Original subtitles

This programme contains scenes which some viewers may find upsetting

I was home, with my family.

Because I'm religious, I didn't open the TV,

I didn't open the radio, nothing.

I went to the synagogue around 8.30.

SHOUTING

Then I see everyone running to me,

"Come fast, we have to do something."

It took me hours to understand what's going on.

Our people, our civilians that we have a contract with them,

we failed.

We failed to protect them.

The 7th of October attacks and the devastating war they sparked in Gaza

have brutally reopened scars from decades of conflict.

The Bible says there is a time for peace

and a time for war.

This is a time for war.

Now, with lasting peace as elusive as ever,

we explore the roots of the crisis.

Those at the highest level tell the story of how, time and again,

they tried - and failed - to end the deepening conflict,

as strained relationships reach breaking point.

What Netanyahu did to Vice President Biden was outrageous.

It's like the biggest slap in the face.

I think American Secretaries of State are like moths to a flame

when it comes to the Middle East.

We'll see how two decades of failed negotiations

helped Hamas' power grew

and we'll hear from their leader

who was killed a month after our interview.

In this first episode, a controversial Israeli plan for Gaza

opens the door for Hamas to seize control.

For Sharon, this is a matter of political life and death for him.

The gut reaction was to view this as a trap, as a conspiracy.

And Palestinian, Israeli and American leaders

grapple with the fallout.

President Bush was looking for an enormous achievement.

Now, what is sexier for an American leader

than a peace agreement in the Middle East?

SHOUTING

SIREN BLARES, SHOUTING CONTINUES

The deadly conflict between Hamas and Israel

began long before the 7th of October.

SIREN WAILS

One of Hamas' most devastating attacks

came in the summer of 2003,

a suicide bombing on a bus in Jerusalem

which killed 23 and left over 100 more seriously injured.

It was part of the Intifada,

the Palestinian uprising against Israeli occupation.

The Palestinian President, Yasser Arafat,

had long been accused of turning a blind eye to such attacks.

We had arrested many of those who are behind these activities.

But no-one can give 100% results.

Arafat, a former guerrilla fighter,

was an icon of the Palestinian people.

His government, the Palestinian Authority,

was nominally in charge of the West Bank and Gaza Strip

despite Israel's military occupation.

Its goal was a Palestinian state,

recognised by the international community.

Israel's leader, Ariel Sharon,

had ceased all diplomatic contact with Arafat and his government.

He was about to take a decision that would shape the course of events

in Gaza and beyond for years to come.

Sharon's radical plan was to end Israel's presence in the Gaza Strip.

But it would be unthinkable for him to do so without the blessing

of Israel's biggest financial and military backer.

He dispatched his Chief of Staff to talk to the Americans.

For us, for the Sharon government,

the peace process seems to be frozen.

But the whole world pressured us,

"These are the way to agree to a foundation of a Palestinian state."

And in this mood, or in this climate,

I met with Condi Rice.

Dubi Weissglas was a kind of combination of a confessor

and Chief of Staff and friend of Ariel Sharon.

He had Sharon's confidence.

Dubi came into my office, and he said, "We have a plan.

"It is a plan that would allow us to go forward

"in terms of the Palestinian state."

So what Dubi Weissglas brought was a proposal for Israel

to unilaterally withdraw from Gaza.

That meant the Israeli military forces would be gone.

And more importantly, settlements, Israeli settlements in Gaza,

would be dismantled and moved out of Gaza.

He started using the phrase that Israel was going to withdraw

from Gaza and throw the keys over the fence.

And basically, whatever happened afterwards was not their problem.

We just sort of all looked at each other like,

"Are we actually hearing what we have been hearing?"

I said, "Condi, this is...

"..not just a serious decision,

"this is a matter of political life or death for him."

Rice took Sharon's plan to the President.

Like so many of his predecessors, George W Bush had taken office

hoping to deliver a breakthrough in the Middle East.

