This has not been the best of weeks for the Friends of Tony Blair.

Just when nostalgia for New Labour was creeping back into fashion, reality has planted another bruise on the reputation of the former Prime Minister. His role as envoy to the Middle East, it transpires, is no longer "viable".

Contrary to myth, the job description had nothing to do with forging peace between Israel and the Palestinians. "The Quartet" (the United States, Russia, the European Union, and the United Nations) made sure of that. Mr Blair's brief was economic development. How that was to be accomplished amid Israeli blockades and armoured incursions was never explained.

Now the former Prime Minister reportedly intends to "step back" from his role. If taken seriously, the phrase might count as his real diplomatic triumph. According to a former US official quoted by the Financial Times at the weekend, Mr Blair enjoyed "no credibility" when he attempted to become involved in the vestigial peace process. All sides "rolled their eyes" at the mention of his name. In truth, he is being "eased out" as an ineffective embarrassment.

The only real surprise is that it has taken eight years for someone to state the obvious. First, there was the fact that Mr Blair was not trusted in the slightest by the Palestinians. The former American official, said to be have been involved in various peace efforts, was withering on that score: "In the end the Israelis didn't mind him, because he was heavily tilted towards them, but the Palestinians couldn't stand him ... "

Then there was Mr Blair's habit of demanding western intervention in the Middle East to thwart this or that regime, or to stifle Islamist threats. It showed a curious understanding of what's meant by peace. It showed no understanding whatever of the effects of his own catastrophic Iraq war in 2003. History, to which he has remained resolutely oblivious, made the envoy the agent of his inevitable failures.

Finally, there was the question Mr Blair likes to avoid: what was in it for Tony? To what extent, if at all, did he avoid combining his lucrative commercial pursuits with his job for the Quartet? The latter position carried no salary, but it put him at the heart of the Middle East business action. It also laid him open to charges, never answered, of repeated conflicts of interest.

The former Prime Minister insists he has not made nearly as much money since leaving Downing Street as people believe. Last December, he said he was "only" worth around £10 million. Given that he has spent £10.2m since 2004 on his country pile, his Hyde Park town house, and an adjoining mews property, this is obviously absurd. Property price inflation alone would have put him well on the road to £20m.

Then there are those business interests. At the end of last year, two of Mr Blair's known companies (his is a secretive operation) had £13m in the bank. When he signed on as an adviser for JP Morgan in 2008 the fee for a part-time role was put at £2m a year. In 2009, he struck a four-year "consultancy" deal with Kuwait valued at £27m. Advice from Tony Blair Associates to the disreputable regime in Kazakhstan is said to be worth £7m annually.

There is, it is claimed, plenty more, enough to allow the envoy to travel by chartered private jet. The governments of Mongolia and Peru benefit from Mr Blair's wisdom, as does an Abu Dhabi investment fund. Last summer he signed up to advise the Egyptian dictatorship of Abdel Fattah el-Sisi on "economic reform". He has contracts with a Saudi oil company and a Swiss insurance firm. If that work dries up, engagements on the international speaking circuit can be worth up to £250,000 a time.

Still, wasn't New Labour's embrace of business one of its most distinctive features? Mr Blair's admirers still recall the fact, though they tend to overlook the behaviour of the bankers during his years in office. What seems obvious, nevertheless, is that at last the contrast between his pursuit of business opportunities and his work for the Quartet, such as it was, has become just too glaring.

As an envoy he helped to secure mobile phone frequencies from the Israelis for the benefit of a firm controlled by the Qatari telecoms giant QTEL. That concern is a big client of JP Morgan. The former Prime Minister also promoted a $6 billion gas field development off the Gaza coast. The British Gas Group, with operating rights for the field, is also a significant JP Morgan client. In the first case, Mr Blair said he had not discussed the deal with the bank. In the second, the financiers said any suggestion of a conflict of interest was "baseless".

It's a matter of taste whether you find all this disgusting or just an example of the energetic entrepreneurial spirit Mr Blair espoused while in office. You might be distressed to see a former prime minister making money hand over fist while failing utterly as anyone's envoy. You might, on the other hand, echo the Mr Blair who last summer warned his party against taxing the rich. Great wealth, in his book, is just "the way the world goes".

But would you propose this figure as an example to his successors, at home or abroad? In Jim Murphy, after all, Scottish Labour has a leader whose loyalty to Mr Blair is well documented. In the Middle East, only some in Israel will mourn the loss of an envoy who caused so few difficulties for Benjamin Netanyahu. In boardrooms around the planet, meanwhile, the adviser for hire will continue to function as the ultimate corporate status symbol.

There is Iraq, of course. War, slaughter, incompetence, their murderous after-effects and the systematic deceits that made it all possible: much to the irritation of Mr Blair and his admirers, "the issue" just won't go away. Taken all together, Labour's "most successful Prime Minister ever" is quite the walking metaphor.

Some, in his party and beyond, still miss him. Those who hanker for the old "third way" and antique "reforms" still keep the faith, still believe that - give or take the odd Middle East abattoir or piece of grasping vulgarity - another touch of Blairism is just what Britain and Labour need. Donations for the party are being hustled in the old style. The lost leader himself has put up £1000 a head for 106 candidates in tough election contests.

A couple have rebelled. Others, while knowing what opponents will make of it, have bitten their tongues, followed orders, and accepted the money. Like the rest of Labour, they are prisoners of Mr Blair's legacy and all that he has come to symbolise. For every inch of progress - the minimum wage, devolution, NHS investment, an assault on poverty - there was a step back, a deal cut, a lousy war launched, the fetishising of money and markets that gave us the bankers' crash.

The test is simple enough. Those who praise the example of this former prime minister also require some careful scrutiny.