The Bush Administration's failure to be consistently involved in helping Israel achieve peace with the Palestinians has been both wrong for our friendship with Israel, as well as badly damaging to our standing in the Arab world.

This quote is referring to the Bush Administration’s lack of involvement in peace negotiations between Israel and Palestine. It means that by not getting involved, the Bush Administration was disloyal to Israel and it also hurt the American people’s relationship with those in the Arab world. This situation made it harder for the U.S. to be seen as an honest, neutral mediator by both Israel and the Arabs.