Cover story of Issue 21, February 4, 2008 of The Jerusalem Report. To subscribe to The Jerusalem Report click here. For two hours after the other dinner guests had gone home, Prime Minister Ehud Olmert, Defense Minster Ehud Barak and U.S. President George Bush talked into the night. The main topic was Iran. It was not the first time the Iranian nuclear weapons' threat had dominated the conversation during Bush's early January visit to Jerusalem. The day before the dinner at the prime minister's Jerusalem residence, Olmert, in a one-on-one meeting with the president, had devoted more than an hour to going over detailed Israeli intelligence on Iran's nuclear program. Olmert showed the president highly classified raw material, and explained where Israeli assessments differed from the controversial U.S. National Intelligence Estimate (NIE), which in December claimed that Iran had shelved a clandestine nuclear weapons' program in 2003. That finding seemed to rule out an American military strike against Iranian nuclear installations during the remainder of the Bush presidency and beyond, and to open up a wide gap between Israeli and American perceptions and policies. While Israel continues to insist that Iran is drawing closer to making nuclear weapons, and that it will not tolerate that eventuality, there was widespread speculation that after the NIE, the U.S. would devote fewer resources to prevent that from happening. After the detailed Bush-Olmert exchanges, however, Israeli officials maintain that the two countries are "on the same page" with regard to Iran. "There is a shared understanding of the gravity the problem of a nuclear-armed Iran presents and a common desire to take action to prevent it," a spokesman for the prime minister told The Report. In a joint press conference with Olmert, Bush indicated how, despite the NIE, the two countries might be "on the same page." A country, which once had a clandestine nuclear weapons program, could easily restart it, he said. "Iran was a threat, Iran is a threat and Iran will be a threat if the international community does not come together and prevent that nation from the development of the knowhow to build a nuclear weapon," he declared. The question, though, is what America intends to do about it. Despite his strong statement, Bush said he had promised the American people to handle the problem through diplomacy. Nevertheless, Israeli officials are adamant that neither Israel nor the U.S. has ruled out the use of force against Iran. In a media briefing on the second day of the Bush visit, a senior Israeli official claimed that while both countries preferred diplomatic and economic measures, they did not "remove any option from the table." The official underlined Israel's seriousness. "I don't want to speak for the president, but when we say all options are on the table, this is not just words," he declared. The message to Tehran was clear: The NIE notwithstanding, the Bush visit had clarified a cardinal point: If Iran continues its nuclear weapons drive, Israel and the U.S. are fully coordinated on ways of stopping it. Bush's stopover in Israel and the Palestinian Authority was something of an afterthought in a presidential tour originally planned for the Gulf, Saudi Arabia and Egypt. Skeptical Israeli pundits tended to dismiss the visit in advance as nothing more than a glorified photo-op. But Israeli officials insist that the meetings were extremely significant in that they gave the leaders a chance to focus in depth on Israel's two most taxing foreign policy challenges - Iran and the Annapolis process with the Palestinians. But will Bush, who will only be in office until January 2009, be able to defuse the Iranian nuclear threat and deliver an Israeli-Palestinian peace in the dying months of his administration? Or will Israel, because of the weakness of Israeli, Palestinian and American leaderships, find itself facing even bigger challenges with a new and possibly less supportive Washington administration in the critical years ahead? The stakes for Israel could hardly be higher. Indeed, Iran, as problematic as it is, was not the main reason for the president's visit. He came primarily to inject a new sense of urgency into the post-Annapolis Israeli-Palestinian negotiations on a final peace deal. After separate talks with Olmert in Jerusalem and Palestinian Authority President Mahmud Abbas in Ramallah, Bush called for an end "to the Israeli occupation of the West Bank and Gaza that began in 1967" and outlined his vision of how negotiations for a peace deal should proceed. He spoke of four parallel tracks: The international road map, Palestinian institution building, Arab countries "reaching out to Israel" and Israeli-Palestinian talks on a permanent peace. Bush also reiterated American views on the core peace issues of territory, Palestinian refugees, Israeli security and Jerusalem. On territory, he said the 1967 borders would need to