When the President first heard of what Dubi Weissglas was proposing,

he immediately embraced it.

And when asked why, he said,

"Because Sharon was willing to take a bold step."

This would sort of shake up things on the issue of Middle East peace,

which was really at a dead end.

I felt, and President Bush felt, that if you had Ariel Sharon

willing to talk about ceding territory,

it was worth taking the chance.

Nobody would question Ariel Sharon's dedication

and devotion to the security of Israel.

Ariel Sharon was celebrated by Israelis as a hero

of their country's long conflict with its Arab neighbours.

In 1967, as a young commander,

he'd played a crucial role in the Six-Day War,

which saw Israel gain swathes of land from Jordan, Syria and Egypt,

including Gaza.

Since then, despite international condemnation,

Israel had been building settlements

throughout the Palestinian territories,

further cementing its occupation.

By 2003, there were more than 400,000 Israeli settlers

living in the West Bank, including East Jerusalem.

In Gaza, there were 7,500 living alongside a Palestinian population

of around a million who were largely confined to the territory.

Sharon knew that any withdrawal would be hugely controversial

in Israel, not least within his own party, the right-wing Likud.

MUSIC: Likud Jingle

BOOING, WHISTLING

BOOING

Watching Sharon's address

was one of Likud's most influential politicians.

When the Prime Minister first raised the disengagement idea,

I said that I had no particular desire to have Israelis

stay in the Gaza Strip in a final political settlement.

But I said, "We're not in a final political settlement.

"And if we withdraw unilaterally,

"it will be understood by the Arab terrorist

"to be a reward for terror."

So unwittingly, and inadvertently,

we could be putting wind in the terrorists' sail.

Sharon had made clear that his plan would be carried out

without any consultation with the Palestinian Authority.

Arafat summoned his top advisers.

I remember distinctly the leadership meeting

that was held shortly after Sharon made that announcement

was characterised by a sense of, "What do we do with this?"

This guy was saying he's going to disengage from Gaza,

to withdraw from it. How can we say no or object or express reservation?

The gut reaction, the instinctive reaction

of many in the Palestinian leadership at that time -

to view this as a trap, as a conspiracy.

You know, "He wants to do Gaza in order to take over the West Bank."

The accusation that Sharon's plan was simply a smokescreen

for his designs on the West Bank was soon gaining traction,

and not just with Palestinians.

Condi came to us and said,

"There are some people in the world believe that your willingness

to leave Gaza is in order to distract attention

"from what's happening in the West Bank,

"and we might be considered as part of this conspiracy."

We insisted that when we thought about the Gaza withdrawal,

it couldn't be, as we called it, Gaza only.

The more he could do in making clear

that this was not about dumping Gaza and grabbing the West Bank,

the more we would be able to do to help Sharon politically.

Sharon was ready to give up Gaza for, let's say, good reasons,

in order to strengthen the Israeli presence in the West Bank.

But he understood very well that in order to be able

to pass it through the Israeli political system,

he needs to get something in return,

and the only ones who could give something were the Americans.

Sharon agreed to make a symbolic gesture.

He'd withdraw from a handful of settlements in the West Bank

as well all of those in Gaza.

In return, he got the American support he wanted,

including a recognition that the biggest settlements

in the West Bank would remain permanently.

We thought that however much they might complain about it,

this was a huge opportunity for the Palestinian people

and the Palestinian Authority.

They got a down payment on a Palestinian state.

They got Gaza, a territory which they would be responsible for

and they would have an opportunity to build and show the world

that they were ready to live side by side in peace with Israel.

The Palestinian leadership didn't see it that way -

and they had even more reason to be sceptical

when Sharon's Chief of Staff said the withdrawal

would put the peace process in formaldehyde.

I used the wrong term. I meant to say that the road map is inactive,

but it's very much alive.

And I said it definitely for the right-wing of our society,

"The Palestinian statehood that you are so much against

"will not happen tomorrow, as might be the case

"if the world will squeeze us."

