People are making such a big deal about settlements, I figured I'd ask Michael Oren to help me calculate their ultimate importance to the peace process. This is a continuation of our discussion held at the Aspen Ideas Festival:

Jeffrey Goldberg: Do you think if settlements were frozen right now, that the Arabs would reach out to Israel for peace talks?

Michael Oren: Very difficult, very difficult. They'd maybe reach out to peace talks. I don't know where those peace talks would run, but I'll tell you several weeks ago, the Prime Minister of Israel, Benyamin Netanyahu, gave a speech. And in the speech he recognizes the need for an independent Palestinian state. He wanted the state to be demilitarized because we've had some nasty experiences with Palestinian entities that shoot at us. And he also had another demand. It wasn't a precondition but it was a demand, that at some stage before the final treaty is signed, that that Palestinian state is going to have to recognize Israel as the Jewish state, as the nation state of the Jewish people. And many people in the Arab world, many people in Europe, were sort of scratching their heads and saying 'why do you need this, isn't this just an obstacle to peace?'

A.B. Yehoshua, who's a very good friend of mine, called me up on the phone screaming, saying 'why do you need this? It's just another obstacle! The prime minister doesn't want peace.' And I explained to [him], I said what you see as an obstacle, I see as a door. And this is a notion that I have held for many, many years, well over 15 years, that without recognition of the legitimate existence of a Palestinian people with an historic land, the right to an independent state in that land, without the reciprocal recognition of a Jewish people with an historic tie to a land and a legitimate claim to a state, there will never be an end to the conflict. That is, only on the basis of that reciprocity can we actually end the conflict, because if you don't have that, if you only have the Jewish state recognizing the Palestinian state, then they will always regard the Jewish state as illegitimate, foreign and temporary.

And there, to me, lies the essence. So Israel can freeze settlements tomorrow -- we plucked up 21 settlements out of Gaza two years ago, and you know I was there, it was the most traumatic event of my military career, was pulling Jews out of their houses -- we did that, and we turned around and got 7,200 rockets fired at us. Settlements are not the issue. The issue is the recognition of the mutual legitimacy of these two peoples, the legitimate claim to these two states.

JG: There are so many ways to go with this, but let me go with a very specific point. You say settlements are not the issue. The Obama Administration believes that settlements are a clear issue, in a way that very few administrations have, they have made this the early centerpiece of their move, their desire to reignite peace talks. Do you think they are making a mistake?

MO: I never said that settlements aren't an issue. I cant speak for the Obama Administration, but I think that they understand as well that the settlements are not the issue, that it's one of many issues. Another issue is the degree to which the Arab states are willing to embark on a process of normalization with us and that process is right now moribund. I think that both sides - the Israeli side, the American side - are working earnestly, ardently, to try and find a compromise over the question of the degree to which construction can continue in the settlements to accord for what we call normal life, and I think, I'm fairly confident, that in the coming period, we will find a solution for this.

JG: You've been studying this for 30 years. Do you actually believe that there's a moment in time, in the near future, when the Palestinians will recognize Israel as a legitimate Jewish state?

MO: I think there is a time in the future, but that moment is the culmination of a process. It's a process that begins with the schools, it begins with changing textbooks, which deny Israel's legitimacy and right to exist. Two weeks ago, I watched public service announcements by the Palestinian Authority -- paid for, by the way, with American taxpayers' dollars -- and the PSA said 'Welcome to PA television, we are going to liberate not only Tulkarem... but we're going to liberate Haifa and Jaffa and Tiberias.' Now that is not the way to go. That does not lead to mutual recognition to the right of two people to their independent states. And that process has to start now. We have recognized our obligations under previous agreements. One of those agreements talks for a sequential process in which Israel will find a solution for the settlement issue, but the Palestinians have to begin to end what we call hatred on their television sets and in their textbooks. Without that, you are raising generations to regard Israel as an alien hostile temporal state. That's not a prescription for peace.

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