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On Wednesday morning, the day after dozens of leaders from around the world came to Annapolis to express support for a renewed dialogue between Israel and the Palestinian Authority (PA), Quartet envoy Tony Blair was preparing to go to the White House for the ceremony marking the launching of actual negotiations, which was being hosted by President George Bush. We met him at the residence of the British ambassador to Washington, where he lodged during his stay in the U.S. capital.

Blair is even more optimistic than usual. Five months after assuming the post of envoy, he says he's starting to feel that a change is under way and that things are progressing in a different, more positive, direction. A central change which he says he notes is in the approach of the Israeli defense establishment. According to Blair, Defense Minister Ehud Barak, Chief of Staff Gabi Ashkenazi, Shin Bet security service head Yuval Diskin and many others with whom he has met are becoming more open-minded with regard to the possibility of progress being achieved vis-a-vis the Palestinians. They are still cautious, he says, but are open to persuasion.

Blair no longer believes that "land for peace," in and of itself, is sufficient. He made this point emphatically in a speech he delivered a few weeks ago at the Saban Forum in Jerusalem. What is no less important, in his view, is the character of the Palestinian state. He wants to see a state with stable institutions that are properly run, particularly from the security point of view. He constantly reiterates that in talks with senior PA officials, and baldly warns them: "There won't be a Palestinian state unless it is coherently governed and run, and anyone who tells you different is misleading you."

Blair is very encouraged by the broad Arab representation at Annapolis. He views this as reflecting a genuine change in the regional situation. He is a great believer in a division between extremists and moderates, and in the coalition that is emerging against Iran. At the same time, Blair understands why the Arabs, and particularly the Saudis, are cautious: "They want to see things moving," he says.

There is one point about which Blair is a little less diplomatic with regard to Israel: the evacuation of the illegal settler outposts. This, he says, is a serious problem that must be resolved. If not, it will adversely affect the political negotiations. The two cannot be separated, he says. Negotiations without progress on the ground simply will not work.

In the final years of his tenure as British premier, Blair faced a bitter political rival in his own party in the form of his chancellor of the exchequer, Gordon Brown, who is today prime minister. The analogy to the present political reality in Israel is clear, and Blair does not evade the issue, but accepts the challenge and analyzes the situation. "How can it work? Well, it can, actually." True, there are personal ambitions, and for some politicians they are the main motivation. But others are in politics "because they want to do the right thing," and Ehud Barak is one of them. Blair is spending a lot of time with Barak, as he is with Palestinian Prime Minister Fayyad. Their "channel" was widely recognized at Annapolis as critical to the success of the reinvigorated peace process.

On the line

As Blair sees it, the importance of the Annapolis summit and its central message lay in its capacity to renew determination on all sides to reach an agreement. All participants, and especially the central players, "put their credibility on the line," he says.

Now is when the hard work must begin, but if one looks back, six months ago people thought about the peace process and said, "there is no such thing," and that no realistic prospect existed of making progress. Although Blair is careful not to overstate what happened the day before, at Annapolis, he stresses the sense of renewed determination and the fact that people showed up and declared their desire to try.

Did the Arab leaders who came to Annapolis put their credibility on the line? The Saudis, for example? Blair responds that the speech made by the Saudi foreign minister was positive. The Saudis want to determine their approach only after they see which way things are going. "They reserve judgment," he says, adding caustically, "which a lot of people didn't do before Annapolis."

The backdrop to the conference, he believes, was first and foremost the significant change in the Arab world since the Saudi peace initiative was first promulgated in 2002. In the past, Blair agrees, the Arab world was an inhibiting factor in Israeli-Palestinian peacemaking. But the Saudis' initiative, recently reaffirmed by the Arab League, was an attempt to change that approach. In his view, part of the strategic change in the region, with the emphasis on what is happening in Iran, is that the Arab world now truly wants an agreement, albeit not on all terms. They do not want to remain preoccupied with this issue and would prefer to see it resolved by means of the two-state formula. Blair understands Israel's concern that some in the international community will say that, in the context of the broad confrontation with Iran and Islamic fundamentalism, it is the Israelis who must compromise on their interests. For his part, he believes the Arabs know that the conflict will not be resolved in conditions that are unacceptable to Israel.