It will happen maybe 5, 10, 20 years,

or it may not happen at all.

Sharon began preparations for the withdrawal,

setting a deadline of August 2005 for all settlers be relocated.

Then, with nine months to go,

came news that shook Palestinians to the core.

Yasser Arafat, the man who'd been the symbol of their resistance

for 40 years, was dead.

The new leader of the Palestinians was a very different character.

Mahmoud Abbas had a background in diplomacy.

President Abbas was the antithesis of Arafat.

He did not believe that you could beat the Israelis in a war.

He thought he would win the battle by convincing the Americans

that the Palestinians were not going to be reverting to violence.

The new President vowed to take on militants like Hamas

in a way that Arafat never had.

Weeks after taking office, he joined Sharon at a summit in Egypt

and announced he would end the Intifada.

Abbas and his team hoped they could now persuade Sharon

to reframe the Gaza withdrawal

as part of a negotiation with the Palestinian Authority.

I said to Dov Weissglas, "Dubi, I understand why you wanted

"to do it unilaterally when Arafat was alive,

"but now you have a new President,

"why not give us the credit for this?"

Our concern was that Hamas would say,

"Look, years of negotiations have failed to produce any results.

"Israel only responds to violence, only responds to force."

Why not let's sit and negotiate, even pretend to negotiate?

A couple of photo ops, a couple of statements,

so I and my team and my boss can go to our public

and say that disengagement is a result of our negotiation process.

Sharon was very consistent.

He said, "If we begin negotiations with the Palestinians,

"it will be endless story because they will always have

"new reservations and new complaints and new demands and we will never

"be able to do what I already decided that we should do."

I remember Weissglas saying to us,

"You don't even understand how we have to talk about this."

"We have to speak about this in Likudish," he said.

"This is a language you don't know.

"To speak to the Likud members, the only way to get this approved

"is to say, 'We're doing this for Israel.

"'We're not doing this for the Palestinians.

"'We don't care about the Palestinians.

"'We're not talking to the Palestinians.'"

CHANTING

Across Israel, huge protests against Sharon's disengagement plan

were gathering force.

Despite pressure from the right,

Sharon had managed to keep his government together.

Then, just before the withdrawal was due to begin,

one of his key cabinet ministers called a press conference.

I remember he comes in without the usual staff.

So I whispered to Sharon, "He's planning a little drama."

We had this feeling that he's about to resign.

I cannot be a partner to a move that I think

compromises the security of Israel, tears the people apart.

The only way that we can win this battle, anywhere, everywhere,

is by confronting terror and not appeasing it.

Appeasement doesn't work.

A week later, Israel began the pull-out from Gaza,

sending in its own forces to evict those settlers who tried to stay.

The operation bitterly divided Israel.

Some soldiers even refused orders to dismantle the settlements.

SHOUTING

They took our people out and give the Arabs this building.

Look, this beautiful area.

I want you just to see that.

They think that it will be peace?

No, no peace. No peace. With Arabs, will be no peace here.

The final Israeli troops left Gaza a month after the operation began.

Israel would still police the borders,

tightly restrict which goods were allowed in and out of the territory

and place controls on the Palestinian Authority

re-arming its police on the ground.

But the day-to-day running of Gaza inside the fence

was now officially in the hands of the Palestinians.

CHANTING OVER LOUDSPEAKER

Within hours of the withdrawal,

Hamas and other militants were claiming it as a victory.

Since its founding in the 1980s, Hamas had promised to destroy Israel

by violent resistance, reclaiming the land they saw as Palestinian.

Support for Hamas had grown in both Gaza and the West Bank -

and it would soon be put to the test.

Earlier that year,

Hamas leaders had met with 12 other Palestinian factions

and - for the first time in their history - agreed to take part

in elections, in return for what they called a calming of violence.

Leaders of Hamas were pushing for election.

