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Kurt Volker: [0:00] There we go. Welcome and thank you for coming. My name is Kurt Volker. I'm the director of the McCain Institute for International Leadership, which is a part of Arizona State University. [0:13] I'm delighted to be able to welcome here the former Prime Minister of Israel, Ehud Olmert. [0:18] One of the things that we have strived to do at the McCain Institute is place a focus on leadership. More questions about what makes a good leader, how do people make decisions, what are good examples that we can learn from. Rather than the traditional focus of, "Well, what's the foreign policy issue or this national security issue?" and have a discussion about it. [0:41] That will happen all over town anyway, but as a McCain Institute Leadership Initiative, we wanted to take advantage of the presence of people like the Prime Minister or many others who have been through or that we are scheduling to talk to about some of their perspectives based on their unique experiences. [1:01] That's what we'll be doing here today. I hope you find that an interesting format. I want to also mention that there will be an after event, a little reception. I'll tell you about that at the end of our program. [1:14] Thank you all for coming. There will be an opportunity, also, for audience comments and questions, be thinking about that. We'll turn it over to you later but we'll get started here. [1:22] Prime Minister, Thank you very much. Thank you very much for coming. Ehud Olmert: [1:26] Thank you very much. Good afternoon. Do you want me to sit down? Kurt: [1:30] You can sit or stand as you like. Ehud: [1:32] I'll sit for a moment. Kurt: [1:36] I thought what I would do. Well, I'll stand, as well. Ehud: [1:39] Oh, now I don't feel comfortable. Kurt: [1:41] I thought for the first question that I would ask you... Ehud: [1:45] Yes [inaudible 00:01:45] . [laughter] Kurt: [1:49] The first question that I would ask you. I took a little bit of a more careful look at your biography. Obviously, you're a famous name in Washington. People have known you as the Prime Minister and known your name before and after that. But you made a remarkable journey in Israeli politics. Ehud: [2:08] That's right.

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Kurt: [2:09] Starting with the Likud Party and then helping found the Kadima Party. Working with Prime Minister Sharon and then ultimately replacing him. The first question I have for you is what led you on that journey? What was your thinking as you took this unusual and actually very strong political path? Ehud: [2:31] Thank you for the question and thank you for the invitation. This is the first time that I've had this privilege to be the guest of the John McCain Institute. I've been to this building a few times. I'm very friendly with Senator McCain. I even hosted him at the residence of the prime minister of Israel when he was a candidate for president in 2008 when he came to visit. I know him way back from Phoenix, Arizona many, many years ago. [3:09] I'm very happy to be here. This is a very interesting, somewhat different from what I've been doing in the last few days, trying to do the impossible, which is to explain the Israeli policy, to express my position on some of the current issues. Not to criticize the Israeli government when I'm overseas and yet, at the same time, to make a very explicit expression of why I think that the policy is the wrong policy. It's not so simple sometimes. [3:49] But maybe through the description of what I was going through in my political act, maybe I can also shed a certain light on some of these issues. I was born to a very revisionist Israeli family of parents that made [inaudible 00: [4:03] 04:14] to Israel, immigrated to Israel from China. Not too many were there. My parents were born in Russia in the Ukraine but during the Communist Revolution in 1917 they were escaping, as quite a few Jews did. They found themselves in the northeast part of China in Harbin. [4:40] It was a small township at that time. Today, it's only a city of about 12 million, which, unfortunately I never had a chance to take my parents with me back to the city but I was there several times. Now I'm an honorary citizen of Harbin. There is a Jewish museum there. It's very exciting. [5:09] My family, both my parents were members of the Revisionist Party and that's where I was born and I grew up. This was long before there was Likud. This is when the original Herut Party, the Freedom Party of Menachem Begin was the main representative of what then was the right wing of Israel. [5:38] Subsequently, there was the Gahal Block. The liberal party joined in and later part of it separated. I was in that part that separated because we were not happy with the leadership of Menachem Begin, strangely enough. Then we joined the [inaudible 00: [5:58] 06:00] to create the Likud in 1973. At that time I was elected the first time in my life to be a member of parliament. I was consecutively until 2009 a member of parliament, which means that I was a member of parliament and a mayor and a prime minister consecutively for 36 years. [6:30] It's quite a long career, and as you say it correctly, I started on the right wing and I'm now considered to be in the center, towards the left. But this is somewhat inaccurate.