In an interview with Haaretz last year, while still prime minister, Blair suggested that while the leadership in Europe understands the threat of extremist Islam, the public does not. Now, he believes, however, that people have begun to see that there is one side that is extremist and another side that is seeking a solution and wants a future in which people from different creeds and cultures coexist peacefully. By his analysis, it comes down to a question that relates to modernization and the response to globalization, over which there is a basic division between the two camps. In this context, the Israeli-Palestinian issue is of critical importance. If the conflict can really be solved, it would serve as a crushing blow to extremism everywhere. But the conflict, he notes, must be resolved in a manner that is just and fair to both sides. Finding a basis of this kind for the solution "will liberate a lot of positive energy" and eradicate a great deal of negative energy.

Barak 'open to persuasion'

There is significant opposition within the Israeli defense establishment to any change in the status quo, articulated both by Barak and by the army brass. But Blair says it was his impression, from his meetings with the defense minister and his colleagues, that they are "open to persuasion." That does not mean they have been persuaded, but, he emphasizes, a few month ago their approach was: "Fine, that may be a nice idea, but we live in the real world, so forget it."

What Blair has tried to explain to the Arab world and to the Palestinians is that they must understand how the events in the Gaza Strip have affected the Israeli public and leadership. One can argue about whether a unilateral move was good or bad, but if one looks at it from the vantage point of Israelis, they left Gaza, evacuated 7,000 settlers and ended up with a Hamas takeover. Much persuasion will be needed to get the Israelis to agree to consider similar moves in the West Bank.

Blair believes that anyone who wants to reach a solution has to understand that just as the Palestinians in the West Bank and Gaza are suffering, so too the Israelis' security concerns are genuinely and deeply felt. He is convinced that no solution will be forthcoming until the sides recognize both of these realities. Blair relates that he always tells people that diplomatic negotiations are important, but that the discussions are not only about territory; the problem is not only land, but also the profile of the state: how it is to be governed, its ability to be a stable neighbor, effectively governed. There are three parallel tracks that have to be engaged simultaneously, otherwise things will not move ahead: political negotiations, creation of a Palestinian capacity for governing, and the taking of steps on the ground. If there is progress in all three areas, it will be possible to find a solution. But anyone who thinks that negotiations are a substitute for creating capabilities, or, similarly, that actions on the ground are of no importance, will never reach a solution. All three are crucial. Accordingly, the solution to the problem is for the capabilities of the PA to be developed gradually, enabling the Palestinians to assume security responsibility and Israel to reduce its military presence.

Blair believes that the Israeli security officials he met are receptive to this. They may not be convinced, but they are open to listening, as long as it is clear that the Palestinians will be ready to attain the required capabilities and take control. That process must not be ephemeral or episodic. It must entail a change of approach by the Palestinians. Blair believes that Palestinian Prime Minister Salam Fayyad is definitely ready for this, and that the Israelis will give it a chance.

However, Blair is not happy with Israel's performance on the ground. In his view, as important as it is for the Palestinians to demonstrate commitment, it is no less essential for the Israelis to do the same. This is the key to the entire matter, particularly with regard to the illegal outposts. Israel must recognize that this is a serious problem. The practical situation cannot be divorced from the diplomatic talks. If one is discussing territory, and at the same time an illegal outpost is established which entails a seizure of land inside that territory, the Palestinians ask themselves what is going on.

Blair notes that the conventional wisdom heretofore has been that, if the political confrontation finds its resolution, the situation on the ground will change. He thinks this is correct up to a point, but believes that the reverse is also true. Asked for his assessment of the seriousness of the Israeli government's declarations over the past three years concerning evacuation of outposts, Blair emphasizes that if positive and renewed momentum exists for a peace process, and the Palestinians can prove that they are capable of implementing their commitments, people will then understand that there is no point to establishing more outposts, because in the end they will be dismantled.

Precisely because Prime Minister Ehud Olmert and Barak are loath to get into a confrontation with the right, Blair thinks that things have to begin to move. There is no point saying: There is no political process - now let's dismantle illegal outposts. But if there is palpable change on the Palestinian side, then it becomes that much easier for the Israeli leadership to explain why the outposts are an impediment. In Blair's view, the Palestinians will be able to demonstrate their capability by arresting those who who need to be arrested, throwing them in jail and not releasing them. What Fayyad has done in Nablus, he says, is very interesting, and his impression is that defense officials in Israel appreciate the fact that genuine attempts are being made.