They felt great self-confidence.

And therefore, they wanted the election

because they thought that they had a chance to win.

Parliamentary elections were set for January 2006.

Abbas would remain President whatever the outcome,

but there would be a new Prime Minister.

With three months to go, Abbas visited the White House.

The question immediately arose,

"You're going to have parliamentary elections - what about Hamas?"

Hamas, to us, was a terrorist group.

How is it that they participate in the elections?

Abbas said, "Look, you say you like free elections.

"Who is my opposition? It's Hamas.

"And if I don't let them participate in any way,

"this is a completely phoney election."

I remember asking about whether or not

Hamas should be allowed to participate

if they were still armed.

In other words, should they have to give up their militia

to participate in the elections,

rather like Sinn Fein had done with the Irish Republican Army?

And I remember Abbas saying, "No, if we say that,

"they won't participate, and then it won't be legitimate."

Conventional wisdom was, if Hamas showed up,

the whole process is going to be derailed.

But consider how much worse it would have been.

If they were forced not to,

if they were prevented from participating, it was a nonstarter.

The saving grace, in a sense, in this argument -

which Abbas also made - was, "They're going to lose.

"I'm going to win.

"Maybe they get 20% of the vote."

Not only does it show it's a free election,

it shows they have a low level of support.

And you're going to divide Hamas because there are going to be

some people in Hamas who are gunmen, who are terrorists,

and there are going to be others who like the taste of politics.

You will be creating a divide in Hamas.

The President, of course, was a big advocate of a democracy agenda,

of empowering people.

And he thought that it was time for the Palestinians to be given

an opportunity to weigh in on the question of their future.

And so he felt the elections had to go forward.

I want to thank President Abbas for his hard work.

I appreciate your service, Mr President.

I assured him that the United States will use our influence

to help realise a shared vision of two democratic states,

Israel and Palestine, living side by side in peace and security.

Thank you, sir. Good job.

The election campaign was soon in full swing.

Any Palestinian living in Gaza or the West Bank,

including East Jerusalem, would be allowed to vote.

Abbas's party, Fatah, was struggling to make a real impact -

even with American support.

There was a disconnect between American culture,

political culture, and Palestinian political culture.

They sent us the guy who designed the podium for President Bush.

This was well-intentioned,

but this was irrelevant to the Palestinian political culture.

No-one cared what the podium looked like.

I actually went to the West Bank a week or two before the election,

and it was really extraordinary because, all over the place,

there were banners for the Hamas candidates.

And when you looked for Fatah banners, nope.

Fatah placards on the wall? Nope.

It was really quite extraordinary,

because how does Hamas know how to do all of this?

They'd never been running in free elections.

Fatah was fielding multiple candidates for the same district.

Hamas was disciplined. They fielded only one candidate everywhere.

They had a very clear, unified message.

Hamas ran a masterful campaign. I remember one of their posters,

very powerful. You know, "America is against Hamas.

"Israel is against Hamas. Who are you for?"

And you are addressing Palestinians. I mean, that wins you votes.

With just weeks to go before the elections,

some Fatah officials started to worry.

They sought help in an unlikely place.

I was approached by a high-ranked Palestinian official. And he said...

.."We are in a big problem with this election,

"but because of the Americans monitoring, we can't call them off.

"The only one who can save us from ourselves, it's you guys."

So I said, "What are you expecting from us?"

He said, "The issue of the post offices in Jerusalem."

Palestinians in Jerusalem had been voting in post offices.

So all that you need is for Sharon to say,

"There'll be no voting in post offices."

Then the Palestinian Authority would say, "We can't go ahead like this.

"The Israelis have ruined the election."

So he said to the Israelis, "This is what you have to do."

What he said is, "Make a public statement

"which would be sort of provocative and we will call off the election.

"Everybody's happy."

