of Gaza.

Obama took office declaring that Israeli-Palestinian peace stood atop his agenda. He demanded that Israel help by stopping construction of West Bank settlements and ending expansion of Jewish neighborhoods in East Jerusalem, lands the Palestinians envision as part of their future state.

Israeli Prime Minister Benjamin Netanyahu said no and poured salt in that wound when his government announced a major East Jerusalem project as Vice President Biden was visiting to reassure Israel of U.S. support.

After a deep chill, Obama said he recognized that neither side was ready for peace talks. Even so, Netanyahu and the Palestinians subsequently agreed to open indirect negotiations brokered by U.S. special envoy George Mitchell.

With Netanyahu canceling a Tuesday meeting in Washington with Obama, the fate of that small move forward was uncertain. Palestinian Authority President Mahmoud Abbas denounced the raid as a "sinful massacre," but he signaled he would continue the indirect talks.

Difficult U.S.-Turkish relations are bound to be seriously set back if Obama does not issue a strong statement on the Israeli ship raid. That carries the possibility for major problems inside NATO, where Turkey is the only Muslim member. And it will further complicate U.S. efforts against the Iranian nuclear program.

Turkey had just reached an agreement to take part of Iran's stockpile of enriched uranium in return for a smaller, more pure batch of nuclear fuel for Iran's research reactor that produces medical isotopes. The United States, Russia, and France had proposed the deal late last year, with Russia to receive the Iranian fuel and France to provide the material for the research reactor. Iran said no.

Difficult balance

The day after the Iranian deal with Turkey, the United States announced it was moving ahead with harsher sanctions in the U.N. Washington was at pains to thank Turkey for its efforts but declared them insufficient. Turkey is deeply opposed to sanctions against its eastern neighbor.

Washington has stood beside Israel throughout its history, vetoing many anti-Israel U.N. Security Council resolutions. At the same time, the United States has tried mightily to keep the Turks in place as a valued NATO member and democratic buffer against Iran and Arab dictatorships like Syria. Egypt, which made peace with Israel in 1978, is likewise a valued Mideast partner.

Now it would seem that Obama has to choose - unless he can figure a way to hit the illusive diplomatic sweet spot that calms the Turks and Egyptians without offending the Israelis. That could prove an impossible task.