During the eight-year administration of former President George W. Bush, US relations with many Arab and Muslim nations were damaged by the invasions of Afghanistan and Iraq and Bush's initial reluctance to push for Israeli-Palestinian peace.
"It is impossible for us to think only in terms of the Palestinian-Israeli conflict and not think in terms of what's happening with Syria or Iran or Lebanon or Afghanistan and Pakistan," he told the Dubai-based satellite channel Al Arabiya.
"It is important for us to be willing to talk to Iran, to express very clearly where our differences are, but (also) where there are potential avenues for progress," Obama said. "If countries like Iran are willing to unclench their fist, they will find an extended hand from us." The Bush administration had pushed for a new round of UN sanctions against Iran for refusing to suspend a uranium enrichment programme.
The United States, European Union and Western powers suspect Tehran is amassing the capability to produce nuclear weapons. Iran insists its nuclear ambitions are limited to the peaceful generation of electricity and refuses to freeze a program that it says is its sovereign right to have.
Obama, who took office on Tuesday, said he had begun to meet his campaign promises by naming former Senator George Mitchell as Middle East envoy. Mitchell arrived in Egypt on Tuesday on the first leg of a regional visit. "Sending George Mitchell to the Middle East is fulfilling my campaign promise that we're not going to wait until the end of my administration to deal with Palestinian and Israeli peace. We're going to start now," Obama said.
"MOMENT IS RIPE" He said his administration wanted to begin by listening and talking to those involved without prejudging their concerns. "We cannot tell either the Israelis or the Palestinians what is best for them," he said. "But I do believe that the moment is ripe for both sides to realise that the path that they are on is one that is not going to result in prosperity and security for their people. And that instead, it's time to return to the negotiating table."
Israeli Prime Minister Ehud Olmert said on Monday he was "optimistic" because Obama had assured him that he intended to maintain Washington's "traditional commitment" to Israel, a commitment the US president reiterated in his interview.
Obama also praised Saudi King Abdullah for the Saudi-sponsored peace initiative, which offers Arab peace to Israel in exchange for its withdrawal from Arab land occupied since 1967 and a just solution for Palestinian refugees.
"I might not agree with every aspect of the proposal, but it took great courage to put forward something that is as significant as that," Obama said. "I think that there are ideas across the region of how we might pursue peace."
Saudi Prince Turki al-Faisal warned Obama in an article published this month that US-Saudi ties were at risk unless Washington changed tack on the Israeli-Palestinian conflict.
Obama acknowledged that the United States had made mistakes but, noting that he had lived in Muslim countries and had Muslim relatives, said he would try to restore that relationship. "My job to the Muslim world is to communicate that the Americans are not your enemy. We sometimes make mistakes. We have not been perfect," he said.
"But ... America was not born as a colonial power, and ... the same respect and partnership that America had with the Muslim world as recently as 20 or 30 years ago, there's no reason why we can't restore that."
He urged Muslims to judge him by his actions, pointing to the decision to close the Guantanamo Bay detention centre, where detainees in the US war on terror are held. He said he also would begin to implement his pledge to draw down troops in Iraq. But while Arabs have high hopes that Obama will change US policies, analysts said he had yet to spell out how he would achieve a two-state solution and manage the Iraq withdrawal.
"We have to lower our expectations that he has a magic wand to solve all our problems," said analyst Mustafa Alani. "The Arab attitude is basically optimistic that Obama will turn a new page and his inaugural speech reached out to Muslims but the devil is in the detail."
Asked about the sharp verbal attacks on him by al Qaeda leaders behind the September 11, 2001 attacks on the United States, Obama said it showed "that their ideas are bankrupt".
"In my inauguration speech, I spoke about: You will be judged on what you've built, not what you've destroyed. And what they've been doing is destroying things," he said. "I think the Muslim world has recognised that that path is leading no place, except more death and destruction."