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The reason it's inaccurate is because now we judge someone, whether he's right or left, not by the traditional criteria of what is right and what is left in social positions. [7:03] Right is in favor of occupying the territories. Left is in favor of pulling out from territories. In this respect, I'm left. But I'm not a socialist, for instance. I haven't been a socialist and I don't think I'll ever be a socialist. I think on this I'm somewhere...I'm not a socialist but I'm certainly in favor of policy on economic and social matters which is much more to the center than the traditional free market, extreme free market economy. [7:49] Anyway, I moved from the right wing on the issue of territories to the center and perhaps even to what is considered to be left in Israel because I reached...I hope that I was courageous enough to look at the reality of life and to reach the inevitable conclusion that for many years I was wrong in my attitudes towards what I think can be the future of the territories and the future of Israel. [8:28] Fundamentally, it happened to me while I was mayor of Jerusalem. I was elected mayor of Jerusalem in 1993. I defeated Teddy Kollek. Just not in any way to criticize, but life is very much influenced by perception and sometimes perceptions are entirely different from reality. [8:56] When I was running for mayor of Jerusalem against Teddy Kollek, it was a national event in Israel. It was far more than just another election for mayorship in some place because Jerusalem is Jerusalem and Teddy Kollek was a legendary figure for many, many years. [9:15] He was interviewed a year before the elections. The interviewer asked him, at that time there was some kind of a protest by the Palestinians living in Jerusalem. He was asked, Teddy Kollek was asked, "What do you think of this protest? How could they do it to you, the person who did so much for the Palestinians and much for the residents of Jerusalem, the Arab residents of Jerusalem? Look how they behaved." [9:44] He said to him, Teddy Kollek said to him because he was a decent guy...He said, "Please stop with this blah blah about what I did to the Palestinians. I never did anything to the Palestinians. I never helped them. I never supported them. I never did anything to improve their quality of life. It's time the world understood the only time that we did something for the Palestinians in Jerusalem was when the sewage was just..." [Transcription missing from 00:10:15 to 00:17:45] Ehud: [17:46] I think he said to him first thing, "Wait with your decisions." [laughs] He was petrified. But [inaudible 00:17:53] immediately will change everything on the spot. It turned out that he never applied the Israeli law. He never integrated the territories into the State of Israel. He didn't do what he could have done, which is to make one step or two steps forward. But the fact is that he pulled out form the entire [inaudible 00: [17:56] 18:10] and made peace with something that was contrary to everything that he said. [18:17] Now, I think that it is the greatest manifestation of the inner strengths and leadership that could be expressed by any person. To be able to do the opposite of

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everything that you said is not a show of weakness. It's the greatness of a person that understands when he's in power and the ultimate responsibility rests with him, that he may have been thinking something different when he was in a different place. But now that the back stops here, and when you look back you see only the wall but nothing else and no one to take council with because it's your responsibility and you have to take the decision. That you have the courage to take a decision that is opposite to everything that you stood for, and to be able to face the people and tell them why you did it. [inaudible 00: [18:52] 19:14] had this courage. [19:17] It doesn't matter whether he was an effective day-to-day prime minister, whether he was a good executive. It doesn't matter. He was a great leader. A leader of historical proportions, and I admire him for that. Kurt: [19:32] He had a partner in this as well, Anwar Sadat. Ehud: [19:36] Absolutely. You always need a partner. Kurt: [19:38] When you look around the Middle East region, there have been great examples of great leaders, and there have been great failures of leaders, as well. What are some of the others in the region that you would point to who've shown the kind of ability to make decisions and the courage that you're just talking about? Ehud: [19:56] I think Rabin is another example. Rabin was the ultimate authority to decide on the Oslo Agreements. I personally think to this day, by the way, there were many mistakes that we committed, and the Oslo Agreements should have been different. It doesn't matter. [20:11] The fact remains that at the time when Rabin decided on the Oslo Agreements, it's not only that he had to refuse to do it, he was the prime minister. But no one else in the labor party, certainly not press, by the way, who was very instrumental in building up the process of Oslo that led to the agreements, but didn't have the political power to impose the agreements on the Knesset. Only Rabin could do it. [20:46] He rose to the challenge, the opportunity, and he carried out. He was, I think, a very impressive show of great leadership and courage, and he paid with his life for this show of leadership. This was another example. I think Sharon with the disengagement. Again, I can take pride at...I proposed it, perhaps, the first time when I spoke at the [inaudible 00: [21:11] 21:24] in his grave 10 years ago. But I didn't have the political power to put this into a process and to impose it and to carry it out. Sharon had. I was helpful to Sharon. I was with him the entire process. [21:43] But Sharon who was the father of all the settlements, Sharon who started on the settlement movement, that maybe, maybe, I hope, not will have changed history in the Middle East, and maybe crossed a line of return. I hope not. [22:10] But this was Sharon's greatest achievement. He had the vision and the courage when he was sitting at the seat of the prime minister to say, "We have to pull out." Now, we have to pull out when he decided to pull out. He decided to pull out from the Gaza

