The Middle East has grown less stable during the presidency of US President George W. Bush, but dramatic improvements could be made by opening broad talks with Syria, former US Secretary of State James A. Baker III said here Sunday. Once-pragmatic US relations with Syria have "gone downhill" in recent years, said Baker, who is in Dubai to oversee the expansion of the Baker Botts LLP law offices. But he said the outlines of a peace deal between Washington's biggest Middle East ally, Israel, and Syria were clear and encouraged both sides to seize the opportunity. "There's the deal. It's all spelled out," Baker said. "This is all by way of saying we need to engage Syria." Israel and Syria are officially at war, though there have been no open hostilities between them for decades. Syria has demanded the return of the Golan, which Israel captured in 1967 and later annexed, as the price for any peace deal. Israel says it will not discuss a formal treaty with its northern neighbor as long as Damascus continues to back Lebanon's Hizbullah and the Hamas. The US brands both groups as terrorists, and several of Hamas's top leaders live in exile in Syria. Syrian President Bashar Assad has the power to force Hamas to recognize Israel if Assad believed it was in Syria's interest, Baker said. "Hamas's officers are in Damascus. They can do this," he said. Hamas's recognition of Israel would leave Israel in a stronger position to make peace with the Palestinians, said Baker, who made similar recommendations as co-chair of the Iraq Study Group, a bipartisan panel that recommended changes in Bush's Iraq strategy, including direct talks with Syria and Iran. Baker noted with some satisfaction that US officials were in talks in Iraq over the weekend with both Iran and Syria. He said he hoped those early contacts could be expanded. The Bush administration had long been reluctant to talk to Syria, citing its support for groups like Hamas. Baker said a good opportunity to forge an Israeli-Palestinian settlement was lost after the 1993 Oslo Accords. He said he was dismayed to see those accords, opposed by right-wing Israelis and hard-liners in the current Bush administration, fall to the wayside. Since then, the Middle East has descended deeper into chaos. "Am I sorry to see Oslo hasn't ripened into a greater peace? Of course I am," Baker said. "It's disappointing to me to see the degree to which the Middle East today is unstable, in a number of arenas. There was a great hope back in the early 1990s. Now, we have a lot of other sources of instability that need to be addressed." Baker, who turns 77 next month, said he was still hopeful for Israeli-Arab settlement in his lifetime. Baker's comments came as Prime Minister Ehud Olmert on Sunday said he was ready to "treat seriously" a 2002 Saudi plan for an Arab-Israeli peace agreement in exchange for Israel's withdrawal from land it captured in 1967. Asked whether he backed the presence of two US Navy aircraft carrier battle groups in the Middle East - for the first time since the 2003 Iraq invasion - Baker said he supported the Bush administration's stance on Iran. That includes being prepared to launch a military attack on Iran's disputed nuclear facilities, he said. "It's too bad we can't pursue the foreign policy ideals of Mother Theresa, but we just can't," Baker said. "It's a tough world out there."