Martin Indyk thinks Ariel Sharon is "by far" the smartest politician in Israel. "He's a pragmatist and he's got his finger on the pulse of his people," says the Clinton-era American ambassador to Israel. And Sharon understands, Indyk argues, that for more and more Israelis today, "separation is more important than settlements." Indyk is here at the helm of this weekend's "Saban Forum" - an annual American-Israeli dialogue that is bringing former president Clinton, would-be president Clinton, Secretary of State Rice and other American luminaries to the country this weekend to meet with numerous top-level Israelis. During his stints as ambassador here and assistant secretary of state in Washington, Indyk clocked up innumerable Sharon hours. He pored over the Israel map that Sharon would carry with him, and heard, over and over, "the lecture" Sharon would give about the transcendent importance of Kfar Darom and Netzarim to Israel's long-term security. Now, says Indyk, "I think Sharon has a new map. The old one that he used to carry around with him got a bit too tattered." And that new map, in Sharon's head, he believes, shows an Israel not only, obviously, without Gaza, but also without most of the West Bank, too. It's a map that features an undivided Jerusalem. It certainly includes the Golan Heights. But in Judea and Samaria, it extends to the current route of the security barrier, incorporates the Etzion Bloc, Ariel and the Ma'aleh Adumim area settlements, and little more. In a week when The Jerusalem Post quoted advisers to the prime minister saying he wanted another term in office so that he would be the man to determine the route of Israel's final borders - "because he thinks that only he can do it, because he knows the land and this is his historic mission" - Indyk plainly takes a similar view of Sharon's intentions. While many politicians who oppose Sharon, and even some of those close to him, express bafflement when asked to assess why the prime minister has changed stance so radically and where he is headed next, the now silver-haired former US envoy believes he has the measure of the man: "Sharon's vision is not of an Israel at peace with its neighbors," says Indyk. "He doesn't believe that is possible. It's of a robust Jewish state with Jerusalem the undivided capital." And for all the prime minister's repeated pledges that there will be no second unilateral withdrawal, attaining that vision for Sharon inevitably necessitates Disengagement Two at some stage or other - a move, incidentally, that the ambassador cautions against for the time being, believing it to be premature if not entirely wrong-headed. "Sharon knows that, in any negotiation with the Palestinians, they'll want Jerusalem on the table. But he doesn't want to negotiate Jerusalem. The same applies, by the way, to Syria and the Golan Heights, and that's why he doesn't want to negotiate with the Syrians." Indyk agrees, with dry understatement, that "people in his own camp have trouble understanding the shift" that Sharon has undergone. "He wasn't forced by the US to give up Gaza," he stresses. "If we had been forcing him," Indyk laughs, "I dare say he wouldn't have done it." So what altered him? "His sense of what is crucial to Israel as a robust Jewish stateâ€¦ He understands that the demographic threat is far more important than the conventional threat. Kfar Darom and Netzarim played a role in countering the conventional threat. But they are counterproductive in terms of demography, and in terms of the terror threat, where you need fewer targets." What does this mean for the future, if Sharon gets to determine it? "If that was the logic of disengagement for Gaza, then the same logic applies for the West Bank. The conventional threat is gone, so the security argument is questionable. With Jordan at peace with Israel, the Syrian army no threat and the US in Iraq, the situation on the east has changed drastically. The security calculation is the opposite of what it used to be. Separation is the way to secure Israel. Get behind a high fence and wall." And once that barrier is completed, says Indyk, "the pressure will grow to withdraw [to it]. There's already talk about unilateral withdrawal. Labor is considering bringing it into its platform. I think it will move quickly into the mainstream." Why does Indyk, who self-evidently endorses the assessment that Israel is better off without Gaza and would be stronger without much of the West Bank, oppose the unilateral route to such a destination? "Sometimes," he sighs, "Israelis are too clever by half. They get enamored by an idea that seems, on the face of it, to serve the country well but then turns out to be short-sighted. Unilateral disengagement made a lot of sense in the days when Arafat was around and there was nothing to be done because he was a serial breaker of commitments and a man who would not give up on violence. But now you have Abu Mazen, and the idea to act unilaterally again, in the West Bank, rather than to find a way to help build a capable Palestinian partner seems short-sighted - despite Abu Mazen's problems." Indyk says he doesn't know whether Abu Mazen will prove capable of confronting Hamas and other terror groups, but he considers the Palestinian leader's public anti-terror rhetoric to be "a hell of a big change" and believes Israel would be foolish to give up on him too soon. "On the Israeli side, there's a feeling that 'It's just words. It will never amount to anything. We should go our merry way.' That becomes a self-fulfilling prophecy. Now, primary responsibility is of course on his shoulders. But Israel can help. Israel's enlightened self-interest