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district, but people forgot that he also pulled out from the West Bank. It's true, only four settlements, but this was very symbolic. [22:45] Now, I'll tell you something that I don't think was ever published. This is a great scoop now for the John McCain Institute. [laughter] Kurt: [22:53] All right, get it on camera. Ehud: [22:54] The original plan of Sharon was to pull out from 17 settlements in the West Bank. Later, he was convinced by outsiders not by Israelis, not by his partners, but by outsiders that it was too much for one state. Better, pull out entirely from the Gaza Strip and from some settlements in the West Bank, but this is a beginning of a process which will continue later. [23:27] Sharon was prepared to pull out from 17 settlements originally in the West Bank, which was very dramatic. I think that these are three good examples for great leadership. I think that [inaudible 00: [23:38] 23:39] also must be given a great credit for the road that he made. Don't forget that Paris was in favor of building the settlements in the beginning. [23:58] He changed this position, and he had the courage to again, also face reality and to understand that the question is not what we believe belongs to us, but how we can build a future that will not be obsessed by the dreams of the past, but the opportunities that we can have for our children and grandchildren. This was a great leadership. Kurt: [24:26] When you look around the... Ehud: [24:28] Of course, I have to say that Anwar Sadat is a great symbol, and I have to say and I know that some of my Egyptian friends may not like it, but Mubarak kept this peace that we made with Anwar Sadat for more than 30 years with great courage and determination. [24:50] He deserves a great credit for it, because I think it made a great impact on the Middle East and on Egypt, and it was very important for all of us. I think that they also manifested a leadership of the highest level. Kurt: [25:06] This opens up a whole topic that I wanted to get to, which is the Arab Spring. Because Mubarak was not challenged because of the relationship with Israel. He was challenged because of his governance at home and the way that was viewed. [25:20] I wanted to ask your views, have we missed opportunities, have leaders missed opportunities, for navigating a course in the Arab Spring between either authoritarianism at home or extremists who are trying to hijack revolutions when a majority of people would like to achieve the justice and respect in society that Israel has achieved for its citizens. Ehud: [25:45] First of all, I'm very proud of the democracy of Israel. I think this is a great testament to the Jewish people and to the State of Israel that we have complete democracy. [25:55] I don't think there can be a better democracy or, there are different

