President Barack Obama meets Egyptian President Hosni Mubarak at the White House today amid an upswing in bilateral relations caused by a mutual interest in containing Iran, defusing Israeli-Palestinian tensions, and reducing the destabilizing threat posed by Islamist extremist groups such as Hamas, Hezbollah, and al-Qaeda. Relations between Cairo and Washington had soured during the Bush Administration because of the Iraq war and the fact that Bush’s Freedom Agenda clashed with Mubarak’s restrictive approach to political freedom and lack of tolerance for political dissent. Although President Obama has backpedaled away from public criticism of Mubarak’s autocratic proclivities, he must privately maintain pressure on the Egyptian leader to reduce his government’s harassment of democratic opposition movements while working closely with Egypt to contain Iran’s expanding power, reduce the terrorist threat posed by Hamas, and revive the long-stalled Israeli-Palestinian peace negotiations.

After the Egyptian government released opposition leader Ayman Nour, who challenged Mubarak in Egypt’s 2005 elections, from prison earlier this year in an apparent goodwill gesture to the incoming Obama Administration, the administration invited Mubarak for a White House visit and announced that Obama had chosen Cairo as the venue for his June speech on engaging Muslims. Obama never mentioned Mubarak by name in that speech and he soft-pedaled calls for democracy in Muslim countries. But it is important for the Obama Administration to continue its predecessor’s efforts to ease the Mubarak regime’s hostile approach to Egypt’s democratic opposition. Otherwise, the political opposition will become dominated by Islamists bent on replacing Mubarak’s “managed democracy” with an Islamist dictatorship. The 81 year-old Mubarak, who has led Egypt since President Anwar Sadat’s assassination in 1981, must build a stable foundation for Egypt’s future political evolution.

In addition to nudging President Mubarak to open up Egypt’s political system to liberal political parties, President Obama should seek close cooperation with Egypt in Arab-Israeli peace negotiations. The Bush Administration had sought to encourage Saudi Arabia to play a leading Arab role in peace negotiations, but the Saudis were skittish about making any public diplomatic outreaches to Israel. Egypt, which already signed a peace treaty with Israel, is much better positioned to play this role and recover its former position as America’s foremost Arab ally.

The Obama Administration has pressed Arab states to take symbolic steps to normalize relations with Israel as a confidence-building measure to assure Israel that a final status agreement with the Palestinians would carry over into a sustainable peace with Arab states. Egypt has discouraged other Arab states from making such symbolic moves until Israel has agreed to freeze its settlement program in the West Bank. But the chief threat to peace is terrorism, not settlements. Settlements can be dismantled through an agreement in the future, but the terrorist threats posed by Hamas, Hezbollah, and other extremist groups are the chief barrier to peace now.

Egypt has taken belated action to root out smuggling networks that have used tunnels to transport arms, including sophisticated Iranian-made rockets, through Egypt’s Sinai peninsula into Gaza following the eruption of fighting between Hamas and Israel in late December. President Obama should press President Mubarak to broaden and deepen this cooperation against Hamas, which has allied itself with Iran and poses a threat to stability in Egypt, as well as the Palestinian territories.

The Obama Administration must balance the need for close cooperation with Cairo on defeating the threats posed by Iran, Hamas and other Islamist extremist movements with the long term U.S. commitment to democracy and the need to open up Egypt’s political process to democratic opposition movements to prevent Islamist extremist groups from gaining traction in post-Mubarak Egypt. The Obama-Mubarak meeting is an important opportunity to strengthen bilateral ties and enhance Egyptian-American cooperation in defeating terrorism and building a stable Arab-Israeli peace.