DAMASCUS, Syria -- In the Old City market, where the eyes of the president gaze down from huge murals and where the ears of the president's spies are always near, no one whispers anymore of Israel and peace.
Now the Syrians talk quietly of Iran and Iraq, the untrustworthy Americans, and a lost opportunity for peace.
"We no longer believe that we'll make peace with Disneyland," said a young man who gave his name as Aladdin, and who used Disneyland as a code word for Israel.
"We no longer say anything about peace. It's boring; nothing will change. The United States won't help us because we all know that Disneyland is part of the United States."
Aladdin laughed, a bitter acknowledgment that the peace process had failed in Syria, a country seen by the United States not so long ago as the key to a comprehensive accord on the Middle East.
Syrian President Hafez el Assad has all but said that peace prospects with Israel are dead, and there is evidence here that "Plan B" is taking shape: bolstering ties with Iran and starting a new partnership with longtime rival Iraq.
The move to forge new alliances is driven in part from the troubled Israeli-Palestinian talks and dormant Israel-Syria negotiations.
But it also stems from fresh military cooperation between Israel and Turkey. Next month Israel, Turkey and the United States plan military training exercises just north of the Syrian border.
Syria feels surrounded, isolated, threatened -- in no mood for peaceful concessions.
"The whole country was preparing for peace," said Nabil Sukkar, prominent Damascus economist who formerly worked for the World Bank. "We thought peace was around the corner. But Israel changed course" a year ago with the election of Prime Minister Benjamin Netanyahu.
Now, Sukkar said, the Syrian perspective is that the Americans are pushing an Israeli-Turkey alliance, abandoning Syria.
"Syria is being encircled in order to force Syria to make concessions, but Syria won't budge. It was American policy that pushed Syria into the Soviet orbit in the 1950s and '60s," he said. "Now America is pushing Syria into an Iranian-Iraqi alliance."
Diplomats detect a "sharp turn" in anti-American sentiment in the last few months, after the United States vetoed two U.N. Security Council measures condemning Israel for planning to build a housing project in historically Arab East Jerusalem.
"Syrian businessmen," said one envoy, "are suddenly more quick to look elsewhere than the United States for sources of goods."
Syria's turn eastward, away from the United States and Israel, is a natural reaction to the faltering peace process, the diplomat said.
"The question for the United States is whether a campaign to isolate certain countries pushes them in directions that you don't want them going in," the diplomat said. "The effect of squeezing the Syrians will be to push them toward the Iranians, the North Koreans, the Chinese."
In recent months, analysts have noted a "perceptible increase" in top-level Iranian visitors, including Iran's foreign and defense ministers. This week, Syria sent its first delegation since the early 1980s to Iraq to explore new ties.
"I think it must be the beginning of a new era of cooperation," said the delegation's leader, Rateb al-Shallah, an Assad confidant and chairman of Syria's chamber of commerce.
Upon arriving in Baghdad, the Iraqi capital, Shallah said he hoped to make deals that conformed with Iraq's oil-for-food arrangement monitored by the United Nations.
Analysts said the delegation's main purpose was to renew a political relationship between Iraqi President Saddam Hussein and Assad, who head rival factions of the Arab Baath Party that have been at odds since Syria sided with Iran in the 1980-1988 Iran-Iraqi War and joined the Western alliance against Iraq in the Persian Gulf war of 1991.
The Syrian delegation traveled on the highway from Damascus to Baghdad, which had been sealed at the border since the early 1980s. If that border reopens, said a Syrian businessman with close ties to the government, "It is a signal from Assad that peace with Israel is dead."
Syria's bottom line with Israel has always been the return of the Golan Heights, captured by Israel in the 1967 Six-Day War. In talks in Maryland in March 1996, Israel apparently agreed in principle to the return of the Golan for certain security arrangements.
"The deal was down to issues about preserving Israel's security as well as Syrian sovereignty," said a diplomat in Damascus with knowledge of the talks. "It was on questions like, do satellites overhead impinge on sovereignty? Does the presence of foreign troops? The Syrians thought it could be wrapped up in three months."
Then came Netanyahu's election, and his comments that he wouldn't give up the Golan. The Israeli leader wanted negotiations to start from scratch.
Syria wants to begin where the two sides left off under former Israeli Prime Minister Shimon Peres and his predecessor, Yitzhak Rabin.