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systems of government in different countries, but I think there will be no doubt that there is a complete freedom of speech and freedom of religion in the State of Israel and for the Israeli citizens, which is not the case in the territories. That's why I think we have to pull out entirely from the territories and allow the Palestinians to exercise their right for self-determination. [26:27] But there is no question that there is...For Jews and non-Jews alike, there is a complete democracy and freedom of speech and freedom of vote and political freedom and religious freedom in the State of Israel, and we are very proud of it. [26:41] I don't know that there is any Arab country that has yet reached that level of democracy. Maybe the only country, the only non-country which practices democracy which is still far from the democracy in the State of Israel, but which will become a democracy similar to Israel, I believe, is the Palestinian entity. That's very interesting. [27:10] I'm very encouraged...In the West Bank, of course, not in Gaza, where they are dominated by a terrorist organization. There is no question about it. But in the Arab countries, I think that the greatest. I'm not a historian, but I'm an observer. In the last 40 years of the events in the Middle East, and I had many talks with Arab leaders, some of them were, it was known that I meet regularly with Mubarak, with King Abdullah. [27:42] I met with others. I can't, of course, disclose the names and the identities for obvious reasons. I have to defend them. The fact that we couldn't meet publically and officially and openly with Arab leaders of countries that are not bordering with Israel and never had any confrontation with Israel, and that they really want to have good relations with us and maintain a degree of cooperation and exchange with Israel but can't show it, is a disgrace. [28:19] Because that could have created an atmosphere, that would have influenced also the possibility of having relations between us and the Palestinians in an entirely different way. [28:29] But there was always this argument coming from them that there is too much influence of extremist, fundamentalist movements, that if they will hold off their hands and listen to control on the day-to-day life of the people, it may create a terrible disaster. [29:10] Of course, this is something that is hard to argue. I don't accept this point of view. I think that democracy is always a recipe which is far better for the health of the society and for the ability of a society to grow and to improve the quality of life for its people. [29:36] I remember talking with Mubarak about it and he says to me, "Your friend, President Bush, he wanted a democracy. Now in Gaza you have democracy." He insisted that the Hamas will participate in the elections. What did you get? Did you get democracy? [29:51] It was a sound argument, because we didn't get democracy in the Gaza District, on the contrary. We got something which is, I think, not the best for the people that live

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in Gaza, and they suffered a lot as a result of the brutality and the extremism of the government that controls and the organization that controls Gaza. [30:18] On the other hand, look what happened in Egypt. The people erupted. No one organized it. No one pushed him. No organization stood behind the eruption of this content in Egypt which led to the downfall of Hosni Mubarak, and on the other hand can we say that the Muslim Brothers represent democracy in its truest form? I'm not certain about it. [30:53] But I think that in spite of all the fears, the direction that the Arab Spring adopted is negative, I disagree. I think that everyone that took over in any of those countries where the Arab Spring took place in Tunisia, in Libya, in Egypt, knows one thing. That the power of the people in the street is stronger than any Mukhabarat, any secret service and police and army together. [31:29] That at the end of the day, if there will not be democracy, if people will not be happy and they can only be happy when they can express themselves without any limitations and move without any constraints and have living conditions which are sufficient in order to be happy and to provide their families with the basic conditions of good life. [31:59] Then the leadership knows that they will be kicked out just as Mubarak was. Just as Gaddafi was. Nothing will help them, because the people are stronger. I think that the Muslim Brothers in Egypt are fully aware of that, and that's why they are so careful not to actually exercise everything that is part of their philosophy and part of their ideology, but they are careful because they know that they will not escape from the same judgment at the end of the day. Kurt: [32:32] It's interesting to watch how different leaders are reacting to that in the Arab world, because in Egypt I think it's exactly as you just described. In Libya, Gaddafi tried to hang out and repress the population and failed miserably. But now in Syria, Assad is doing the same thing, and arguably is succeeding. Ehud: [32:56] The time being, and he's succeeding partly because of the enormous support. Unfortunately, Syria has turned out, because of geopolitical reason, to be a point of...Let's put it in the milder terms, possible controversy, between America and Russia, or the West and Russia. Russia feels that it can give up, and since no one knows who the alternative for Assad may be, then the Russians, I think, believe that they need to exercise their power to support and save Bashar Al-Assad. [33:38] Yet, I'm not certain they will succeed. I'm not certain that he will prevail. I suggest that we'll be patient, but because...Sooner than later, the opposition. No one can kill 100,000 of his own citizens and remain in power in this world. It's impossible. It will not happen in Syria, and it's on the way to change. It's just a matter of time. Kurt: [34:09] You mentioned America and Russia. I want to make a good argument that Russia has been deeply involved with Syria, but the United States hasn't.

