Syria, a middling Arab country formally at war with Israel over the occupied Golan Heights, must juggle its alliances to survive in a volatile Middle East.

Threats of a new conflict have ricocheted between Syria, Israel, Iran and Lebanon this year, especially after Israeli and U.S. talk of alleged Syrian arms transfers to Lebanese Hezbollah fighters, although leaders on all sides deny they want a fight.

Impatient with the United States, but keeping the door ajar, President Bashar al-Assad is clinging to an Iranian-led “resistance” camp, while signalling readiness to resume indirect peace talks with Israel via Turkey, a former foe turned friend.

“We cannot wait any longer,” he told Italy’s La Repubblica newspaper this week. “President (Barack) Obama’s America had raised expectations regarding a new Middle East policy. But now the clock of history is striking a new hour.”

Syria was now forging a regional order with Russia as well as Turkey and Iran, rather than relying on Western powers.

“This is not a turnabout,” said Assad, who has ruled Syria for nearly 10 years. “We want good relations with Washington. Rather it is about recognising reality: the failure by America and Europe in solving the problems of the world, in our region.”

Whether any new alignment will have better luck remains to be seen — even Assad acknowledged that the United States would play a decisive role in the final stage of any peace settlement.

Syria has emerged from the isolation it endured after the 2005 assassination of Lebanese statesman Rafik al-Hariri. It denied responsibility but was forced to pull its troops out of Lebanon after an outcry led by Washington, Paris and Riyadh.

SLOW GOING

Obama’s “engagement” with Syria has proved frustrating for both sides — Congress has yet to confirm a U.S. ambassador to Damascus named in February after a five-year hiatus. Obama has renewed sanctions on Syria, while easing some in practice.

Some Syrians view the glass as half-full.

“The American school is about to re-open, the ambassador has been named, there have been high-level visits from U.S. officials and a blind eye to some of the sanctions,” said Sami Moubayed, a historian. “Relations are nowhere as bad as they were under George W. Bush. Are we in a honeymoon? Not yet.”

Reviled as an “evil-doer” by Obama’s predecessor Bush, Syria has calmed some Western concerns about its behaviour in the region, just as the intended U.S. troop pullout from Iraq has assuaged some Syrian fears about Western militarism.

“Their external isolation is reduced,” a Western diplomat said. “It’s not that Syria has done nothing. Across the regional issues there has been limited progress in all areas.”

Ticking them off, he said Damascus had re-set relations with Lebanon after improving ties with Saudi Arabia. The flow of foreign militants into Iraq had all but ceased as U.S. pullout plans crystallised. Syria clearly wanted a stable, unified Iraq.

Turkish-mediated talks with Israel had made progress until the Gaza war halted them in December 2008. Syria had neither helped nor hindered U.S.-led efforts on the Palestinian track.

“Where concerns remain is weapons transfers to Hezbollah — real concerns about that — and to a lesser extent the relationship with Hamas, although Syria isn’t seen as a primary supplier of weapons in that case,” the diplomat said.

For Syria, the end-goal of any U.S. engagement is the return of the Golan Heights, captured by Israel in 1967, Moubayed said.

“A credible, sustainable deal needs the United States. So far Obama has been helpless at moving that track forward. You need to jump-start talks on the Golan,” he declared.

Prospects for renewing indirect talks via Turkey seem dim after Turkish criticism of Israeli policy in recent months.

“The Turks and Syrians are ready, but the Israelis aren’t. They say the Turks are no longer impartial,” Moubayed said.

Instead, Syria and Israel have been talking more of war than peace, although for now neither seems to want a confrontation.

INFLUENCE IN LEBANON

In Lebanon, arena of a 2006 Israeli-Hezbollah war, Syria’s allies have effective veto power in the government. Hariri’s son Saad has visited Damascus twice as Lebanese prime minister.

That alone indicates how much influence Syria has regained in the neighbour it dominated during its 29-year troop presence.

“In Lebanon, Syria has never been this close to having a full house,” said Peter Harling, the International Crisis Group’s Syria analyst, citing a spectrum of relationships.

Apart from its warm ties with Shi’ites through Hezbollah, Syria can manage Lebanon’s Sunni community via Hariri and the Saudis, and has won over key Christian leaders, as well as Druze chieftain Walid Jumblatt, once its bitterest critic.

Syria has made such gains without heeding U.S-Israeli pressure to ditch its alliances with Iran, Hezbollah and Hamas.

Assad mingles with Iran’s President Mahmoud Ahmadinejad and Hezbollah leader Sayyed Hassan Nasrallah as easily as he does with Turkish President Tayyip Erdogan and the Emir of Qatar.

“Syria is trying to keep one foot in the resistance camp and one in this more pragmatic camp in the middle,” Harling said.

“Its strength lies in its ability to juggle relationships and the ambiguity and ambivalence of its foreign policy.”

(Editing by Samia Nakhoul)