Newly returned to White House following the wedding of his daughter Jenna at his Texas ranch this weekend, US President George W. Bush was in notably good spirits as he sat with The Jerusalem Post and three other Israeli journalists in the Oval Office on Monday. He spoke about the moral principles that underpin his presidency and about the challenges posed by Islamic extremism. But he did not say unequivocally that he believed he could thwart Iran's nuclear drive before leaving office. Ahead his visit to Israel later this week, the president also stressed his continuing belief that an accord can be reached this year between Israel and the Palestinians. He said he had witnessed the emergence of the belief in Israel that the Jewish state's long-term survival depends on there being a Palestinian state. And he added that he himself could not envisage the Middle East evolving in the absence of such a Palestinian state. Excerpts: President Bush's opening remarks: I'm looking forward to my trip to Israel, and Saudi and Egypt. There's no better place to talk about democracy, and the history of democracy, and the challenge of democracy in dealing with existential threats and terrorism and state sponsored terrorists than in the Knesset. I hope at the end of the speech [I'll give in the Knesset], people will say, "If vision accounts for anything, he has got a vision of how to deal with the extremists and radicals." Bush on the corruption allegations against Prime Minister Olmert, and whether an accord with the Palestinians is still possible in 2008: I do [think a deal is still possible]. Let me say something about Olmert. It's a legal matter inside the system. The system will deal with it. My relationship with the prime minister has been nothing but excellent. I find him to be an honest guy who loves his family. He's easy to talk to. He's a strategic thinker. So we'll see what happens. The vision of a state is such a powerful notion, such an important notion for Israel's very existence, that I do believe that we have a chance to get something defined. This is not an Olmert plan. This is a plan of a government. Tzipi Livni is handling the negotiations. Ehud Barak is involved. During my presidency, there's been clarity for people to see the world the way it really is. A failed leadership of Hamas in Gaza, for example. Plus [there's been] the emergence of thought in Israel that the only way to exist in the long-term is for there to be a Palestinian state. And it's a powerful idea. I believe in powerful ideas. I believe that with US help, the negotiators can come up with the definition of a state. The state won't exist until certain obligations are met. But it's the definition itself which becomes a powerful engine for the marginalization of people who murder innocents to achieve their objectives. That's really what the struggle is about. It's the same struggle in Iraq and it's the same struggle in Lebanon. The Middle East is where the great ideological conflict is being played out. And an effective Bush foreign policy is to put the focus of the United States squarely in the middle of the Middle East. That's like our top priority. It is the top priority of this government. Bush on the prospects for halting Iran's nuclear drive in his term: Iran is an incredibly negative influence. They are sending weapons into Iraq and we're pushing back hard and will continue to do so. Hizbullah is no longer the great force against Israel. All of a sudden, they've turned against their own people. Hamas is not a classic political party trying to better people's lives. They are trying to destroy Israel. That's the truth. The other truth is that Iran is involved in funding Hamas and Hizbullah and it's that Iranian influence which I'm deeply concerned about. But there needs to be more than just the United States concerned about it. We take [seriously] this issue of [Iran] getting the technology, the know-how on how to develop a nuclear weapon. All options are on the table. Of course you want to try to solve this problem diplomatically. What definitely will be done [before I leave office will be the establishment of] a structure on how to deal with this, to try to resolve this diplomatically. In other words sanctions, pressures, financial pressures. You know, a history of pressure that will serve as a framework to make sure other countries are involved. Bush on how to tackle the current instability in Lebanon: I'd advise the world backing [Prime Minister] Saniora. He's a good guy. He's tough and he's in a really tough situation. I admire him. Lebanese democracy is vital for the Middle East. This is again a case of people receiving outside funds to destabilize democracies. Bush on what he'll be demanding from Israel during his visit, including on settlements: I will come not as somebody who demands, but as someone who encourages. The United States cannot impose peace. Lasting peace happens when people understand, in this case, that the definition of the [Palestinian] state is the first step toward peace. And it's hard work. So what I'll be doing is encouraging people to see if they can't reach agreement on what the borders of a state will look like, for example. Because once you can define the borders of the state then you can deal with the settlement issue in much more concrete terms. I'm not running for the Nobel Peace Prize. I'm just trying to be a guy to use the influence of the United States to move the process along. All I've tried to do is wade in and add some legitimacy to the two-state solution. I've been the first president to articulate it. To me it's the only solution. I just don't see how the Middle East evolves without a Palestinian state that's free and democratic. I don't see how the Middle East can involve without a democratic Lebanon, or without an Iraq that succeeds. And, by the way, Iraq is succeeding. Bush on whether he would consider an Iranian attack on Israel the equivalent of an attack on the US: I made it clear that if the world wants to avoid [World War III], then we better deal with the Iranian issue now. Implicit in that is that if they have one of those things and lob it at Israel or at other friends of ours, there'll be a response. Bush on his vision for Israel's borders, and Mahmoud Abbas as a peace partner: We believe in a contiguous [Palestinian] state. It can't look like Swiss cheese. That's why we've been talking about these outposts. Some of these remote settlements. The question is how much territory can the sides settle on. I don't want to give your newspapers a screaming headline, "Bush says this is what the borders ought to look like." But Bush does reiterate what he told the world [and in] the letter [to Ariel Sharon in 2004, which some understand as indicating American support for Israeli expansion into the West Bank to encompass major settlements]. Bush on possible Israeli-Syrian dialogue: I have made some very clear conditions for the United States to talk to [Syria]. Early on in my administration we said, you're housing Hamas, you're enabling transit of materials to Hizbullah in Lebanon. Since then, they've made life miserable for the young democracy in Iraq. It's easy to get our attention. And that is actually to become a constructive force. A positive force. A force for peace. Not a force that continually uses these extremist groups to destabilize the nationhood. That's the position of the United States, separated from Syria by an ocean. Israeli politicians have got to come up with their own vision of security. And I have never told Olmert one thing or another about what to do about his security. That's not what friends do. He's made the decision that he made, the idea of trying to get dialogue. I know him well. And I know he's as concerned as any other person that's ever been the prime minister of Israel. The biggest long-term threat to peace in the Middle East is Iran. The Iranian connection to Syria is very troubling. Anything done should keep that strategic reason in mind. Of all the people who understand the existential threat that the Iranians pose, it's the Israelis. Bush looking back on what he's done as president: In terms of Israel, I hope that history will say that this is a guy who clearly saw the world the way it is. Ideological conflicts require a combination of force and vision in order to marginalize and defeat... I can assure you that al-Qaida, Hamas and Hizbullah don't think about the comforts of life. They are driven. And the fundamental challenge facing this world is well, countries like the United States, be prepared to continue to stay in the lead. You asked legacy and all that business, which I don't worry about by the way. I'll be long gone before some smart person ever figures out what happened inside this Oval Office. But one of [those legacies] has got to be, he clearly saw the threat and he did something about it.