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Ehud: [34:17] Because Russia was deeply involved in. Because America, I think, doesn't want to turn Syria into a point of confrontation. Kurt: [34:27] If you're right that a leader can't stay in power killing 100,000 of his own people, what do we do now? Ehud: [34:35] I think that the revolutionaries inside Syria will do, and that there are ways to help them. I think that some of these ways are exercised, quietly and without too many talks. But they are exercised, and I think that eventually Assad will collapse, regrettably, after killing many of his own people. Kurt: [35:01] Interesting. I want to turn it over to the audience. I know you may have lined up a lot of questions here. I'll start here in the third row. Ted Kattouf: [35:12] My name is Ted Kattouf. I'm a former US diplomat. I'll frame this in terms of leadership, but it's got a political dimension to it as well. It's widely reported that you made what could only be described in Israeli terms as a generous offer to Mahmoud Abbas concerning a two-state solution before you left office. Ehud: [35:41] Long before I left office. Ted: [35:43] Long before you left office, OK. Well that makes it even more interesting, then, because I was going to ask you if you thought either, A, that he wasn't prepared himself to make the hard decisions, i.e. right of return and the like, that he needed to make. Or B, could it be that he thought you were on your way out, and therefore you would not be able to follow through with the generous terms that you offered? Ehud: [36:20] Number one, I hope you don't mind if I say, that these were generous terms not only by Israeli standards, but by objective standards. I think that if you read the book, the memoires of Condalisa Rice, the former Secretary of State of the United States, she describes the evening in May of 2008, which was almost 10 months before I left office. I left office on the first of April, 2009. This was a long time before I left office. [36:54] I described to her what I'm going to propose at the third of May to Abu Mazen, and she said that she was shocked and she was devastated. She said, "It's impossible that I hear what I hear. [37:11] Is this the Prime Minister of Israel telling me this? He's talking about sharing Jerusalem with the Palestinians? It's impossible." I say to myself, write it down, write it down. Then she said, "No, no, no, listen to him. Listen to him. Look at him." She was entirely shocked and she said it. I was very excited in that she... [37:32] We didn't have dinner. This was supposed to be a private dinner just her and me, and it turned out that every time the waiters came, I pushed them out and I said, "Go, go, go." I was talking and then she talked and then she said...She ran to the hotel, and she used a safe line to the White House. But she said, "I'm not certain that the White House was the only one that heard me, because in an Israel hotel you never know." Although the line was safe. I don't know.

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[38:07] She said that she called the president, the president wasn't there, she talked to Steve Hadley and they just now met with Steve Hadley. She said to him, "Steve, tell the president that he was right about Olmert, that he wants peace but I'm afraid that he will die, because they killed Rabin for far less." [38:25] She thought that this was generous, not just by Israeli standards but even by American standards. Now, why did Abu Mazen not say yes? Look, at the end of the day of course you have to ask him. But first of all, Abu Mazen keeps saying all the time to everyone, including public TV, to the Israeli TV, "I never said no." [38:52] Now, don't take it lightly. This is not just a manipulation. When a leader who is still the leader says, "Hey, about this plan, I never said no," he also sends you a message that I am here possibly to discuss it. I am not yet in a position that I rejected, because he's still in power. I'm not in power, but the plan is alive, and Abu Mazen says, "I didn't say no." [39:25] This is something which is not insignificant, but of course I expected him to say yes. I urged him to say yes. I begged him to say yes. I told him, "President, it may not be 100 percent on what you wanted," although I thought it was 99 and a half percent of what he wanted, of what the Palestinians always say they want. [39:44] They wanted to have part of Jerusalem. They had every of our part of Jerusalem back. They wanted to have a position in the Holy Basin. I offered a trustee of five nations that will control without sovereignty for any nation, but without sovereignty for Israel. [40:06] With the United States, Saudi Arabia, Jordan, the Palestinians in Israel, in a trust that will control the Holy Basin and will keep it as open for every believer and, of course, will provide complete religious freedom for everyone. [40:30] This was what the Palestinians always wanted, and the territorial solution on the basis of the 67 lines we swapped of territories. Which is what Obama said, which is what Bush said, which is what the Palestinians said. We are ready to make some adjustments, and as long as this will be based completely on the 67 borders which I proposed to them. [40:51] I really begged him, "Sign it! Sign my initials and let's go to the United Nations and change history and change the world." But one, he may have thought that I will not survive politically, although I'm not certain that at this time he had a reason to be certain about it. [41:10] But he may have thought. Two, he heard the voice of some opponents in Israel and some of my supporters in Israel, which did encourage him..."Supporters" with quotation marks, that may have been a part of my coalition, but which were not entirely in line with this policy, which said to him, "Wait, why do you have to do it?" [41:34] Also, he had his own difficulties at home with opposition, with Hamas, with these others that were against him. If you put all of this together, you may get the feeling that he needed a little but more time. I still believe that we can make peace on that basis,

