Former Palestinian Authority chairman Yasser Arafat's decision not to adopt the peace initiative offered at Camp David five years ago was a "colossal historical blunder," said visiting former U.S. president Bill Clinton has said.

Clinton presented his analysis of the current situation in the Middle East in his keynote address at the Saban Forum on Saturday night. He urged Israel's leadership to refrain from taking unilateral steps in dealings with the Palestinians and to choose the course of peace.

"It's been unbelievably 10 years since that dark day when we lost Yitzhak Rabin, and what I still believe is our best chance for a comprehensive and lasting peace," Clinton said. "Not a week has gone by in those 10 years when I have not thought of his family, his allies and Israel's struggle."

Clinton demonstrated extensive knowledge of Israel's current political situation, and linked Shimon Peres' defeat in last week's Labor Party primaries to the trouble facing Prime Minister Ariel Sharon from within the Likud.

"In a classic example of the old adage that no good deed will go unpunished, Prime Minister Sharon's astonishingly courageous withdrawal from Gaza... has placed his governance in question, and he has lost his partner, Shimon Peres, one of the most brilliant leaders of this or any age."

Clinton explained Peres' defeat in the Labor primaries by stating that the party "wants to pursue an economic and social agenda more vigorously... and has chosen a leader who, quite admirably in his lifetime, tried to advance the welfare of Israel's working families, and thankfully has promised to pursue and support reasonable efforts for peace.

"No Israeli artist in history could have written a political satire with as many twists and turns, ironies and deadends, highs and lows, heartbreak and hilarity as the present reality in the last few years," he continued.

Clinton praised Sharon for the disengagement plan, but urged him to pursue a path of dialogue rather than unilateral measures. "As a strategy for the long term, the idea that Israel can proceed unilaterally forever, without a cooperative relationship with a successful Palestinian state, it seems to me highly premature to make that concession," he said.