About the participation of those who are living in East Jerusalem,

Prime Minister Sharon took a decision

that those who live there will be able to vote

in the villages around Jerusalem, like Abu Dis and others,

and not in those post offices within East Jerusalem.

Word soon got around that Abbas was preparing to cancel the elections.

The American consul general was dispatched to see the President,

who was also known as Abu Mazen.

I was asked by the State Department to convey a message to Abu Mazen

that the administration wanted the election to go forward.

I passed that message to him,

and after that, there was no further discussion

from the Palestinian side about postponing elections at that point.

As election day came around, Abbas had reason to be optimistic.

The elections went well.

No problems. Everybody who wanted to vote voted.

Polls were showing that Hamas will not win the majority.

Hamas will win maybe 30% to 40%,

and Fatah will get the rest.

Of course we are optimistic because we have democratic elections.

I was in Ramallah at the time.

I woke up to a commotion outside.

WHISTLE BLOWS, DRUMMING

SINGING

I turned on the TV, and the reporters were saying

that Hamas had won the election.

Gathered myself, went to the ministry,

and there was a state of shock,

a sense of, "OK, now what?"

CAR HORN BEEPS

When I went to bed, the last report was that Fatah had won.

So I'm a very early riser,

and the next morning, I was exercising

and there was a crawl on the morning news,

and it said, "Hamas wins elections."

And I thought, "Wait a minute. I thought Fatah won the elections.

"Why would this be the case?"

We got to the office right away to try to figure out what to do.

You might think we would have on our desk the scenarios,

"If Hamas wins, we do this, "and if Fatah wins, we do that,"

but we didn't.

Nobody had any plans for a Hamas victory.

Nobody believed it was even conceivable.

This put the United States in an extremely difficult position.

We were promoting the freedom agenda,

the importance of democracy, the importance of elections.

Were we now going to say that the elections were illegitimate

because Hamas had won them?

I met with Abu Mazen, and the message from Washington was,

was there any way he could avoid

appointing Hamas to lead the government?

The president told the Americans, "You wanted us to have an election,

"free election, democratic election, and this is the result.

"And now I have to accept the result and you have to accept it too.

"You have to pay the price with us."

How the international community responded to the election results

would be determined by a group called the Quartet.

Established to mediate Middle East peace talks,

it was made up of the US, EU, United Nations and Russia -

which was then working with the Americans in the War on Terror.

Their representatives were attending a summit on Afghanistan

when Rice called an emergency meeting.

From the American point of view,

there could be no dealing with Hamas.

And the argument we made was, "We will destroy our common position

"about fighting terrorism if we say it's OK for Hamas

"to be a terrorist group and be in this government, and we'll just

"deal with them as if they were not holding a gun in their other hand."

The Americans proposed a set of principles

for any new Palestinian government.

They must renounce violence, recognise Israel

and sign up to previous peace agreements -

all things that Hamas would almost certainly reject.

The question was, who would tell Hamas?

Russia was the only member of the Quartet that actually had

a relationship with Hamas.

And so I had to convince Sergey Lavrov,

the Russian Foreign Minister,

not only that it was important that we state these principles

but that Russia was going to have to carry the water in doing that.

It did take some convincing with Sergey,

but as we talked it through, he came to recognise that

the Russian Federation couldn't be on the side of violence

in the Middle East. And he did actually carry the message to Hamas.

The Russians were saying to Hamas, "Guys, say the magic words."

"Just say some formula about,

"'Of course we want peaceful this and peaceful that,'"

but Hamas was not playing ball.

They were remaining Hamas - armed struggle.

The Hamas party has made it clear

that they do not support the right of Israel to exist.

And I have made it clear, so long as that's their policy,

that we will not support a Palestinian government

made up of Hamas.

Hamas failed to endorse the Quartet Principles,

failed to disavow violence against Israel.

This did not sound to us like the way to get

a peaceful democratic Palestinian state.

This new democracy that's emerging in the Palestinian territories

must understand that you can't have a political party

that also has got a armed wing to it, that democracies yield peace.

We were in a state of confusion, but also a state of indignation.

We undertook this process as you demanded,

at the time that you insisted we do it,

and now you are rejecting it.

How is that democracy? How is that rational?

But we were told in no uncertain terms by the Quartet, "Nope.

"That outcome is not amenable to our principles, to our vision.

"You either fix this or it's a no-go."

Abbas invited Ismail Haniyeh, Hamas' leader in Gaza,

to become Prime Minister.

The government he formed would be in charge of crucial parts

of Palestinian life in both Gaza and the West Bank.

But the Quartet Principles meant its ministries could not directly

receive the international aid on which they desperately relied.

The money would instead have to go through

the Fatah-run Presidency of Abbas in Ramallah.

Our hope really was that Hamas would be isolated in Gaza,

so either Hamas would reform and become a legitimate political party

or it would remain isolated.

And the hope was that if you had a failure in Gaza, you had a success

in the West Bank, Palestinian politics would resolve this issue

and, in short, that Gazans would throw off the yoke of Hamas.

The Western powers

wanted to create a split between the President's office

and the Prime Minister's office.

And the split would be total because the President's office

will be receiving the money and will be talking to the West

while the government, with its health ministry

and economic ministry and education ministry, would receive no money.

This was a disaster for Palestinians altogether.

The breakdown in relations between Hamas and Fatah was soon

only too evident and quickly spilled onto the streets of Gaza.

With American backing, Abbas had started training thousands

of new recruits to his Presidential Guard to police the territory.

GUNSHOTS

Hamas fighters refused to accept their authority.

By early 2007, dozens had died in clashes between the two sides

and images of Palestinians killing Palestinians

were broadcast around the Arab world.

The region's most powerful leader decided to intervene.

The King of Saudi Arabia -

the custodian of Islam's most sacred sites -

invited Hamas and Fatah to Mecca to talk about reconciling.

The Saudis pay a lot of money for the Palestinian Authority.

Therefore, it was not only hard to say no to them,

it was almost impossible.

The final text didn't mention the recognition of Israel.

It simply stated that both Hamas and Fatah would stop shedding

Palestinian blood and stressed the importance of national unity

to confront the Israeli occupation.

Back in Gaza, the divisions between Hamas and Fatah would only deepen.

Hamas was very frightened that the Americans

were helping Fatah to end the presence of Hamas by force.

And Fatah was thinking the same,

that Hamas was going to do something to take over Gaza.

So, one night, I decided to go to see what's the situation like.

And it was a bit shocking.

We were driving around and we saw, on every corner of every street,

a Hamas fighter carrying his RPG on his back, not hiding.

So the next day, I went to the President and we said to him

that the situation is not good and something has to happen.

GUNSHOTS

It was Hamas who acted first.

In June, its fighters caught the Fatah security forces off-guard

and seized control,

saying that only Hamas had the legitimacy to run Gaza.

Within days, Hamas had pushed the Presidential Guard

out of Gaza entirely.

Abbas called his top advisers to his West Bank headquarters.

There was a very solemn meeting, as you can imagine.

And, you know, by that time,

the feeling had set in that this was a violent takeover of power.

Well, this was the ultimate...scenario, if you want,

the ultimate split. You have two powers, two factions

controlling the two areas of the West Bank and Gaza.

Abbas's authority was at rock-bottom.

He'd come to office promising to negotiate a two-state solution,

but had now lost control of one of the Palestinian territories

on which that vision depended.

Weeks later, he was in Egypt for a summit with some of the region's

biggest players, including Israel's new Prime Minister.

Abu Mazen, for all practical purposes,

seemed to have been dead, and we decided to revive him,

to bring him into life again.

Ehud Olmert had taken office the previous year,

after Ariel Sharon suffered a massive stroke

from which he would never recover.

Unlike Sharon, Olmert promised direct peace talks

with the Palestinians.

