Looking at the downfall of the dictatorship in Tunisia, and the exploding protests against the Mubarak regime in Egypt, it’s obviously hard for Western/Northern commentators, let alone Australians, to say much about what is happening now and will happen. In part that reflects the cultural and political distances involved, and in part the opaqueness of political and cultural life that is inevitably associated with dictatorship and censorship. But it seems clear that some basic premises of US policy towards the region have been rendered invalid.
Most obviously, the Mubarak regime is finished in its role as the key US ally in the Arab world. If the regime survives at all, it will be through brutal repression which makes it clear once and for all that the dictatorship is held in place solely by military force. That in turn will make the provision of substantial economic or military aid politically untenable (the Republicans were already keen to cut aid to Egypt). But without continuing aid, there is little reason for any Egyptian government to support US foreign policy in the region.
The bigger casualty is the ‘Arab exception’: the idea that the concept of democracy is not really applicable in Arab countries and that foreign policy therefore amounts to a choice of which dictator to support. 
The autonomous emergence of democratic governments in Tunisia and Egypt would fatally undermine this exception, and leave the remaining dictatorships and monarchies in the region as anomalies, for which the question about the end of the regime would be “when?” rather than “if?”. A traditional foreign policy based on the presumed continuance of the status quo would become highly problematic, with high potential costs when the crash came
More generally, the whole approach of US foreign policy towards the “Middle East” rests on assumptions that will be hard to sustain when the existing dictatorships are gone. Most fundamentally, how can the idea that the US has “strategic interests” in the region be justified? In some sense, this idea rests on the assumption that the existing governments are less than legitimate, and can be dealt with in terms of traditional Great Power politics, with spheres of influence, secret deals and so on. Even weak democratic states display much more effective resistance to external interference in their domestic affairs than do typical autocratic regimes.
The point applies most obviously in relation to oil. The idea that the US can legitimately use its military power to ensure continued access to oil resources rests, in large measure, on the (not entirely unfounded) assumption that those controlling the resources are a bunch of sheikhs and military adventurers who happened to be in the right place, with guns, at the right time. Without the Arab exception, the idea of oil as a special case, not subject to the ordinary assumption that resources are the property of the people in whose country they are found, will also be hard to sustain.
Finally, of course, there is the Israel-Palestine dispute. The current crisis may well have a direct impact here. But the indirect impact of the emergence of democratic governments in the Arab world (if this happens) will be even greater. Without the special status that comes from being the only real democracy in a region full of autocracies, the idea that Israel can continue indefinitely to rule over subject peoples and expropriate their land will be even harder to sustain, as will any attempt by the US to back that claim. On the other hand, you don’t have to believe strong versions of democratic peace to conclude that the long-term prospects for a just and sustainable peace would be enhanced by the emergence of democracy. Whether this is right or wrong, the end of the Arab exception would surely undermine the idea that the US has some special role to play in all this.
Finally, the EU is much nearer to the action than is the US, and I think it’s clear that all kinds of debates within the EU (over migration, the admission of Turkey, further integration with the Mediterranean and so on) have been colored by the Arab exception in one way or another.
Those are some strong claims, and not fully worked out, so feel free to set me straight.
fn1. There were a lot of other exceptions until recently, applying to South Americans, non-Arab Muslims, Asians in general (this one much promoted by advocates of ‘Asian values’ like Lee Kuan Yew). And before that, the exceptions were the rule, and democracy was seen as something specifically Anglo or Western European).
fn 2. There was a shadow debate on this topic under the Bush Administration, which issued a lot of pro-democracy rhetoric as part of its case for . In practice, however, the Bushies continued to rely on friendly dictatorships in the Arab world (and beyond, in Pakistan and the former Soviet Union) as leading allies in the Global War on Terror. For these allies, token gestures towards democracy were encouraged, provided there was no possibility that they would actually give rise to governments responsive to popular opinion. The reasoning behind the Iraq war embodied yet another version of the exception, namely the idea that democracy would never arise from the ‘Arab street’. Instead, democracy had to be exported by armed US missionaries, with the happy side-effect of ensuring that the grateful beneficiaries would elect a pro-US government.
fn3. Iran being the paradigm case. That said, Iran is something of an outlier. In many places where US-backed dictators have been overthrown, the subsequent level of anti-American sentiment has been surprisingly modest.