Syria’s President Bashar al-Assad talks to a man who was wounded in a car bomb explosion on Saturday, at al-Mowasat hospital in Damascus October 1, 2008. REUTERS/Sana

“Nothing is a breakthrough, and I’m not sure that there will be,” Rice, who met with Moallem on the sidelines of the U.N. General Assembly in New York Friday, told Bloomberg TV Monday. “But it’s time to talk about some of the changes that are taking place in the Middle East.”

While the Rice-Moallem contact reportedly lasted only 10 minutes, her chief regional deputy, Assistant Secretary for Near Eastern Affairs David Welch, met with the Syrian official in a longer meeting Monday, according to the Wall Street Journal which suggested that the talks portended a “potential thaw” between Washington and Damascus.

”I consider this a good progress in the American position,” Moallem told the Journal in a reference to his meeting with Rice. “The atmosphere was positive. We decided to continue this dialogue.”

Still, some observers voiced skepticism that the meetings signaled a major shift in Washington’s willingness to seriously engage Damascus in the nearly four months before Pres. Bush leaves office.

“It’s clearly time for a re-think of [Syria] policy, and I think Rice and others in the administration are trying to shepherd it forward,” said Joshua Landis, a Syria specialist at the University of Oklahoma who publishes the widely read www.syriacomment.com blog. “Rice is definitely open to it — and the whole Department of Defense has been kicking for this for a long time — but she can’t get it past the White House.”

He noted that Bush himself had referred to Syria as a ”sponsor of terrorism” in his speech to the General Assembly just last week.

As with Iran and North Korea, the split between administration hawks and realists over Syria is a familiar one. While Rice’s predecessor, former Secretary of State Colin Powell, argued for engaging with Damascus both before and after the March 2003 U.S. invasion of Iraq, the hawks — then led by Cheney and Pentagon chief Donald Rumsfeld — favored a policy of ”regime change” against the government President Bashir al-Assad.

Amid charges that Syria was facilitating the smuggling of Sunni extremists into Iraq, Washington’s hostility toward Damascus grew steadily after the invasion and climaxed after the 2005 assassination of Lebanese Prime Minister Rafik Hariri which the U.S. blamed on Syria.

The administration, which offered strong support to the subsequent “Cedar Revolution” in Lebanon, withdrew its ambassador from Damascus as part of a much more comprehensive effort to weaken and isolate Assad. During the month-long war between Israel and Hizbullah the following year, Abrams, presumably with Cheney’s backing, reportedly assured Israeli policymakers that Washington would have no objection to their expanding hostilities into Syrian territory.

Rumsfeld’s resignation in November 2006 and his replacement by the more realist Robert Gates — not to mention the stunning deterioration in Washington’s regional position resulting from the war’s outcome, the routing of Fatah by Syria-backed Hamas in Gaza, and the growing sectarian violence In Iraq — tilted the balance of power within the administration.

Over the strenuous objections of neo-conservatives and other hawks, Rice invited Syria to take part in last November’s Annapolis Summit that launched the formal resumption of direct talks between Israel and the Palestine Authority (PA).

It was shortly after the meeting that Turkey began mediating indirect peace talks between Damascus and the government of Israeli Prime Minister Ehud Olmert, reportedly centered around the return of the Israeli-occupied Golan Heights in exchange for Syria’s agreement to normalize ties and cut its links to Hizbullah, Hamas, and Iran.

While, according to virtually all accounts, those talks made major progress, they have been suspended since early September pending the formation or election of a new Israeli government. Olmert, who last week resigned as head of the ruling Kadima Party due to a corruption scandal, is currently serving as a caretaker.

In addition, Damascus has long insisted that a final peace accord could be reached only if Washington strongly endorsed the deal and normalized ties, something that the White House, despite the urging from the State Department and several former senior U.S. diplomats — including the ex-head of the American Israel Public Affairs Committee (AIPAC) — has so far ruled out.

Meanwhile, however, Washington’s efforts to isolate Syria have eroded significantly in recent months. Hizbullah’s victory over pro-Western forces in Beirut last spring followed by the Doha Accord that gave pro-Syrian forces there a virtual veto over major policy decisions marked a major political defeat for Washington’s Lebanon policy.

At the same time, the replacement of French President Jacques Chirac, Washington’s closest ally in isolating Assad, by Nicolas Sarkozy dealt another major blow.

In July, Sarkozy became the first West European leader to host Assad — at the annual Bastille Day celebration, no less — since Hariri’s death. Sarkozy followed that up with a visit to Damascus earlier this month where he offered to co-sponsor Israeli-Syrian peace talks when they resume. At the same time, Assad announced several moves seemingly designed to appease Washington; among them, sending ambassadors to both Lebanon and Iraq.

Whether the past week’s meetings suggest that the balance of power within the administration has shifted should become clearer in the coming weeks, particularly if Washington sends an ambassador or senior-ranking official to Damascus, as has long been urged by Syria.

According to Landis, the U.S. commander in Iraq, Gen. David Petraeus, pressed the White House last December to go there himself but was rebuffed. Now head of U.S. Central Command and a White House favorite, Petraeus could decide to renew his request which, if granted, would likely be seen as evidence of serious shift.

Saturday’s car-bombing that killed some 17 people in Damascus itself could bolster the Pentagon’s longstanding case that greater intelligence cooperation with Syria could serve the interests of both countries. Most analysts have pointed to Sunni extremists, possibly tied to al Qaeda, as the most likely perpetrators.