is to help." Why so? "Unilateralism leads to a two-state outcome - but the Jewish state is behind a high fence and a failed, Palestinian, terror state is on the other side. If that's not the outcome that Israel wants - to have a disaster on the other side of the fence - then think back to what you do want and say, 'Abu Mazen may not be the best thing since sliced bread but he's better than the Hamas alternative.' If Abu Mazen fails, then maybe it's time for unilateralism, but at the moment I think it's time to find ways to help him," says Indyk. "Territory for peace agreements with a capable, responsible, accountable Palestinian partner is better than territory for nothing." HAPPY TO talk at length and be quoted, now that he is no longer in government, Indyk roots the failure of the Clinton presidency's unrelenting peace efforts not at Camp David, but months further back, and what he believes was the missed opportunity for Israeli-Syrian peace. It was, he says, a case of "ships passing in the night." There was a moment, near the end of his life, "after seven years of playing games with us and Israel," when Hafez Assad was ready for a deal. But Ehud Barak wasn't. "He feared that the people of Israel would think he was giving up [on the Golan] too easily," Indyk explains. Three months later, when Barak was ready, it was too late. "Assad was so physically weak he had the strength for only one more act - to ensure his son's succession." "America blew it because our whole strategy depended on getting Syria," Indyk acknowledges. "Lebanon would have followed. The Saudis would have been more supportive [of regional normalization with Israel] and Arafat would have had to run to catch up with the rest of the Arab world, fearing the Palestinian cause was being left behind. Instead, when we missed the deal, Arafat went from fear of being left behind to being the only game in town." When the Syrian breakdown was followed, in May 2000, by Israel's unilateral pullout from Lebanon, the prospect of dramatic Israeli-Palestinian progress receded still further. "Hizbullah was trumpeting a victory for violence at a time when internal debate was already raging among the Palestinians" between those who favored negotiations and those who wanted to use violence to try to extract concessions. Those factors combined, says Indyk, "to cause failure at Camp David, and then the intifada broke out which made a Palestinian deal impossible." Yet even in the best of circumstances, Indyk later says, even if it had been Rabin rather than the "non-politician" Barak who was doing the negotiating, no all-encompassing permanent accord would have been feasible - perhaps because of the issue of Palestinian refugees and certainly because of irreconcilable differences over the fate of the Old City and the Temple Mount. Indyk plainly subscribes to the view that much would have been better had Yitzhak Rabin lived. He takes pains to stress that Rabin never explicitly endorsed either independent Palestinian statehood or the dismantling of settlements, and that, rather than the 94 or so percent of the West Bank that Barak was ready to relinquish, under Rabin "everything we heard was always 70%." But he thinks Rabin would have made more progress than his successors did with Arafat because "he had Arafat's number. He knew who he was dealing with and how to deal with him." With Arafat, "it was all tactics, not strategy." Rabin treated him with respect, but he also "slapped a six-month security closure on Gaza" when Arafat first arrived there. "He would have insisted on Arafat fighting terror," and Indyk believes that might have worked even though that's "hard to conceive looking back at the last few years [of Arafat's life]â€¦ People forget but [at the time of Rabin's assassination] Arafat and his security forces were moving against Hamas." Rabin, says the ex-envoy, "would never have gone for a final deal" the way Barak did. "Oslo deferred all the crucial issues - Jerusalem, settlements, refugees, borders. That's what he liked about it. He entered skeptical that Arafat would ever accept his red lines: No Palestinian state; nothing on Jerusalem; nothing on settlements. Oslo put all of them off." But it was meant to be a five-year process, by the end of which those final-status issues were to have been resolved as well. "Yes, and it was being delayed," Indyk notes, "and Rabin kept saying that there were 'no sacred timetables.' "My guess? Rabin would have wanted to solve the territorial issue" and would have had to "come up" from that 70% to do so, suggests Indyk. "But he would have found a way to defer the issue of Jerusalem and perhaps the refugee issue as well." Like Sharon, says Indyk, "I don't believe Rabin would have agreed to sharing Jerusalemâ€¦ He wouldn't have accepted Arafat's minimum requirements, and he would have known that Arafat would not accept his and that there was no deal there." That assessment seems to permanently rule out a final-status accord on Jerusalem? With a "capable, responsible, accountable" Palestinian leadership, Indyk says, "it's possible to resolve all the issues except for the holy basin. Israelis don't see Shuafat as critical to their vision of the city, let alone Kalandia refugee camp. Jewish Jerusalem from Ma'aleh Adumim to the east, Givat and Pisgat Ze'ev to the north and Gilo and Har Homa to the south is larger than any Jewish Jerusalem ever was before. Arafat accepted all of that, including Ma'aleh Adumim. "But I don't see any deal possible in the Old City - dividing the Old City, dividing sovereignty on the Temple Mount," says Indyk. "The Palestinians already feel they have sovereignty on the Temple Mount."