At the tail end of an hourlong interview with The Jerusalem Post on Tuesday in Britain's drab embassy in Tel Aviv, when the conversation shifted to the often shrill British attitudes toward Israel, UK Ambassador Tom Phillips advised not to "forget the good things out there, even if there are some problems." True, there may be divestment and boycott calls, a critical academia, public opinion polls that show a general dislike among many Brits for Israel, and an often vicious press, yet Prime Minister Tony Blair has been good for Israel, there are strong people-to-people relations, and there is lively commerce between the two countries. Not all in British-Israeli ties, Phillips made abundantly clear, is bleak. Which is obviously true. It is also obviously true that the job of the ambassador is to highlight the positive, which Phillips does with aplomb. Phillips arrived as his country's envoy last August for a second go-around, having served as the deputy head of the British embassy from 1990 to 1993. Just how adept Phillips is at finding that silver lining became abundantly clear at the outset of the interview, when he discussed the enormous changes he has seen in Israel over the last 15 years, both in what he called "hardware" terms - the physical development of the country - and in "software" terms, public attitudes and perceptions. "When I arrived in 1990 it was illegal for an Israeli to talk to the PLO, and prime minister Yitzhak Shamir was saying basically that Israel had done [UN Security Council Resolution 242] by giving Sinai back to Egypt. We had the Arab world in a pretty enormous state of denial about Israel. "If you said then that in 10 years there would be failed, let alone successful, talks on final status, I would have said it would be miracle to get that far. But it happened - and that is tremendous." In the current configuration, with a Hamas government on the other side, what does Britain want to see Israel do now? "What is happening in the Palestinian world is of course complex. The dialogue is not with Hamas, but with [Palestinian Authority Chairman Mamoud Abbas] Abu Mahmoud - we are looking for that to continue, and hope it will prosper - that things will come of it. "We think the [PA] national unity government was a step forward, at least in terms of quieting down inter-Palestinian violence... And we are looking to see how that national unity government actually performs now, what it is going to do, and whether it lives by the Quartet's conditions and moves nearer towards them. But we do think that there is a dialogue that can be had with President Abbas, and we welcome the extent that is going on, and we want that to continue and make progress." But aren't we all fooling ourselves, since Abu Mazen isn't calling the shots, and it doesn't look like he can deliver the goods? "Whether he can deliver the goods I think is unproven. I don't think it's a given that he can't." Really? But he hasn't even been able to keep the rockets from falling on Sderot. I think he is playing a careful game with the Palestinians, and has to work with them in that. Hamas has been in power now for over a year and it doesn't look like they are changing their stripes. "I'm not sure about that. I think the Mecca [PA national unity government] deal itself was a step forward. We are picking up... signs of movement in Hamas. I think, too, it is conceivable that some of the violence we are seeing is from people saying that they don't like the way some of this is going politically, and are trying to do something to prompt a big Israeli response and bring down the house of cards. There is very complex dynamics going on right now." But since Hamas hasn't gone as far as the world wanted under the existing pressure, do you think that it might be time to step up the pressure? "I'm not sure what else meaningful you could do. The money is not being channeled to the government as such, or not to the Hamas part of it. We are not having contacts or dialogue with them. I think the pressure is quite tough." The money is not going to the government, but more money went to the Palestinians last year than the year before. "It is going in properly, and thoroughly audited, through the temporary international mechanism, in ways that we think are right. What are you trying to do, bring the whole Palestinian society down and punish men, women and children? Or perhaps trying to get people to pressure their government, and that if the people don't feel that screws are being turned, they won't do so? "I think the fact that Hamas moved as far as the Mecca agreement - and one would like them to mover further - is in itself a sign of them feeling the pressure." Is it wise that Britain and other European countries are not dealing with Hamas? "I think it is. You get back to whether it is reasonable to expect Israel to sit down and talk to people who do not recognize its right to exist." Is this policy toward Hamas sustainable in the long term, or if Hamas waits it out will your government and others have no choice but to deal with it? "The answer to that is in the lap of events to come, but it depends critically on how meaningful the dialogue between your prime minister and President Abbas is in developing the alternative vision." What does that mean? That if [Prime Minister Ehud] Olmert and Abbas move forward then there wouldn't be a need to deal with Hamas, but if not, there might be a need to deal with Hamas? "If there is going to be a solution here it