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and I still believe that it can be with Abu Mazen, because I don't see any leader on the Palestinian side who is prepared to stand up for the principles that Abu Mazen adopted. [42:08] It took him time. He wasn't in that position when he originally started as number two to Yasser Arafat. But eventually he changed, and he realized that there is so much that you can achieve. [42:21] I think that finally what I proposed to him was that which could fulfill the dreams of the Palestinians for a separate state on the basis of 67 lines, with part of Jerusalem. [42:37] But they always talked about the eastern part of Jerusalem as the capital of the Palestinians and a symbolic recognition of the suffering of Palestinians as a result of the war between Jews and Arabs. Also a symbolic recognition of the suffering of Jews, because Jews suffered just as much and maybe more, because Jews were expelled from many Arab countries, not just from one country as some of the Palestinians claimed that they were. [43:08] But it doesn't matter. I'm not going to argue now about what proportion does matter. I think the principle was that we have to recognize that people suffered, and we have to find a way to make a symbolic gesture that will recognize it. We were prepared to do it, within the framework of the Arab Peace Initiative. [43:31] As I said before, maybe we needed a little bit more time. I always emphasized it, unfortunately Abu Mazen never said yes. But equally at the same time I emphasize that he never said no. He still has an opportunity to say yes. Kurt: [43:52] Interesting. Very interesting. We had a few other hands here. First in the front row. There's a microphone coming, let me give that to you. Abraham Avidor: [44:02] Thank you, Prime Minister, for you interesting and thoughtful presentation. My name is Abraham Avidor. Today marks the 46th anniversary of the beginning of the Six-Day War. I happened to participate in that war as a young lieutenant on the Israeli Air Force. Since then, there have been countless efforts to negotiate peace. You mentioned Oslo, Madrid, Geneva, Camp David, and so on. The question now, with the current following the election and apparently the shift toward an Israeli politics to a domestic [inaudible 00: [44:24] 44:32] , social, economic, and so on, is there any leadership in the current cabinet who is really powerful enough to bring about meaningful peace with the Palestinians as supported by the Obama Administration, or is this just another [inaudible 00:44:52] to negotiate without any meaning results? Thank you. Kurt: [45:00] Interesting. Ehud: [45:01] The brief answer, is there a leader that potentially could have the power to do it? The answer is yes. Is there a leader who is prepared now to exercise this potential and to fulfill this promise remains to be seen? I don't know. Certainly not the prime minister, but there are other leaders, and they can influence.

