As Barack Obama readies himself for his second stint at the White House, his list of unfinished business looks daunting. Besides seeking to keep the US fiscal deficit under check without battering growth, Obama's options in dealing with the Middle East just got more complicated with renewed tension between Israel and Palestine. 

Days of bombing and counter-bombing by the Israeli Defence Forces and the Hamas militia - which controls the Gaza Strip - have taken the current death toll to at least 15, with more than 100 reported injured. With emergency meetings being called at the UN and the Arab League, Obama's second-term Middle East policy will be tested sooner than expected.

It is pertinent to note that Israel goes to polls early next year, and there is no love lost between Prime Minister Benjamin Netanyahu and Obama. The former had barely concealed his support for Mitt Romney in the run-up to the US presidential election. The Republican candidate was seen to be far more enthusiastic about Netanyahu's 'gettough' approach towards the Palestinians, as well as his military plans to deal with Iran's nuclear programme. Obama, on the other hand, called on Netanyahu to halt the settlements in the West Bank, proclaimed his support for Palestinian statehood (although he is yet to back his words with action) and preferred sanctions and diplomacy to tackle Tehran.

With Obama firmly back in the saddle, perhaps Netanyahu feels he should go for broke. This explains his government's increasingly hawkish stance on the Palestinian issue. Further, the Palestinians plan to push for recognition of statehood in the UN general assembly in two weeks' time. It would be interesting to see if Obama -who had earlier blocked a similar bid in the UN security council - uses this opportunity to embarrass Netanyahu. The possibility holds out significant ramifications for the entire region.

Meanwhile, there is broad consensus that the Bashar al-Assad regime in Syria is on its way out. But it is still uncertain as to when exactly this event will come about. Free of electoral compulsions, Obama can now help this transition along in Damascus. Doing so would also deal a heavy blow to the 'Resistance Axis' comprising Syria, Iran and the Hezbollah.

But one area where Obama has been vindicated and is expected to stay the course is his Iran foreign policy. Economic sanctions against Tehran for its nuclear programme have had a devastating effect with the Iranian Rial falling by as much as 40 per cent. Further, Tehran is now more than willing to get back to the negotiating table, significantly reducing the prospect of military action in the region. This should also calm the nerves of the Gulf Arab monarchies that were getting quite anxious over the prospect of Iran going nuclear.

That said, the longterm challenge that the Obama administration faces in the region is nurturing the new Arab democracies. Last year's pro-democracy Arab Spring wave shook up the political contours of the Middle East and North Africa. But as the new representative governments feel their way forward, they clearly require a significant amount of guidance and assistance. Countries such as Morocco, Tunisia and Egypt, which have all elected new governments under expanded democratic norms, are looking for massive investments for institution building, and addressing socio-economic challenges. But with economic woes plaguing the EU and the US, they are being forced to turn to the Gulf monarchies for foreign investments.

This is a contradiction as the Gulf monarchies resisted the Arab Spring tooth and nail, and have nary a soft spot for representative democracy. In such a scenario, the Arab Spring democracies desperately need partnerships that will help nurture their nascent democratic institutions. This is a task that the Obama administration can certainly outsource to India. As the world's largest democracy, India is uniquely positioned to guide these countries through institution-to-institution and parliament-to-parliament cooperation.

That there is a demand for such engagement is exemplified by Morocco's King Mohammed VI, who having ceded significant powers to parliament in the wake of the Arab Spring movement, recently called on Morocco's legislators to strengthen partnership relations with other democratic parliaments.

As Obama gears up for his second term, there is no denying that he has to hit the ground running. Notwithstanding huge economic woes in America, the fast pace of the evolving situation in the Middle East means that he will barely have time to catch his breath. But the world's hoping he will be up to the task.