Olmert was totally different to Sharon.

Olmert was the mayor of Jerusalem, which had East Jerusalem within it.

And therefore he knew how to deal with the Palestinians,

with the Arabs.

He knew that the predicament of Abbas

was very difficult at the time.

And he knew that the Israelis need peace,

need to finish this issue once and for all.

While we were talking, one of my assistants broke into the room

and said, "Prime Minister, we need you outside."

I have a telephone call. The head of the secret service calls me,

and he says, "There is a meeting now taking place in Gaza

"with 12 of all the leaders of Hamas."

And he said, "We have an F-16 with one-ton bomb ready,

"and they will all be killed. I just need your OK."

I said, "Look, I sit right now with President Mubarak,

"with King Abdullah and with President Mahmoud Abbas."

"If, while we sit in Sharm El Sheikh, the leaders of Hamas

"will be assassinated - I mean, eliminated - by us,

"they will be implicated to have cooperated with us

"in killing Palestinians and this will be their end.

"And I'm not going to risk my partners,

"even for the sake of such...a very desired achievement.

"Say no."

Hamas' leadership in Gaza remained intact.

And while Olmert and Abbas were talking about a peace deal,

its fighters were building their capabilities,

firing barrage after barrage of rockets into Israel.

For the US President and his Secretary of State,

the clock was ticking.

Their final term in office was coming to an end,

and they desperately wanted to see a peace deal.

The President thought if Abbas could work out an agreement

that would establish a Palestinian state,

then that outcome could be taken to the people of Gaza and say,

"Do you want to continue to live under Hamas?

"Or do you want to join and be part of this Palestinian state?

"You decide."

Condi was in no doubt that we should continue to move forward

despite, you know, the loss of Gaza.

This was hers. And, after all, she had a partner in Olmert.

Progress was slow.

After several rounds of talks, Olmert and Abbas

had made little headway.

Rice flew to Israel to try to move things forward.

I was invited to dinner with the Prime Minister

and a little bit surprised that he said to me,

"I want to have dinner with you alone.

"I don't want anyone to be there."

There was a table, two seats, and I started to talk.

The waiters came with food, and I say, "No, no, no, no!"

And they went!

I could tell that he was a bit nervous somehow,

that this was different.

And he started to say that he believed that if we were

going to make progress, what he had to do was to put on the table...

He didn't say it this way, but it was almost Israel's final offer

on how we would get to a two-state solution.

And then he began to describe what he had in mind.

Olmert told Rice that he was ready to offer Abbas a deal

that would see Israel withdraw from 95% of the West Bank.

And he even went on to talk about the controversial subject

of Jerusalem and its iconic religious sites.

I said the Arab side of Jerusalem will be part of a Palestinian state,

will be the capital of a Palestinian state.

And then I said the Holy Basin will not be under

the exclusive sovereignty of anyone.

And there will be a trust of five nations -

Saudi Arabia, Jordan, Palestine, Israel and America -

under the auspices of the UN Security Council.

I thought, "This, in some ways, might be the breakthrough."

It's easy to think of the Israeli-Palestinian conflict

as a political conflict.

But I remember my first trip to Jerusalem

and looking at the Holy Sites with that extraordinary light

that is only there in Jerusalem

and seeing that the Holy Sites don't meet in Jerusalem,

they clash in Jerusalem.

And so this acknowledgement that something had to be done also

about the religious element of the Palestinian-Israeli conflict.

I was very excited because it was the first time

that I presented the full scale, the whole programme.

And it... It erupts like a volcano

from my chest to her.

I was writing as fast as I could,

trying to keep up with what I was hearing,

and he was accelerating in his speech as he went through this.

And I knew that this was a very special moment

and what to do about it, what to do with it.

Rice went back to her hotel to talk to her team.

I was amazed by the offer

because it went much further than the Israelis had ever gone.

My reaction to this was, "Wait a minute.

