Food and oil prices are rising as tension in Cairo is soaring – time to get on board with the people‘s demands.

Add Barack Obama to the long list of statesmen who couldn’t solve the Riddle of the Sphinx. For a while last week it looked like a miracle was happening: The United States was on the verge of doing right and doing well at the same time. After stumbling initially, the administration openly warned the Egyptian army and government not to slaughter the protesters. It also started lining up behind the Egyptian people’s demands for a swift transition to a new, more democratic regime. Neo-con lions like Robert Kagan and Elliott Abrams bedded down with liberal internationalist lambs in a”Working Group on Egypt” that called for reforms and Mubarak’s exit, while John McCain and other Republicans offered bipartisan cover for Real Change in the world’s oldest civilization.

But by Saturday, February 5, the wheels started coming off. With oil prices threatening the anemic global recovery and commodity prices soaring, the President dialed up leaders of the Persian Gulf states for whom the aging Egyptian leader is Mummy Dearest. As the world watched in astonishment, Frank Wisner, a veteran US diplomat who now works with a major Washington law firm that represents major Egyptian business and government interests, calmly advised the Munich Security Conference that Mubarak should stay on for a while. The hapless State Department responded by being against it before the White House and other NATO leaders all came out for it.

Now with the whole world watching, Mubarak’s American (and Soviet – the Cold War is truly over) trained intelligence chief now presides over the “democratic transition” as Mubarak holds on.

It’s always dangerous if you lose your compass amid the desert sands. But for the White House to lose its moral compass now is potentially catastrophic. The President is already bent on one Mission Impossible in Afghanistan, a land that Alexander the Great couldn’t conquer. Now he’s trying again in a place that Napoleon couldn’t hold.

A foreign exchange crisis lies immediately ahead, as food prices keep rising. If the security police or the army turns Cairo’s streets and squares into the Valley of the Dead, the harm to both Egypt and U.S. interests will be incalculable. In the longer run, the confidence the US reposes in the army as a force for stability may also be misplaced. Vertical and horizontal tensions run deep within a fighting force that is now big business. Better supplement it while you can with a free press, an independent judiciary, a real parliament and an end to repression. In a word: democracy.

Thomas Ferguson is Senior Fellow at the Roosevelt Institute and Professor of Political Science at the University of Massachusetts, Boston. He is the author of many books and articles, including Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems.