Without a doubt, it was Iraq that ended his career at 10 Downing Street. The campaign against Saddam Hussein continues to dog him. It was Iraq that largely prevented him from becoming "the first president of the European Union." Nevertheless, Tony Blair does not apologize, does not express regrets and does not attempt to justify himself.

"It's really important to understand that Saddam was actually a threat to the region," he resolutely says in an interview with Haaretz, during his most recent visit to Israel as the Quartet's special envoy. "And quite apart from anything else you may remember, he used to pay the families of [the Palestinian] suicide bombers."

When asked whether the wave of global terror, with its roots in countries like Afghanistan, Somalia and Yemen, proves it was a mistake to focus on a single dictator, he replies: "Personally I think we will defeat this terrorism when we understand it is one battle, one struggle. This is a global movement with an ideology."

Soon, Blair will appear as the primary witness before a government commission of inquiry, set up in London, in response to public pressure, in order to answer the critical question: How was Britain dragged into a war in 2003 despite having evidence that Iraq no longer possessed weapons of mass destruction? Why was this information concealed, and moreover, who is responsible for the fact that the public was given a distorted, even specious account, according to which Iraq had the capacity to deploy weapons of mass destruction within 45 minutes?

These questions are tearing apart the Labor Party, and some members and supporters fear that Blair's testimony - whose presumed gist may be discerned in this interview - will quash the party's hopes of maintaining its hold on power when elections are held this spring.

"People sometimes say to me, no, it's not really Iraq, it's Afghanistan," Blair says. "Someone else will say, no it's Pakistan, and someone else will say it's Iraq, and someone else will say it's Yemen. But actually it's all of these because in different ways, they represent different challenges that are unified by one single movement with a single ideology. And this is going to be resolved, in my view, over a long period of time. But what is important is that wherever it is fighting us, we're prepared to fight back. And actually if you take the situation, for example, in Iraq, what began as a fight to remove Saddam was over in two months but then what occupied us for the next six years was fighting external elements - Al-Qaida on one hand, Iranian-backed militias on the other, which are the same elements we're fighting everywhere. Now, ultimately we've got to understand that, unfortunately, we can't say: 'Look, let's concentrate it here, but not here, and here, and here,' because that's not the way this thing's working."

Blair's equation doesn't end there. "Actually there is a unifying theme, in my view, between what's happened in countries like our own country with terrorist activity, and what's happening in places like Yemen or Afghanistan or Somalia or, I'm afraid, other countries. The key to understanding this is [that] this is a global movement with a global ideology and it is one struggle. It's one struggle with many different arenas."

Blair rejects accusations that Britain is not showing the same resolve as France, which is leading the international struggle against Iran's procurement of nuclear arms. He praises the "clear determination" of Prime Minister Gordon Brown and other Europeans in the face of the regime of the ayatollahs. And while Defense Minister Ehud Barak openly criticized the West last week, saying that it "is not lending sufficient support" to dissident demonstrators in Iran, Blair offers a complex, cautious response.

"People are trying to feel their way toward supporting people who are trying to stand up for freedom and democracy and the right to speak their mind, and to do that in such a way that it doesn't give the regime even more excuses to start cracking down on people."

Peace from the ground

For the past two and a half years, Blair has been the Quartet's Middle East envoy. During this same period, he has repeated the mantra that peace has to be built from the ground up, from the foundations. First you have to build Palestinian civil society and the institutions of state, and only then can you discuss the core issues and disputes over refugees, right of return and Jerusalem.

But when Blair is asked about Israeli Foreign Minister Avigdor Lieberman - who met with Blair this week, and declared that an American draft peace proposal, reported in the press but not formally presented, was unrealistic ("It will not be possible to reach an arrangement on final borders within nine months, nor a complete final status arrangement within two years") - Blair says, "I've learned over time that you can listen to these statements but in a sense just put them to one side and carry on working for peace."

The concept of economic peace and "bottom-up" activity is important, but it is not enough, Blair admits. At the end of the day, politics is key. Economic and political peace complement one another. One cannot exist without the other.

In reference to Lieberman, Blair says, "I understand what he's saying. If he's saying we're not going to get peace tomorrow, no, of course we're not. But I think there is a serious prospect of getting a negotiation back together. If that happens, that's a big plus, a big positive, and the work that we're doing specifically can help improve that."

In this context, he cites his own contribution to the removal of dozens of checkpoints in the territories. "If you just go back two years, people said to me, you know, the Israelis will never lift any of these checkpoints; they will never give you permission for any of this economic stuff; the Palestinians don't want to do it, it's hopeless. Two years on, when I drive around in Jenin and Ramallah - I'll be going to Jericho tomorrow and I've been recently in Nablus and elsewhere, Hebron - yes there are still major challenges, of course there are, but you can also see economic activity happening. And all I'm saying to people is: 'Never lose hope.'"

Blair is determined not to stop at this. "Now we've got to take it to a whole further level," he says.

"When in another 100 years they write a book about the history of the Middle East, Blair's name will proudly appear in it," says a high-ranking Israeli Foreign Ministry official who has tracked the activities of the Quartet emissary. "He had humble objectives," says the official. "He chose to deal with the micro, in areas that no one could imagine an international superstar of his caliber choosing to address. But he carried out all his missions. He took over projects that were going nowhere for years, accumulating dust [the sewage system in Gaza, tourism in Bethlehem, establishment of a second Palestinian cell-phone operator, among other things], and resuscitated them."

Yet not everyone shares that opinion. Catherine Ashton, for example, the new European foreign affairs chief, whom Blair once appointed as an EU commissioner, came out against her former patron. In her premiere appearance in the European parliament two weeks ago, Ashton denounced continued settlement activity, house evictions in East Jerusalem and the separation fence. "The Quartet must demonstrate that it is worth the money, that it is capable of being reinvigorated," she declared, in a statement widely perceived as an attack.

Blair chose to interpret Ashton's words as frustration over the stalled political process. The criticism, he said, was not directed at him, but at the Quartet, and the United States at its head; at the fact that the international body "has not had significant impact" in the region. At the "politics" and not at the "economy."

"I think that what she's saying is she would like the Quartet to have a bigger role, which I totally agree with," he said.

Asked specifically about disappointment in Europe over the Obama administration and its activity in the region, he praises the work of Secretary of State Hillary Clinton, envoy George Mitchell (with whom Blair worked to achieve a peace accord in Northern Ireland), and National Security Advisor James Jones. As for Barack Obama and the peace process, he says, "All I say to people on President Obama is he's just a year into his administration, so let's give the guy a chance. Let's hope that over this next period of weeks we can get this thing [the peace process] together."

When asked if he sincerely believes the declarations by Prime Minister Benjamin Netanyahu, including his readiness to advance an American peace plan, Blair answers, "My view has always been that the prime minister is prepared to make peace, provided it's on terms that guarantee Israel's security and is fair for Israelis. What I always say to people on the outside when I'm trying to explain this whole issue to them is, first of all, look at a map, you know, look at a map of the region, and then see what a small bit of land it is, Israel and the Palestinian territory. So if you can't deal with the on-the-ground worry of the Israelis about security, you can't make peace."

Is the continued blockade of Gaza the way to achieve this secure peace, and is this even feasible without including Hamas, with which Israel is in any case holding indirect talks?

No and yes, he replies. Blair believes the blockade is boomeranging, in that it encourages an illegal economy as well as goods and weapons imports through the underground tunnels. However, he opposes including Hamas. Unlike the IRA in Northern Ireland, Hamas refuses to abandon its violent ways, he says. Therefore, we have to make do with the indirect talks through the Egyptians.

And aren't we taking a risk, given the increasing radicalization of Gaza, including the growing Al-Qaida influence?

"There is always that fear, but on the other hand the best way of defeating that possibility is not necessarily to kneel to their demands, I'm afraid," says Blair.

Given the dead end, we are hearing more and more people talking about "three states for two peoples." What do you think about that?

"I just don't think that would work," says Blair. "You know, I talk to people in Gaza a lot of the time. There are large numbers of people in Gaza who disagree with Hamas. I had a video conference this morning with the Gazan business community. They don't support the idea of Gaza being run by Hamas, and they don't support the idea of Gaza being separated from the West Bank. So I don't think that is ever going to be a realistic solution."

Blair prefers not to comment on the Goldstone Report ("I've got enough on my plate to worry about, trying to do my own things"), yet when asked to explain why British public opinion is now considered the most anti-Israel in all of Europe, Blair falls back on the terrorism equation.

"Look, there's criticism everywhere, I think, but that's partly because people don't understand how difficult this situation is when you come under attack, your civilians come under attack, and you're a democratic government and you're expected to respond. I mean, we face this continually. We face it now, actually, in places like Afghanistan."

He praises the British political leadership, which condemned the arrest warrant issued last month against Tzipi Livni, and adds: "I think the best way of resolving all that criticism is to move on to the positive agenda for the future" - the political and economic peace process.

"Labor fears Blair will be a liability," screamed a headline of the London Times this week, regarding Blair's expected testimony on the Iraq war. History will judge - as the Israeli Foreign Ministry official said - if Blair's name will be inscribed in the region's history book; if he will go down as one of the greatest leaders of Britain in the modern era (his wife Cherie was recently quoted as saying that he would go down in history, "up there with Churchill"); or if he will be remembered, conversely, as "George Bush's poodle," who led his country into a destructive dead-end war.