WASHINGTON (AP) ― As with Iran 30 years ago, American leaders again are wrestling with the moral conflict between Washington’s demands for democracy among its friends and strategic coziness with dictatorial regimes seen as key to stability in an increasingly complex world, particularly the Middle East.

The turmoil in Egypt ― and it’s potential for grave consequences for U.S. policy throughout the region ― was inevitable. The recent WikiLeaks release of U.S. diplomatic reports showed that Washington knew what problems it increasingly faced with the regime of President Hosni Mubarak and his three decades of iron-fisted rule.

As importantly, the U.S. handling of Egyptian uprising, regardless of how it plays out, now has other close American friends in the Middle East ― particularly in Saudi Arabia and Jordan ― watching closely, looking for foreshadowings of what might be in store for them.

For that reason, U.S. officials have taken great pains to walk a middle line between Mubarak, an old friend and bulwark ally in the Arab world, and the profound street protests that threaten to drive him from power.

Secretary of State Hillary Clinton was spreading that message widely on U.S. television talk shows Sunday.

“It’s not a question of who retains power,” she said. “It’s how are we going to respond to the legitimate needs and grievances expressed by the Egyptian people and chart a new path. Clearly, the path that has been followed has not been one that has created that democratic future, that economic opportunity that people in the peaceful protests are seeking.”

Both the State Department and the White House, in apparent frustration with Mubarak, quickly began talking late last week about the future of America’s $1.5 billion in annual military and economic aid to Egypt. That sum is second only to America’s annual grant to Israel, a practice that dates to the 1979 peace treaty the U.S. brokered between the two neighbors.

That frustration was already on record in a report by Clinton’s ambassador to Egypt, Margaret Scobey, to Gen. David Petraeus in late 2008 before his meeting with Mubarak. Petraeus was then chief of the U.S. military’s Central Command.

“Mubarak now makes scant public pretense of advancing a vision for democratic change. An ongoing challenge remains balancing our security interests with our democracy promotion efforts,” she wrote, according to one document that was made public by WikiLeaks, the secrets-spilling website.

That is akin to U.S. diplomatic reports about Tunisia, where a people’s revolt forced President Zine al-Abidine Ben Ali from power two weeks ago after weeks of violent protest. That followed WikiLeaks disclosures that American diplomats were repulsed by that government’s greed.

Reports of that kind show clearly that American diplomats hold no illusions about the dictatorial regimes that have held power for decades in the region. At the same time the reports often draw a stark contrast between realities on the ground and official American policy. Dictating Washington’s Mideast policy is a fundamental discomfort with instability, fears of a takeover by Islamic radicals ― as happened in Iran 30 years ago ― and the historic U.S. backing for Israel, a Jewish state surrounded by Arabs.

That’s all compounded by heavy U.S. reliance on oil from Saudi Arabia and other Arab states in the Persian Gulf region.

Early on in his presidency, Obama traveled to Cairo to deliver a speech to the Arab and Muslim world, declaring U.S. friendship but tempering it with a stern call for democracy. In the meantime, U.S. relations with Turkey, the only Muslim nation in NATO, and with always tumultuous Lebanon, have become severely strained. Then came Tunisia and Egypt, where dictatorial regimes were a bulwark against radical Islam.

That is causing deep concern in Israel, where some fear a takeover in Egypt by the Muslim Brotherhood, could lead to an abnegation of Cairo’s peace treaty with the Jewish state. The deeply conservative Islamic organization is the largest opposition group in Egypt, officially banned but still holding a large block of seats in parliament.

“Jimmy Carter will go down in American history as ‘the president who lost Iran,’ which during his term went from being a major strategic ally of the United States to being the revolutionary Islamic republic,” wrote the analyst Aluf Benn in the daily Haaretz. “Barack Obama will be remembered as the president who ‘lost’ Turkey, Lebanon and Egypt, and during whose tenure America’s alliances in the Middle East crumbled.”

Obama knows history and has been active on the telephone with key leaders, looking for ways around the Iranian scenario. The White House on Sunday issued the following statement outlining Obama’s contacts.

Since Saturday, the statement said, Obama had spoken with the prime ministers of Turkey, Israel and Britain as well as King Abdullah of Saudi Arabia.

“During his calls, the president reiterated his focus on opposing violence and calling for restraint; supporting universal rights, including the right to peaceful assembly, association, and speech; and supporting an orderly transition to a government that is responsive to the aspirations of the Egyptian people,” the statement said. “The president asked each of the leaders that he spoke to for their assessment of the situation, and agreed to stay in close contact going forward.”

Obama is treading carefully but covering all the necessary bases as his administration struggles with the most serious foreign policy crisis since he took office two years ago. No matter what he does, however, he likely will end up angering either the Arab street that is celebrating the Egyptian uprising or other Arab dictators who have long counted on U.S. government support.