Secretary of State Madeleine Albright's blunt assessment of her Middle East rescue effort last week stunned American Jewish leaders accustomed to bland diplo-speak.

Normal procedure after such high-profile missions is to claim success, no matter how obvious the evidence of failure. Albright's public declaration that she had made little progress was designed to make Palestinian and Israeli leaders squirm.

"I will come back here whenever the leaders have made hard decisions, but I am not going to come back here to tread water," she told reporters.

Albright's formula — a calculated blend of tough public warnings to Israeli and Palestinian leaders and a personal, empathetic brand of diplomacy aimed at bolstering public support for the peace process on both sides — won high marks from mainstream Jewish leaders, despite the criticism of Israeli policy.

"She hit all the important notes," said a top official with a major Jewish group here. "She made it clear that she views some recent Israeli policies as unhelpful, but there was a connection to Israel's security concerns that we have not seen in the past."

That positive reaction could prove important if predictions of a major new peace initiative sometime in 1998 prove accurate.

Albright incensed Palestinian representatives and declawed attacks from Jerusalem by offering some of the frankest criticisms yet of the Palestinian Authority's unwillingness to renounce violence as a negotiating tool and dismantle the terrorist infrastructure.

At the same time, she conspicuously ignored Israeli demands that she limit her agenda to the issue of security.

She called for a settlements "time-out," and forcefully criticized the Israeli economic squeeze on the Palestinians, saying, "It is beyond my understanding where withholding money is a security issue."

But her empathy for Israelis worried about continuing Palestinian violence and her stern warnings to Palestinian leader Yasser Arafat took the sting out of that criticism.

The most striking element of Albright's diplomatic formula was her determination to address the concerns of ordinary Israelis and Palestinians directly.

For Israelis, negotiations are hollow as long as suicide bombers spew death on crowded Jerusalem streets and Palestinian leaders wink at the Hamas fanatics who send them. Palestinians have lost faith in the talks because the Netanyahu government refuses to offer even glimmers of the political and economic outcomes they could achieve at the end of the long, arduous process.

Albright made these points in meetings with Arafat and Prime Minister Benjamin Netanyahu, but she also took them directly to the Israeli and Palestinian people with an effective use of words and symbols that tapped into the core concerns of both.

Her highly personal, outspoken approach was a sharp departure from the strategies of her predecessors.

James Baker, President Bush's secretary of state, preferred the cudgel. He was cold and remote, and Israelis never had a sense that he understood their well-founded fears of dealing with Mideast "bad guys" like Arafat.

The taciturn Warren Christopher showed infinite patience with Israeli and Palestinian leaders, but his focus was on the process, not the people. He, too, failed to bolster confidence in the Israeli or Palestinian middle.

In contrast, Albright emphasized the concerns of everyday people in the region who will have to live with their leaders' mistakes, and she did it directly in a series of public appearances and local radio and television speeches.

Strengthening support for the peace process among ordinary Israelis and Palestinians, along with nudging their leaders to make confidence-building gestures, will pave the way for a new American peace initiative sometime next year, administration officials hope.

"The trip was meant to signal both sides that the U.S. has not forsaken the Middle East," said Joel Singer, legal adviser to the foreign ministry in the Rabin government and one of the architects of the Oslo agreements. "And it was meant to signal that when they do get more involved, the style will be different. They will be more active; the U.S. will eventually do more than it has done in the past to push both sides toward an agreement."

Singer predicted that the new initiative would come sometime in 1998; administration officials are less specific, but confirm the general idea.

Albright's retooled Mideast diplomacy will also have an impact on American Jewish groups that have been pushed by Jerusalem in recent weeks to resist the expected new U.S. squeeze.

Right-of-center organizations quickly complained that she had diluted her anti-terrorism message by adding criticisms of recent Israeli policy, but most mainstream Jewish leaders found her approach fair and refreshingly straightforward.

"American Jews respond very strongly to indications of unfairness, which we saw with Baker," said an official with a major pro-Israel group here. "But Albright seemed anything but unfair; there was an element of reasonableness to what she had to say. If she can maintain the same balance as she pushes the peace process, rank-and-file American Jews will not be inclined to resist."

The Netanyahu government, which has been working closely with Republican leaders in Congress to forestall new administration pressure, will redouble its efforts. But that strategy could backfire if Albright sticks to her guns–pushing both sides while responding to the core concerns of Palestinian and Israeli citizens.