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Kurt: [45:32] That's interesting, especially in light of what you said about [inaudible 00:45:34] coming from the very strong position and being the one to make those choices. Ehud: [45:41] That's right. Kurt: [45:43] There was one; we're going to take a couple in a row. I think we'll do two and two, if we can start with the gentleman here. There's a microphone coming. Dan Whitman: [45:54] I'm Dan Whitman, formerly with the state department. I have a two word question. John Kerry? Ehud: [46:01] I'm a good friend of John Kerry. I like him very much. I'm very happy with his determination to carry on and to try and convince to the two sides to make the necessary adjustments that will allow them to see together and discuss the issues. [46:20] I hope that the Secretary of State will convince its president to support him in a manner that will give strengths to the initiative to the Secretary of State, because we have to be very open about it. A Secretary of State, any Secretary of State, can do that much. He needs the president to support him publically and powerfully in order to have the necessary power to convince the sides to go on that line. [46:59] I hope that Kerry will be influential enough when he's president just as he will be influential enough on the parties involved in the conflict. Female Audience Member: [47:12] I suppose you've seen the plan. He says he has a plan for it. [laughter] Ehud: [47:16] I haven't seen the broadcast. Kurt: [47:18] All right, just behind. Daniel Marshall: [47:21] Daniel Marshall, also a former government official and with Transnational Strategy Group now. Mr. Prime Minister, the question is on economic and commercial possibilities to try to bring the countries together. The region is seeing, and this better than anyone the power of commercial arrangements, the QIZ program in better of days between Egypt and Israel. Ehud: [47:43] I did it. Daniel: [47:44] Exactly. Also, for example, the power of business between Turkey and Israel to keep those countries together. My question is simple this. Is it realistic to imagine, given the government we have in Cairo now, that business could be a way to bring these two countries together? Ehud: [48:05] Business can be helpful. Business will not replace the political accommodations that are necessary in order to make it possible. I think that the two agreements that we made on the squeeze, both with Jordan and with Egypt, were enormously helpful for the economies of those countries. [48:23] I remember the days that I was arguing with some Americans who came to me and say to me, "What the heck? Why do you squeeze us so much to make a concession to Egypt that will cost thousands

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of jobs in America?" Because Egypt has an advantage over China. Egypt has the raw material for cotton, the best in the world. Also they have inexpensive manpower, labor. They have both things, the raw material and the inexpensive labor. [49:06] They insisted also in that the quiz will contain maybe half of the territory of Egypt, which is quite big anyway. In a matter of two or three years, they created 400 manufacturing facilities as a result of this agreement, with tens of thousands of jobs and billions of exports to America. [49:27] The Americans came to me at the beginning and they say, "Why do we need to do it? Why do they deserve to get it?" I said, "Look guys. If there will be a one day war between Israel and Egypt, it will cost you 10 times more than anything that you may lose as a result of this agreement. [49:43] But if there will be an agreement that is rewarding the Egyptians with billions of dollars of exports, it will be another barrier against the possible eruption of hostilities, even if there will be a disagreement between Israel and Egypt in the future." [50:02] I think that therefore economic operation is important, but at the same time, economic operation which exists between us and the Palestinians. I am now chairing a company, a conglomerate, which is doing a lot of business with the Palestinians. But it's not sufficient to overcome the political barriers. [50:29] Therefore what I suggest is this. Everywhere we can do business together is great. Why? Because you do business only when the two sides can make money, right? Otherwise you don't do business. They will not do business if they can't benefit from it and will not do business if we can't benefit from it. So if two sides can benefit from it, it's good. It does good for the economy of the other side. It does good to the economy of Israel. [50:56] But let's not fool ourselves that this can replace the necessary political adjustments that both of us have to make in order to make this into a real, genuine, comprehensive peace between us and them so that will we live without terror or that we will live with a different atmosphere of cooperation and friendship, which is so necessary for our region. Kurt: [51:25] In the back there is a question, and we're running out of time, so we'll keep in brief. Back there, we'll take two. We'll go back here first. Alan Mendelson: [51:32] My name is Alan Mendelson. I'm just a citizen of Washington. First, I want to thank you very much for such interesting remarks. I'm sure we are all very, very interested. I'm sure you've got a lot of voters here today who would be prepared to elect you. [51:44] Secondly, I want to ask you what you think about the Abu Mazen demand that if the settlements be given to Palestinian control, they be freed of all Jews. I want to know what you think about that and also whether you think it's possible. Ehud: [52:04] There's another question that you suggested, yes.