is has to be two states broadly around the Clinton parameters... I think one of the things that all of us have to do is keep the spotlight very clearly on the shape of that solution, and try to make it clear that that is the choice that has to be made by both societies." Olmert is keen on pushing Saudi involvement in the diplomatic process, thinking that this will give legitimacy to the Palestinian moderates, and cut the legs from under Hamas. Do you think that is a sound approach? "Most Israelis I talk to have a very deep longing, one I understand, for a secure place in this region, [and] that is obviously a sense that is certainly going to have to come from others in the region. "And I think that everyone knows that the region is going to want there to be meaningful progress on the Palestinian track before they are going to play that game as much as many Israelis would like. Getting that calibration right is one of the things that now has to be done." Is there pressure from the international community on the Saudis to jump in now? Is Britain involved in this? "We think it is very useful that the Arab League Initiative has been relaunched in the way it has, and that it is a contribution to the current diplomatic equation." How has it been helpful? Israel has said it seemed like a take-it-or-leave-it ultimatum. Because at the end of the day, if you are going to have a deal here it has got to involve that wider regional element. I wouldn't want it to be seen as a proscriptive-only solution, but as one of the basis for the process that now has to be gone through." Some are saying that in light of the Winograd Committee report and the current political situation in Israel, nothing diplomatically is going to move now. Is that correct? "Clearly, the sooner there is a government feeling firm and secure here, a government able fully to focus on the peace process here, it would be a major step, good news in itself. "I'm not hearing any inclination from the government to say we can't possibly do the peace process until we sort out where we are on Winograd. "On the contrary, what we are hearing is a firm stance that we understand that the status quo is not sustainable with the Palestinians... I think we would say to the government, 'Okay, we understand that you have a lot on your plate at the moment.' "But we are not hearing from them that they are stopping still, we are hearing from them, 'We know we have to go on.' "If I'm the Saudi king, and I have a major card to play, am I going to use it on Olmert, or wait to see who will be the prime minister down the line? I don't know what the Saudis think." Do you have any creative ideas on what Israel should do now to stop the Kassam attacks from Gaza? "It is very difficult, and we do appreciate the dilemma. Obviously we are encouraging the Palestinians not to fire. We very much appreciate what President Abbas is doing to get the cease-fire there, and the more that can be done the better. "It think it is important that we all say that the Palestinians should stop firing these rockets; that it is outrageous that they are shooting at civilians in Sderot and elsewhere. And we must maintain diplomatic pressure on the Palestinians to improve their act... "My sense is that obviously Israel has the right to self-defense, but as always that would have to be proportional and in accordance with international laws governing conflict and all that. "I think that it is true to say that many in Israel are aware that if some of the guys firing at you actually want you to go back in [to Gaza] massively, then that might not be the wisest thing to do. Where does that leave you, what is the next thing you do the day after? It is a very, very difficult tangled situation at the moment, and we recognize the restraint the Israeli government has shown and how hard it is for them to get this equation right." Things have heated up there over the last few days. Are you urging Israel to show restraint now? "We discuss with them the complex issues that are involved." Turning to Lebanon, there is a certain feeling here that Israel was led down the garden path on UN Security Council Resolution 1701 since it called for an end to arms coming in from Syria, but that flow continues. "You have probably heard, as I have, that when the Israeli government talks about 1701 they say some very nice things about the role that UNIFIL is doing. So there are some positives out there. "We want to see all parts of 1701 implemented, apart from the immediate mandate of UNIFIL in the south, including the immediate release of the Israeli soldiers and including meaningful action on that border. "It is not quite the case that nothing has been done. The Germans have sent out an evaluation missions to see how to help the Lebanese to improve controls on that border. We are very supportive of that German initiative. Movement is at hand to try and do something." Is there any concern in the international community that Israel might unilaterally take action to stop the arms flow? "When I talk to Israelis the current focus is very much to get the UN properly focused on this problem." What should be done with Iran that is not being done? If you told me when I came here that we would get two [UN Security Council] Chapter 7 resolutions through unanimously, I would have said that would have been very hard diplomatically. I think that is a huge achievement... "I think that message of international unity has registered in Iran. We've seen signs