Transportation Minister Shaul Mofaz, who previously served as defense minister and chief of General Staff, obviously has more on his mind than roads and traffic jams - which is why he has to love the periodical strategic dialogues with the US. Mofaz was selected last year to head Israel's team to those talks, formally known as the Joint Political Military Group, and he spent a couple of days in Washington this week talking with US Secretary of State Condoleezza Rice and Undersecretary of State for Political Affairs Nicholas Burns about the "big" issues: Iran, Syria and Hizbullah. First the good news: Mofaz doesn't feel the fighting in the refugee camps in Lebanon will spill over to Israel. Now the bad news: everything else. Well, maybe not absolutely everything: He does believe that there is a more than 50 percent chance that sanctions can stop Iran's nuclear march, and that a secret channel with Syria might do some good. But still, an hour with Mofaz doesn't exactly leave one with an optimistic picture, because the scene he paints is of a Hizbullah that is at prewar capacity throughout Lebanon, both north and south of the Litani River; a Hamas that is poised to completely take over the Palestinian Authority; and an Iran that is not only merrily pushing along with its nuclear program, but also training and funding both Hamas and Hizbullah. On Monday, just before going to Washington, Mofaz sat down in his Knesset office with The Jerusalem Post and laid out his sober view of the main issues on the agenda. What is the focus of the current strategic dialogue in Washington? The main issue will be Iran and its pursuit of nuclear power. There is currently a three-stage strategy: The need to create a united front against the Iranian nuclear program; the importance of strengthening sanctions against Teheran, with an emphasis on financial measures; and the fact that all options remain on the table. The creation of the united front and the sanctions are mostly operational and are dependent on how much they will be implemented. The third option is mostly meant to send a message [to Iran], since we cannot let its capabilities meet its intentions. We are not yet talking about additional options, but we are talking about the possibility of additional options. There is some talk in Jerusalem that if US President George W. Bush does decide to take military action, it would be in the summer of 2008, after the party primaries and before the conventions. Do you agree? I don't think that it is right today to talk about military options as long as you have not exhausted all the other options, especially sanctions. I give the sanctions more than a 50 percent chance, not 10% or 20%. Otherwise we would not be investing so much effort in this, and we would not have passed [UN Security Council] Resolution 1747. This resolution talks about stopping Iran from sending weapons to countries and terror groups like Syria and Hizbullah. We know this is taking place, and the best proof was the train that was stopped in Turkey recently [transporting weapons from Iran to Syria]. You said you think there is a more than 50% chance sanctions will work. But by when? I think that if the US decides to escalate the sanctions, we will start to see their results by the end of the year. We are already seeing the beginning of this with financial and economic officials [in Iran] complaining that their moves are being stopped as a result of [President Mahmoud] Ahmadinejad's polices. To increase the sanctions, we can stop commerce between Iranian banks and American and European banks. We can stop giving them refined fuel or not help them renew their outdated oil infrastructure. All of this can influence them. If the sanctions are stepped up, I think we can start to see their results. This doesn't mean, however, that by the end of the year they will agree to stop their nuclear program. If there is an escalation in the sanctions, and we see results, would that mean there is no need for military action? Yes. The potential for a regional escalation as a result of an attack is great. Iran sees Israel as a target and has ballistic missiles that can reach every European capital. If it responds, then Hizbullah will respond and maybe Syria, and we don't even know how Hamas will react. So before using force, we need to fully exhaust the sanctions course. What other topics are on the strategic dialogue agenda? The second topic is UN Resolution 1701 [which ended the Second Lebanon War]. There is no implementation of 1701, and today Hizbullah is back to the strength it was at before July 12, 2006 [the day the war erupted]. It is not back in its positions right along the border but it is in positions - forest preserve areas - that are close to the border. They have not fulfilled the resolution. The kidnapped soldiers have not been returned; Hizbullah has not been disarmed and dismantled by the Lebanese armed forces or UNIFIL; there is no embargo on the Lebanese-Syrian border; and there is a free flow of weapons to the Hizbullah. The open border and flow of weapons is basically the big flaw with the resolution? Along with the fact that Hizbullah has not been dismantled and has not left southern Lebanon. This was the mission given to UNIFIL and the Lebanese armed forces [LAF]. They spoke about disarming Hizbullah and moving them north of the Litani River. Now, not only are they still in southern Lebanon, but they are also building a second military line north of the Litani River. Today they have a double grip - both sides of the Litani. You are saying that they are in positions next to the border with weapons? Yes. They don't walk around in southern Lebanon in the open with the weapons, but rather are limited to areas like urban areas that the LAF and UNIFIL do not enter; and when Hizbullah guerrillas walk around, they walk around disguised as civilians. Of course they have weapons. No one goes inside the forest preserves. But the IDF is saying that UNIFIL is doing a good job, particularly the French, Spanish and Italian contingents. I have not heard of a single shot that was fired there, or a clash between Hizbullah and the LAF. They are avoiding clashes, and they stay out of Hizbullah areas. It could be that they are discovering old weapons and ammunition caches, but they are not going to uncover caches in places where Hizbullah maintains a presence. It could be that they found some caches, informed us about them and blew them up, but it has not reached the point where they are dismantling Hizbullah. What do you want the Americans to do? The Americans spearheaded 1701 and it is not being implemented. They can step up the pressure inside the UN Security Council and on LAF through the Lebanese government to implement the resolution. But there are no UN observers on the Syrian-Lebanese border to stop the arms flow. That's true and I don't see any signs indicating that there will be. Do we ask for them? Of course. This is part of the resolution that talks about an embargo on the flow of arms to Hizbullah and this isn't [being implemented]. There is an impression that while Hizbullah is getting weapons, this is only north of the Litani; it isn't moving the weapons south. Hizbullah has returned to full capacity in southern Lebanon and is back at where