"He told Condi. Has he told his cabinet?"

And I was actually fearful.

Because where are we if Olmert proposes this to Abbas

and Abbas says yes

and the Israeli cabinet says no, or the Knesset says no?

That's the end of the peace effort.

Before Olmert had a chance to present his plan to Abbas,

he was forced to confront a different problem.

NEWSREADER: The Israeli Prime Minister, Ehud Olmert,

has denied allegations that he took illegal campaign contributions

from an American businessman.

The allegation, essentially, is that he received

hundreds of thousands of dollars from a Jewish-American financier

who is known in Israeli press as The Laundryman.

As we say in Hebrew, in Yiddish, it's a "lange maiseh" -

it's a long story -

because from day one of my Prime Ministership,

there were investigations conducted against me

by all my political rivals.

And I knew from the beginning that I was, in a way,

playing on a borrowed time,

and therefore I have to hurry up and to move forward as fast as I can.

After police launched an official investigation,

Olmert announced he would step down as soon as a new leader was chosen.

Nevertheless, he decided to press ahead with Abbas.

We went to this meeting. It was the President and myself.

So after we had some time talking,

Olmert asked the President to go with him to a separate room.

I brought this map and I presented it to Abu Mazen.

This is the first time that I exposed this map to the media.

You can see here it says,

"Annexed to Israel 4.9% of the territory of the West Bank,"

and the blue stains here are what was scheduled

or what was planned to be annexed to Israel.

The map that Olmert presented showed Israel withdrawing

from the vast majority of the West Bank.

It would retain the largest settlements,

but the Palestinians would be given Israeli land in return.

The plan would also connect Gaza and the West Bank via a tunnel

or highway, to help re-unite the two territories politically.

He said, "Prime Minister, this is very serious.

"It is very, very, very serious."

He says, "Give me the map."

I said, "President, I will not give you the map

"unless you sign it by initials."

I said, "President, I beg you.

"Listen, in the next 50 years,

"you will not find one Israeli leader that will propose to you

"what I propose to you now. Sign it, sign it and let's change history!"

And he said to me, you know, "I need my map expert to go over it."

So I said, "OK, let's set up a meeting tomorrow

"for your map expert and my map expert." And he said, "Fine."

So we parted, you know, like

we are about to embark on an historic step forward.

We said goodbye and we went into the car.

And the President said that Prime Minister Olmert said,

"If you agree to this, we can sign a deal."

And of course we laughed

because it is unfortunate that Olmert,

regardless of how nice he was, he's a lame duck - in American terms -

and therefore we will go nowhere with this.

Next day, they called,

and they said, "Well, the President forgot that he has got to go

"to Amman and, you know, we'll come back to you."

I've been waiting 15 years for this.

Nine days later, Abbas flew to America to see Bush.

Mr President, welcome back.

The American President hadn't given up hope

of making a breakthrough before he left office.

His argument to Abbas was, "Seize the opportunity

"and do a peace deal now."

If he would accept a peace deal with the Israelis,

it would then give him a platform

to go to the people of Gaza

and bring Gaza and the West Bank back together.

Bush's view was, "This was a time for boldness, for leadership,

"a historic opportunity."

And unfortunately, Abbas did not seize it.

Olmert presented this map to President Abbas

but told him that he cannot take a copy.

How can you sign on the biggest deal in the history of the Palestinians -

that is peace agreement with Israel -

when you don't know what the map looked like exactly,

and what are the conditions surrounding the map?

That's not a good deal.

We might as well wait for the next Prime Minister to come.

In four months, Bush would leave office -

the latest US President who would do so

without the peace deal they'd craved.

Israelis, meanwhile, prepared to go to the polls in an election

that would determine the course of the peace process for years to come.

With Netanyahu, you had to lay down a very strong line to begin with.

Netanyahu said Obama said to him,

"You know what I do with people who disagree with me?"

and then drew a finger across his neck.