of the strain there. We don't think they have yet changed direction, but we think there is debate about the wisdom of what they are doing starting to seep out... "I think that what we have to do now is go on increasing the pressure and maintaining the pressure, at the same time making it clear to the Iranians that if they change course and suspend [their nuclear program], then we suspend [sanctions] too; that we can go back, if they come back. This is not against Iran or the Iranian people." Turning to Britain, why is Britain - not the government, not Blair and the ambassador - but why do the British seems so awful regarding Israel? The trade unions, academia, the press, the church - what is it? "I don't know the answer. I don't know where the boycott notions are brewing from. The government has made its position crystal clear. We disagree with boycotts. "Beyond the boycotts, I'm talking about the whole sentiment. There seems to be a real disconnect between the government and the people when it comes to Israel. "Lot of the contact we see is very healthy. Something like the Steven Hawkins visit last year. The response that got in the UK, here and in Palestine - was enormous... "The one point I would make, with some sadness, as someone here committed to Israel, believing that Israel has a right to exist in peace here, and understanding the very complex historical reason that has got Israel into a position of it as being an occupier of territory with people who don't want to be Israeli, and whom Israelis don't want to give the vote - some of this will go on as long as Israel is regarded as an occupying power. It is what goes with being an occupying power. "The only answer in the end to some of the flak - some of the flak is totally unjustified in the UK, and some is justified - Israel is going to get a critical press as long as it is an occupying power, that is what I conclude at the end of the day. "You then get into the complex areas of why there is such enormous press interest here, compared to places like Darfur, and that is very interesting. I think it is partly because journalists can operate here, where in some parts of the world it is harder for them to operate. "After being involved with this place for a long time, I think in the end it is because of the enormous symbolic resonance of this conflict - because of the religious factors - the world's three great monotheistic religions coming together here in the way that they do creates a symbolic resonance much greater than most other conflicts. "I had an absolutely fascinating meeting with a group of haredi leaders who took it for granted that Israel would get much more publicity than anywhere else because this is where God started the story. I think they are making the same point that I am; that because of that factor, because of the meaning of this bit of real estate in so many myths, it is going to carry that weight." But it seems to go beyond just the press. We're talking about divestments and boycotts, things you don't have towards other countries. "Well, divestment, hold on. I ran over with you the very real world trade stats out there [$2.3 billion a year] of an extremely healthy situation. Where is this divestment? I haven't seen any? "There are calls for divestment, from the Anglican church and others. It creates a mood, among Israelis, wondering what is going on, why is it happening? And yet a lot of Israelis go to the UK, get on with it, and there is a very warm relationship. "When we had the English football fans over here, the buzz on the streets here was amazing... They [the English fans] were coming up to us and saying they were never received like this anywhere, that Israelis were coming up to them asking for their photographs and their signature. It was a tremendous thing. Basically, Israel sent back 3,500 plus English fans with a very positive impression of Israel. This was a very big event. "Don't forget the good things that are out there, even if there are some problems. There are some problems." There is also a sense here that Blair's political troubles were due in no small part to his strong support for Israel. Do you see it as that? "I think it is the Iraq factor that has influenced public opinion more than Israel." Will your government's tone remain the same towards Israel once Blair is out of office? "It is above my pay grade to say who will be my next prime minister. I've seen what the speculation is. I can't imagine any British government saying the security of Israel doesn't matter. "[UK Conservative Party leader] David Cameron, who was out here recently, and [Chancellor of the Exchequer] Gordon Brown who may be - some speculate - the next leader, both of them have recently put on their record their commitment and friendship to Israel. "So yes, there will be moments when we criticize - there are things we have problems with - one has to be frank about that. "There are aspects of the occupation that distress me, having gone around the territories and looked at it, that I find hard to justify. I cannot justify the amount of settlement activity that is going on, that has gone on since I've been here [in 1993]. I think this is a major, major obstacle to peace. "The number of settlers has gone up very significantly indeed, and I think this is going to be a major strain when the moment comes to address it. "So there are things we criticize. But I think that the basic commitment to Israel's right to be here - nobody is going to touch that."