it was before the war - it has rehabilitated its military. I cannot give you numbers, but it is in principle back at its full strength. The same goes for the long-range rockets, although we don't know exactly how many they have, since it takes time to collect the intelligence. It took us six years - from 2000 to 2006 - to collect intelligence on its long-range rocket array. But now there is no doubt that long-range rockets are being transferred to Hizbullah. There is linkage between the radical quartet - led by Iran, Syria, Hizbullah and Hamas. Non-government groups like al-Qaida are also growing stronger. We have been talking for three to four years about al-Qaida trying to get a foothold in the Middle East, and there have been attempts to infiltrate Israel. Today it is clear that it has a presence in Lebanon. All that is happening in the Nahr el-Bared refugee camp is with al-Qaida. Do you see any ramifications from the fighting going on there for Israel, since it seems to have already moved south? I don't think that is a threat, or that it will ignite the area. What should Israel do regarding Syria? Today, Syria is investing in preparing the military, although without signs indicating that it plans to attack us. It is taking steps to raise the military's level of readiness, to obtain new weaponry, and it is also investing in defensive measures along the border. This is all happening, while in the background there are declarations made by Hizbullah, Ahmadinejad and [Syrian President] Bashar [Assad] who has said several times that if progress is not made in negotiations, the Golan Heights can be retrieved by force. All of this creates "combustible fumes" that even the smallest match can set afire. What might constitute that match? A miscalculation - a terror attack initiated by Hizbullah or a terror group on the Syrian border. This could lead us to going on high alert and then to a Syrian miscalculation that will turn the combustible fumes into a blaze. Don't we already have a tense situation along the border all the time? No. Before the Lebanon war things were quiet along the Syrian border and there wasn't any tension. But today the tension there can escalate. We will, of course, keep a close eye on what is going on there, and Israel will exercise judgment and act responsibly, but we don't know what that the other side will do. Is this where your proposal for a secret channel of talks with the Syrians comes into play? The secret channel is good for several reasons: If a state calls on Israel to hold peace talks, it is worth checking out. I don't think we should make declarations when we plan to start peace talks and hold a ceremony. But I think we should check into it. Check into what? We should check the seriousness of Assad's overtures, since he cannot claim to be clean and innocent when he is allowing terror groups to have offices in Damascus, transferring arms to Hizbullah, trying to undermine [Lebanese Prime Minister Fuad] Saniora's government - and now the UN has established the Hariri tribunal [to investigate the assassination of former Lebanese prime minister Rafik Hariri]. With this happening, he can't just come out one day and say he wants peace with Israel and at the same time issue threats. So given all that, what is there to check into? You know what Assad is doing in Lebanon and with Hamas... We are not talking about a secret meeting between [Prime Minister Ehud] Olmert and Bashar or between foreign ministers or defense ministers. What we are talking about are two figures that are in direct contact with the leaders who can hold the talks instead of them. Is this already happening? I didn't say whether it was or wasn't, or at what level. What I said is that when there is a call coming from Syria for talks, and another call in the form of a threats - when you also see what is going on in the military; when you are after a war and there are usually aftershocks that can lead to a deterioration - then there is room to talk to the Syrians through a secret channel and without making any declarations. Every country has the diplomatic tools to do this, and we don't have to announce it publicly. What does this accomplish? On the one hand it opens an indirect line of communication between the two sides. Secondly, it creates a level of trust. Thirdly it can lead to a declaration of intentions such as, "We are not interested in war and don't plan to attack you." This can lower tensions and prevent miscalculations - such as a local Syrian commander who suddenly, due to the tension along the border, does something that ignites the region. I think that, because of all of the above, there is a good reason to open this line of communication. This is not meant to send a single message or meet just once a year, but needs to be something continuous that allows you to better comprehend what the other side's intentions are. Are you asking the US for their permission for these talks, since they were once opposed? No. I am just voicing my opinion... I am sure that while we are sitting here, there are many secret channels that the US is holding with a number of countries that we don't know about and shouldn't know about. It is also important to keep in mind that many peace treaties, including some of ours, started via secret channels. But some say that now, with the Hariri tribunal getting started, is exactly not the time to take Syria out of international isolation by holding talks. I think that their isolation is so deep that a secret channel is not what will give them air to breathe. I think that it is in both our interests to have a line of communication like this. This does not give them legitimacy for their support of terror. If you sit with them, with a delegation, for real negotiations, then that gives them legitimacy - but a secret channel can end tomorrow. Do you agree with the IDF assessment that without negotiations there is fear of war with Syria? I don't think the Syrians have an interest in going to war with us right now. I don't think it is the interest of either side. That doesn't mean, however, that we don't need to be prepared for the possibility. In many ways, it is easier to fight against Syria than against Hizbullah, since this a state and a regime that is easier to topple than a guerrilla group. This doesn't mean that we couldn't have achieved a better result and have defeated Hizbullah. You said that direct talks would give Assad legitimacy. So do you set an end to funding of Hamas and Hizbullah as conditions before real talks? If you set preconditions, you can create a situation in which there will never be talks. But when you go to talks, you need to pay a price to show that you are serious. For example, if Assad wants to make peace with us, he needs to remove the Hamas and Islamic Jihad terror headquarters. We can't go to peace talks when Khaled Mashaal is in Damascus and Assad funds and supports Hizbullah. A secret channel does not have a cost and you have nothing to lose if its stops. But when [formal] talks blow up, it could be combustible and lead to the use of force. [Secret talks] are a discreet and in-depth way of clarifying things that can reduce the level of tension and change the way people talk. The moment you clarify your intentions you speak differently.