be adjusted to "reflect current realities," but the Palestinian state to be established in the West Bank and Gaza would need to have contiguous territory in the West Bank and be viable. In other words, Israel would be able to retain large Jewish population centers in the West Bank, but not to leave it divided into separate Palestinian cantons. On refugees, he said the parties would need to consider "new international mechanisms, including compensation." He reaffirmed "America's steadfast commitment to Israel's security, and said "no agreement and no Palestinian state will be born of terror." As for Jerusalem, he merely acknowledged that it was a "tough issue," on which both sides would have to make painful compromises. As for the time frame, Bush said he hoped a peace deal would happen by the end of the year, but that it would not be implemented until both sides carried out their road map obligations: removing illegal outposts for Israel; fighting terror and dismantling terrorist militias for the Palestinians. Although it contained little that was new, both sides welcomed the president's statement as a fair reflection of agreements reached so far and as a good basis on which to build. "We believe it provides a positive conceptual framework for our discussions with the Palestinians," a senior official told The Report. Over the coming weeks, Israeli and Palestinian negotiators intend to accelerate talks on a final peace deal. They have set up a three-tier negotiating structure: Olmert and Abbas to meet every few weeks to resolve outstanding matters of principle; Foreign Minister Tzipi Livni and former Palestinian prime minister Ahmed Qurei to tackle the core issues of territory, Jerusalem and refugees in a single committee; other matters, like security, water, legal and economic relations between Israel and a future Palestine, to be discussed in a host of special issue committees. All the while, the Americans intend to keep up the pressure: U.S. General William Fraser will monitor the two sides' compliance with their basic road map undertakings; Secretary of State Condoleezza Rice may undertake some shuttle diplomacy; and in May, Bush will be back, ostensibly for Israel's 60th anniversary celebrations, but also to get progress reports from all concerned, and, if necessary, to make a call on who is to blame for any deadlock or delay. Yet, for all the frameworks, structures and well-intentioned pressure, it is clear the process faces serious obstacles. The Americans are well aware that it will be hard for Olmert to move ahead on core issues without losing his right-wing coalition partners Yisrael Beiteinu and Shas, and that it will be even harder for Abbas to meet Israel's basic security conditions when he does not control the West Bank, and has no security presence whatsoever in the Gaza Strip, held by his radical Hamas rivals. Indeed, because of Abbas's weakness, Olmert and Barak sought tacit American understanding for continued Israeli military operations in the Palestinian territories even while negotiations go ahead. The Israelis argued that a security vacuum would play into the hands of the extremists, who could use terror to destroy a promising peace process. The Palestinians countered that it is difficult for them to achieve security credibility while Israeli soldiers are still active in their territory. The American answer was to urge Israel to allow the Palestinian forces to do as much as they can, but ultimately for Israel to decide what measures it needs to take to maintain security. According to Israeli officials, the Americans - who are actually helping to build effective Palestinian security structures - are well aware of the danger of a security vacuum and the need for Israeli action to prevent it. "They understand that Israel will be ready to stand down when Palestinian security is ready to stand up," the senior official told The Report. Because of the weakness of the two leaders, the Israeli right argues that the negotiations are merely a fa?ade to keep Olmert in power. The buzzword on the right is "virtual reality." Likud former foreign minister Silvan Shalom talks of "virtual negotiations with a virtual peace partner for a virtual peace deal." He says Olmert is planning to offer the Palestinians major concessions in this virtual process in a bid to lock the peace-tending Labor party into the coalition, irrespective of the findings of the Winograd Commission, which was expected to rule harshly in its late January report on the prime minister's performance in the 2006 Lebanon war. Olmert confidants retort that the process is real, and that it would be a huge strategic mistake to dillydally over peacemaking sponsored by an American administration so profoundly receptive to Israeli needs. They argue that if there is a deal, Abbas will be able to put it to the Palestinian people in a referendum, as a first step towards regaining control of Gaza and creating realistic