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Kurt: [52:06] We'll take the back row, briefly, and then we'll turn it back to you. Cami Bhatt: [52:11] Yes sir, my name is Cami Bhatt and I write for the Pakistani Spectator. My question, if Senator McCain asked you that who is smart, Obama or Bush II. Bush II who borrowed billions and trillions of dollars from China and dumped in this small hole called Middle East and gives thousands of American lives. [52:33] On the other hand, you have Obama, who doesn't want to give a single American life and basically he is just, let these crazy people kill each other. We don't need to get involved with this. Thanks. Kurt: [52:43] Interesting. OK. Ehud: [52:48] First of all, the question about the proposal of Abu Mazen. Look, we have to separate from the Palestinians. [52:58] There is no way that we can remain in the territories even if they will be given to the Palestinians to, what will become as a Palestinian, independent Palestinian state. Because it will be, this is a prescription for almost endless confrontations. There will create a chaos and brutal engagements on both sides and this is not what we want. [53:29] Look, we have to give up the dream of Greater Israel. I know it's heartbreaking, believe me, I said this in a different meeting today. The day that I sit in front of Abu Mazen, in the study of the residence of the Prime Minister of Israel in Jerusalem. I was very close to him, even closer than we are, because, set up in the room. [53:56] I look in his eyes and I said, "Mr. President, here is my plan," which included the sharing of the city of Jerusalem, coming from the person that was for 10 years the mayor of Jerusalem, the champion of what is known as the united, undivided city of Jerusalem. [54:17] To have said it to him, for me, was one of the most difficult moments of my life. And believe me, I've been through some. But I felt that if I have to make a choice, we win peace. Between a future without wars and without terror. I knew that this will not come momentarily, that even if we pull out from the territories there still may be terror for a while. I knew it. [54:47] Yet, I knew that there is no alternative to it but that we will pull out and separate from the Palestinians until both sides will learn to live at peace with each other, which might take some time. But we need to be separated. Therefore, all these artificial solutions are not realistic and I don't accept them. [55:11] We have to keep three centers because there is so much that realistically we can do to pull out from. But these three centers of Jewish population in the territories will comprise only less than six percent of the population of the territories. Less than six percent of the territories so we are talking. [55:33] We will swap territories with the Palestinians. In areas which are very meaningful and very solid, not just desert parts of Israel. I think that this is the only solution.

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[55:49] This is hard. It is hard to accept it. It is hard to live with it. Sometimes, you revolt against it and you say, "Why the heck can't they be more flexible? Why do they have to insist on 100 percent? Why can't they understand that things have changed, the realities have changed and they have to adjust to it? Maybe they're wrong." [56:08] But let's be smart rather than just when what we need is peace. That will create an entirely different Middle East. [56:17] Now, as for you, look. I may have an opinion, but I don't want to disclose it. I'm not an American. I'm not an American. I don't think that it would be proper for a former prime minister of Israel to say who is smarter, George Bush or 43rd, right? 44th. They are two great Americans. Kurt: [56:46] Very diplomatic answer. [laughter] [56:48] The final question that I always ask people, and I'd like to ask you, is when you look at a next generation of rising leaders around the world, what advice would you like them to take to heart? Ehud: [57:03] Sleep well. [laughter] . Honestly. The most important thing for any leader is to sleep well. If someone thinks that leadership is measured by dramas, you wake up in the middle of the night because they called you from the situation room. There's something in Afghanistan or in Pakistan, and the president would not sleep the rest of the night. To do this, sleep well. Keep cool. Don't be over excited and take decisions. Take decisions, 10 a day, no more. But take meaningful decisions, one after the other. Don't work too hard. Enjoy your life. Watch soccer. Not necessarily American food, but if you insist on American food, well, [inaudible 00: [57:28] 57:53] baseball, I will not fight with you. Even on the NBA, I love American basketball. [58:01] Honestly, and one thing. Have a vision. Have a vision. That is, don't wake up in the morning and ask yourself, what am I going to do today? You have to know what you want to do in four years or six years or eight years, which is significant and important. You have to have a vision. That has to guide you and to lead you. The rest will come with this vision. [58:29] But, as I said, don't be obsessed with every detail of everything. Because it's impossible. You have to be focused, you have to be able to concentrate on that which is important and do it with love. It's important. Do it with love. Because if you don't have love in your heart, you will not be a good leader. [58:54] Thank you very much. Kurt: [58:54] Thank you, prime minister. [applause] [58:55] I'd like to invite you, Prime Minister and all of you to go up to the sixth floor. We'll have a brief reception, if you're interested. See the McCain institute, since we're a new entity here. Ehud: [59:13] Thank you, thank you.

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Kurt: [59:14] I think they're looking for a quick word with the media here.

Transcription by CastingWords