The Palestinians would consider a compromise deal on the "right of return into Israel" in exchange for the creation of a viable state in the West Bank, former US ambassador to Israel Martin Indyk told The Jerusalem Post on Tuesday. Although Palestinians have continued to insist that they would not give up the right of return into Israel, Indyk said he believed that over the last six years the Palestinians have formed a more realistic set of expectations with respect to a final status solution. As the Israeli position has softened, the Palestinians in turn have changed, said Indyk. Instead of standing firm on the right of return, Indyk said, it was his understanding that they would accept a "just solution," which would not necessarily include a physical return to their former homes in Israel. "In the context of a package deal, they would live with it," he said, as he spoke with the Post after a lecture at the Annual John Gandel Symposium on the Middle East at Tel Aviv University. Indyk, who was the US ambassador to Israel in 1995-1997 and in 2000-2001, told the audience that he believed there was only a small difference of opinion between Israel and the Arab world on a two-state solution, which both sides have endorsed. The gap between the two sides was much larger in the 1990s, Indyk said. In addition, he said, the Arab states have indicated their willingness to accept a solution that would be worked out between both sides. "It is important now to lift our eyes to what [US Secretary of State Condoleezza Rice] calls the political horizon and focus on a final status deal," said Indyk, who is the director of the Saban Center for Middle East Policy at the Brookings Institute in Washington DC. He warned that "Those in Israel who imagine that [Rice] can be end-run by talking to the president and shutting her down have it wrong. She is her master's voice and she could not be engaged in this effort without Bush's support." "She has said privately that she has never seen a conflict like this, where everyone agrees on an end game and no one agrees on how to get there," said Indyk. Given that Rice has concluded that it is as difficult to reach an agreement on small matters as on larger ones, she has come to believe that it is better to focus on resolving the conflict rather then drawing up another interim agreement. As a step in that direction, Rice wants to convene an international meeting in the style of the Madrid Conference in 1991 designed to launch final status negotiations. Such a peace process would test both Hamas and Syria, who would have to decide whether to continue their alliance with Iran or to turn to the West and to be part of a broader consensus of Arab states with regard to Israel, he said. Syrian President Bashar Assad suspects that negotiations are on the horizon, said Indyk. Last week, Assad put forward for the first time some conditions for talks with Israel, said Indyk. In spite of this move, Indyk said, he no longer favors a Syria-first approach to resolving the Israeli-Palestinian conflict. "In the 1990s, I was the strongest advocate in the Clinton peace team for a Syria-first approach, but we should...pursue a Palestinian-first approach this time," said Indyk. "[Assad] will seek a process that will get him off of America's 'bad boy' list and might give him an opportunity to rebuild his influence," said Indyk. He predicted that Assad would engage in the process of peace but but would hesitate to finalize the deal out of fear that to do so would be "fraught with dangers and risks for him." Assad would be more likely to take that step if an agreement came in the context of a larger deal with the Palestinians, said Indyk. The negotiations to end the Israeli-Palestinian conflict are best held between those two parties, said Indyk. He said the renewal of the Arab League Initiative of 2002 was an attempt by the Arab states to bolster a final status solution by promising to normalize relations with Israel. Indyk said that time was not in Israel's favor. He urged Israel to make use of this latest opportunity to make peace. "Let us end the conflict while there is an opportunity to do it," Indyk said.