conditions for its implementation. Israeli experts on American Middle East policy are generally skeptical over how much Bush will be able to do on the Palestinian front. And they are sharply divided over what kind of action he is likely to take on Iran. Eitan Gilboa, of Bar-Ilan University's BESA Center for Strategic Studies, maintains that Bush's capacity to pressure the parties is extremely limited. He argues that if the president pushes Olmert too hard he could precipitate new elections, "which would torpedo everything," and that Abbas is so weak that there is nothing he could be pressured into doing. "Annapolis was described as the conference of the weak. And that's the problem: The weaker Bush, Olmert and Abbas are, the harder it is for them to make the concessions necessary to close a deal," he declares. On Iran, Gilboa says he would be very surprised if Bush does anything dramatic during the remainder of his term, like initiating peace talks or taking military action. Indeed, he raises the possibility that the president may actually have ordered the NIE findings to get himself off the hook on military action. "The administration has no stomach for a military action now. The public doesn't want it and it could hurt the chances of the Republican candidate in the November presidential election," he says. In Gilboa's view, any new president will probably try to engage Iran in peace talks in the twin hope that it can be induced to reverse its nuclear policy and that its hard-line President Mahmoud Ahmadinejad will be voted out of office in 2009. Gilboa, however, warns that this approach could prove extremely shortsighted. He argues that because of its hegemonic regional aspirations, Iran is unlikely to give up its nuclear drive, and the end result could be a dangerously volatile nuclear arms race in the Middle East as a whole. In this situation, should Iran launch a nuclear attack in Israel, Gilboa is certain that any American president would honor Bush's pledge to come to Israel's aid. The Americans, he says, would be ready to wipe out Iran to deter any other Muslim state from launching a nuclear attack. "They would do this out of American interests, not Israeli ones. The aim would be to create a powerful deterrence against any future use of nuclear weapons anywhere against any foe," he maintains. Gilboa is not the only scholar predicting an American policy change on Iran. Galia Golan, of the Herzliya Interdisciplinary Center, agrees that the Americans are likely to opt for a new policy of engagement or dialogue. She says Bush may have allowed the NIE report on Iran's nuclear program to be made public to prepare the way for a policy change she thinks was instigated by Condoleezza Rice. Golan adds that the Baker-Hamilton recommendations - by former secretary of state James Baker and former Congressional Foreign Affairs Committee chairman Lee Hamilton - that the U.S. withdraw from Iraq and start talks with Iran are now widely accepted in Washington and very likely to be adopted by any successor administration. And this, she says, could become a source of future friction between Israel and America. Golan, author of "Israel and Palestine: Peace Plans and Proposals from Oslo to Disengagement," also attributes the new more proactive American policy on the Israeli-Palestinian track to Rice."She changed over the past year or two. In the course of her trips here, I think she came to understand the conflict extremely well. And she recognizes the urgency of a cutting deal soon with the two-state solution becoming less and less popular," she avers. As for a peace deal being achieved while Bush is still in office, Golan, a Peace Now activist, believes much depends on Olmert and the amount of pressure the Americans are able to exert on him. She believes that only Bush has the clout to influence the prime minister, but she is not sure how committed he is to the process Rice initiated. "I think that while the pressure can work on Olmert, ultimately it's a question of whether he is really willing to go forward. I think he wants to. Maybe American pressure can give him the kind of excuse he needs domestically," she declares. Rice will play the leading role and will come to the region several times in the course of the next year to "bang heads," according to Roni Bart, an expert on U.S. Middle East policy at Tel Aviv University's Institute for National Security Studies. "[Dennis] Ross, [Henry] Kissinger and [Jimmy] Carter undertook intensive shuttle diplomacy when the parties were close to an agreement, in the last inning so to speak. We are not there yet. But I think there will be close personal involvement on her part even in the first and second innings, to make sure the parties are really making progress," he says. Bart believes there is a real chance of an agreement by December 2008, if the Americans lower their goals. Instead of going for all four core issues, borders, security arrangements, Jerusalem