At the Paris economic conference scheduled for December 17, the Quartet will present a major reform plan to the PA, a cardinal component of which will be security. The Palestinians have already agreed to a number of steps that Blair believes will be of great significance for Israel. He declines to elaborate.

Prime Minister Fayyad and President Abbas are determined to attain the security capability necessary for them to become a partner Israel can rely on. Blair agrees that the Palestinians truly need to demonstrate motivation, and says that part of his mission is to tell the Palestinians, "Understand this: You will not get this state unless you show this commitment." If they want a state, it will have to have strong security forces, with a proper chain of command and one authority. If they want a state, that is what they have to achieve. Anyone who tells them that they can achieve a state without doing this "is spinning them a line."

If he were in Israel's place, Blair says, he would not conduct negotiations on the establishment of a Palestinian state unless he were certain that it would be properly run. He agrees that Hamas is a major problem, but he also believes that if progress is made on all three of the necessary fronts, a point will come when the Palestinian leadership will be able to make the population in Gaza a very clear offer.

Hamas falling

Blair notes an interesting development of the past few months. A half year ago, he says, it was taken for granted in Israel and Europe that in another few years, they would be talking to Hamas anyway. So, went the reasoning, why not recognize it now? It was clear that if elections were held the next morning, Hamas would win for sure. Today the situation is very different. Now, "if you would have to put money on it," the feeling is that Hamas would not win. The conviction that there is no way for the Palestinians other than extremism is no longer viable. Blair agrees that it's still not clear just how Hamas will be removed from the scene. It is, after all, an armed organization that will not relinquish power voluntarily, but Blair suggests that it no longer enjoys popular support. Consequently, he thinks, if the Palestinians are given a realistic horizon for a two-state solution, they will buy it.

The envoy has also thought about the growing support in Israel for a military operation in Gaza, one intended to expel Hamas from the Strip and place rule in the hands of Abu Mazen or an international force. There are ways to deal with the issue of Hamas, says Blair, but this is not the right time to talk about it. Nor is this an opportune moment to discuss the possibility of an international force for Gaza.

On the possibility of incorporating Hamas into the political process, Blair thinks that people are "talking a lot of nonsense" when they suggest that that scenario is analogous to the one in Northern Ireland. The British ended with a situation in which Sinn Fein was part of the process, but only after they fulfilled a number of basic conditions. He does not think that the problem is Hamas or not Hamas. It is a matter of principle. If they want a two-state solution, that is wonderful, as long as they are ready to reach it by nonviolent means. Those are the two principles that Hamas must accepted if it has any hope of becoming part of the political process.

Regarding the vagaries of Israeli coalition politics, Blair says diplomatically that there is no political system that works well. Everyone always thinks that the political system he is part of is the worst, but when you see another system, you discover that it is pretty much the same. People tell him that Olmert is weak politically and has coalition constraints and that Abbas is weak because of the many Palestinian factions. But Blair takes the opposite view. "If you can reinvigorate the peace process, both [leaders] become strong." The Kadima party's whole raison d'etre was to promote "a hard-headed" way toward peace. With a viable peace process under way, its message becomes relevant again.

By the same token, Israel should take greater account of the importance of the PA's changing political heritage. Today there is a completely new leadership. One of the things that is going on beneath the surface, even if they don't play it up, is that the Palestinians are trying to relinquish the mentality of a resistance movement for one of a government that is managed by political parties. Asked to consider a "hypothetical" situation in which a prime minister is under constant pressure from his No. 2, who wants to accelerate his political demise, Blair laughs, but doesn't dodge the question. "How can it work? Well it can, actually." Politics, he says, is people by a few saints, others engaged in "skullduggery," and others still for whom the purpose is "to do the right thing." Ehud Barak, he says, is a politician of this latter type. Despite their political rivalry, men like Olmert and the defense minister can work together for a cause they both espouse. Barak was not out to sabotage the peace effort. He was affected by the "trauma" of the Camp David-Taba experience seven years ago, when peace talks seemed close to success, but eventually blew apart. Blair says he was moved that Barak made a point of referring to that experience in his speech to the Annapolis conference.

When asked for his appraisal of President Bush's commitment to the process, in light of the feeling that the current peace offensive is largely the project of Secretary of State Condoleezza Rice, Blair replies that from his talks with Bush, he can testify that the president is giving Rice his full backing. Without it, the Annapolis conference would not have taken place. If we succeed in moving toward a solution, that will set the 21st century in the right direction.