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On the eve of Israel's 60th Independence Day, President Shimon Peres cites the country's achievements but he is also aware of the public's sense of cautious joy, and how that feeling exists despite the government, not because of it.

"So what?" he says in an interview this week at the President's Residence. "It's not terrible that there is no rejoicing at the government. Governments all over the world are losing their strength. Besides, the Jews gave the world dissatisfaction. Celebration is not a Jewish thing. Still, I'm optimistic, though I'm not satisfied."

Such an expression uses the plays on words Peres enjoys so much, but it does not mask the deep change in his rhetoric and of his world view. The past decade has handed him some disappointments.

"Although in '98 everything seemed dark because of Rabin's murder, I believed we could still move the peace process ahead more quickly. I did not think we'd have so many problems. I believed the separation between the West Bank and Gaza would make things easier, not harder. I did not imagine that we would leave Gaza and they would fire Qassams from there; I did not imagine that Hamas would show so strongly in the elections.

This admission of disappointment, though not of despair, is not the only change in the man. He never used words like "revenge" or "destruction" before in a national sense. But he did use them in his speeches in Poland marking 65 years since the Warsaw Ghetto uprising. He described Israel's success after the Holocaust as "revenge," and the two intifadas as attempts to destroy Israel. It might be assumed that the rhetoric stemmed from the fact that this was Peres' first visit to Poland as president. However, Peres said, "It's not because I am president, it's because of Ahmadinejad," the president told Haaretz. "I identify a phenomenon similar to Hitler, and the world is once again indifferent. I can't say for sure he would behave like Hitler, but the world is taking him lightly. Not only we are isolated. The world has changed. We have become both more global and more individualistic."

If you had spoken like this in the past, you might still be prime minister.

"That could be, but I'm not sure it would be a good thing if I were prime minister. I can't say I did things this way on purpose, but the result allowed me to focus on things that were really important to me, and not on the need to govern. My record while I was not prime minister is richer than my record as prime minister, even though others were sometimes luckier than I was. Apparently history has its own wisdom."

We asked Peres to name what he thought were his greatest achievements. His response: relations with France, Operation Kadesh, Israel Aerospace Industries, the Dimona nuclear reactor, defense research, Entebbe, rehabilitation of the army after the Yom Kippur War, overcoming the inflation of the 1980s, peace with Jordan, Oslo, and the establishment of cities like Upper Nazareth.

Peres carefully skirts his contribution to the establishment of the settlement of Ofra, authorized when he was defense minister in 1975.

Peres sees Israel's biggest missed opportunity as the blocking of the London agreement in 1987 to transfer the West Bank to Jordanian control.

"I thought the option should be Jordanian, although that, too, was not without its problems," he recalls. "The question was, who would rule, Arafat or Hussein. To this day I have no doubt it was our biggest diplomatic mistake."

But Peres did not give up entirely. He continued to promote the Israeli-Jordanian-Palestinian economic initiative. Its map is a world away from the colonial division of the Sykes-Picot agreement dividing the country between the French and the British in 1916. "You can have economic and ethnic relationships, and not only political border," he says.

Experience, in our region too, actually shows that national interests outstrip economic ones.

"That may be, but national priorities change when a person goes from being poor to being middle class. I'm talking about economics not only in terms of money, but in a wider social sense."

On the assumption that we cannot proceed on two tracks simultaneously, is the Palestinian track preferable over the Syrian track?

"Without a doubt. Even if we have to speak to everyone who wants to talk to us, and although the Syrian issue seems easier, the Palestinian issue comes first. Even if only because the Syrian situation is static and the Palestinian is dynamic. Without Arafat, for example, we would not have gotten to Oslo. What influenced him, among other things, was that the Europeans embraced him."

Perhaps the lesson is to embrace Hamas, or at least not to choke it?

"There's no comparison. They managed to bend Arafat. In any case, the Fatah option must not be weakened."

That sounds depressing.

"Not at all. We only need to suit ourselves to changing circumstances, for good and for bad. To promote economic peace, which changes societies and at the same time suit our means of warfare to new threats. There's no point for an F16 to run after one terrorist. There must be other means and we have them. At this very moment there are 30 or 40 scientists creating innovative means of warfare. You have no idea of the IDF's strength. We chose not to use it, but it exists."

It seems that you are blaming the Palestinians more than in the past.

That's true. We became more flexible and they became more extreme. From this starting point I want to create good will toward Israel, to make friends."

It seems that the Jew in you was born after you were left last of your generation of giants.

Indeed, I have a feeling of responsibility to future heritage. I love this burden. Life should have significance."