and refugees, they should focus on the first two only. "Then they could even have a signing ceremony on the borders of a future Palestinian state and its security arrangements with Israel, which would be extremely significant. Refugees and Jerusalem would be deferred for later," he says. Bart also suggests that the Americans give Israel a letter of guarantee on security, similar to Bush's letter to then-prime minister Ariel Sharon in April 2004 on territory and refugees. "The Israelis have been saying that they want to be allowed freedom of action in Gaza and the West Bank and the right to use air space over Palestinian territory. The letter would state what the Americans accept as Israeli rights in the security domain. That would give Israel confidence to go forward towards a final settlement, despite its concerns about the Palestinians' implementation of their road map obligation to fight terror," he declares. On Iran, Bart argues that the NIE has been far less influential than is generally thought, and that Bush may still attack Iran if he believes that is the right thing to do. He points out that the NIE failed to convince key players that the Iranians had changed their nuclear policy; not the Europeans, the Arab states, the American presidential candidates or, most importantly, Bush himself. "After seven years we know a bit about Bush. He doesn't care about public opinion and he says God talks to him. If he thought he should attack before the NIE, and if that's what he still thinks a few months from now, the NIE won't change his mind," says Bart. Some experts believe that, paradoxically, the NIE could actually increase the chances of war with Iran. Haifa University political scientist, Benny Miller, author of "States, Nations and Great Powers: The Sources of Regional War and Peace," observes that Russia and China might cite it as an argument against tightening economic sanctions on Iran. "If as a result there is no effective diplomatic-economic pressure, the U.S. might feel it has no choice but to use force," he asserts. Miller points out that if America does not act, and Israel decides to use force on its own, it will need American approval, because of the heavy U.S. military air traffic in and around Iraq. Therefore, he argues that it was extremely important for Bush to get the Israeli intelligence perspective as a counterweight to the NIE. "No ongoing dialogue between officials can be a substitute for the president himself hearing the Israeli assessment at first hand," he maintains. On the Israeli-Palestinian track, Miller argues that the window of opportunity may not be open for much longer. In his view, peace between bitter rivals like Israel and the Palestinians can only be achieved through the good offices of a hegemonic power like the United States on which both depend. But, he says, American power is on the wane, with China rising, Russia subverting U.S. moves and Iranian influence growing, and in a few years time, the United States may no longer have the regional clout to broker a deal. The problem, says Miller, is exacerbated by the fact that the moderate Palestinian leadership in the West Bank is unable to exercise a monopoly on the use of force - a basic condition for functional statehood - and that the Israeli state is unable to exert full authority over the settlers. Yet given the limited time available for reaching a deal, the two sides should press ahead on the basis of previous understandings, for example the principles for peace laid down by Presidents Clinton and Bush. This, he says, must be accompanied by strong American and international help in Palestinian institution-building to prepare the way for a functional Palestinian state, without which no peace will be possible. Miller thinks it is unlikely that such huge tasks will be completed by the end of the year, but insists that the Sisyphean effort should not be abandoned. "Maybe this will create a basis for stronger leaderships in the future to reach and implement a deal," he says. During the dinner for Bush at Olmert's residence, the table talk turned to Israeli politics. "Take care of Olmert," Bush told the assembled cabinet ministers, alluding to threats by right-wing parties to bolt the coalition and the Winograd Commission's potential impact on Olmert's future. "Israeli politics is like karate," Bush continued. "You never know when the next chop is going to come." This time, though, the prime minister knows exactly when the next chop is coming: January 30, when retired Judge Eliyahu Winograd makes his report on the Lebanon war public. The question is whether or not Olmert - who has said that he will not resign but will stay in power in order to implement the report's recommendations - will be able to find an effective counter. Bush's ambitious peace effort could depend on it. Cover story of Issue 21, February 4, 2008 of The Jerusalem Report. To subscribe to The Jerusalem Report click here.