The killing of the US ambassador to Libya, Chris Stevens, and three other embassy staff, will send shock waves through US-Arab relations. It is likely to have effects far beyond the specific Libyan context and place pressure on the Obama administration in the middle of its re-election campaign.
It is no secret that Libya has gone through a period of great instability since the fall of the Qaddafi regime last year. The new government and armed forces have yet to succeed in disarming militants or re-establishing their authority throughout the country.
In the recent past, however, this insecurity did not result in a total breakdown of order. Indeed, Libya has managed to hold elections and is moving forward with its transition to democratic rule.Regardless, Libya - like other Arab countries grappling with instability - has seen radicalised Salafi and jihadi elements gain traction. They had a strong showing in recent elections, and some have managed to form militias capable of posing a threat to domestic foes or, in this case, a foreign embassy.
The security threat posed by such radicalised militias comes as no surprise to Libyans, and a process is already underway to rebuild the national army and disarm irregular militants, whose numbers currently stand in the tens of thousands. It is clear, however, that such an undertaking will probably take years to complete.
It is important to note that Salafi Islamists represent a minority in the Arab world. Many have joined the transition process, either as rebels or as participants in electoral - and ultimately democratic - politics. Incidents like the reaction to the film whose anti-Muslim sentiments may have sparked the attack on the US Embassy in Benghazi -reminiscent of the Danish cartoon controversy in 2005 - enable these radicalised elements of Arab society to project power and influence far beyond their numbers.
In Libya, the United States was generally viewed favourably by the rebels thanks to its role in the Nato no-fly zone and the removal of the hated Qaddafi regime. The Libyan government has excellent relations with the United States, other western and eastern powers, as well as countries in its neighbourhood. No doubt it deeply regrets the security breach that resulted in Tuesday's tragedy and will do its best to tighten security and guard against similar events in the future.
In the United States, the deaths will reverberate in the loud echo chamber of the US presidential election campaign. The fact that the incident occurred on the anniversary of September 11 only serves to make matters much worse.
There is little doubt that the crisis and the Obama administration's handling of it will be election issues. So far, the reactions of Secretary of State Hillary Clinton and President Barack Obama reflect the administration's general approach of moderation. They have studiously avoided any inflammatory statements or rhetoric that could cause the situation to get out of hand.
But the radical right wing which currently dominates the Republican Party, and which includes many neo-conservatives from the days of George W Bush's administration, will characterise any approach taken by Mr Obama as too weak and conciliatory. And they will likely use this incident to characterise the rising Islamist parties in the Arab world - from both the Muslim Brotherhood and Salafist groups - as dangerous potential enemies of the United States.
Indeed, if the Republican candidate Mitt Romney ends up winning the presidency, this incident could end up shaping much of his approach to Islamist groups, which continue to win elections and join parliamentary and governing coalitions across the Arab world.
In this context, it is important for the United States to engage these governments, encourage moderation and hold them to standards of democratic practice, pluralism and human rights. At the same time, however, the United States should strive to prevent cultural or ideological currents at home from generating patterns of outright hostility and animosity against US policy and involvement in the region.
It is a difficult balance to strike, but one that is indispensable to successful US diplomacy in the "new" Arab world.
Governments both in the Arab world and the United States need to work quickly to prevent this crisis from escalating. Eleven years ago, Osama bin Laden succeeded in setting the course of western-Muslim relations since. Let us hope that the militants of Benghazi - who represent only a minority of Libyans - do not end up dictating the course of western-Muslim relations for years to come.