Gentlemen, thank you for being with us. Daniel Levy, I will start with you. They have agreed to meet again in two weeks. Is that important, or is that the least you expected?
DANIEL LEVY, New America Foundation: It would be a bit of a damp squib if this was the first and last meeting. It's important that a process is now under way. Benjamin Netanyahu has not engaged in the past as the Israeli negotiator on the substantive financial status issues. The Palestinian side of the table has spent an awfully long period of time in such talks, not really the case with the Israeli side.
So, it's important to at least explore how far the parties can go, and then where the American role can come in, in bridging what remains to be bridged, if this will succeed.
JUDY WOODRUFF: So, Hisham Melhem, significant it's in two weeks they're meeting again, Netanyahu and Abbas? And Hillary Clinton will there, Secretary Clinton. Is that significant?
HISHAM MELHEM, Washington bureau chief, Al-Arabiya Television: Absolutely. I mean, they have to send the message to the Palestinians, to the Iranians, to the wider region, the other Arabs, and to the Iranians, that this is a serious prospect.
It's also important for them to settle the issue now, which is, the 26th of this month, what's going to happen on that date, where the so-called moratorium will end, and...
JUDY WOODRUFF: This is a moratorium that currently exists on Israeli settlements.
HISHAM MELHEM: Exactly. It will expire on the 26th. And Mahmoud Abbas, according to Palestinian sources, told the president of the United States yesterday in fact, he gave him a paper that includes the Palestinian positions. And, in a sense, he said, if settlement activities resume after the 26th, it will be extremely difficult for me, probably impossible, to continue with the negotiations.
The president promised him that he will work with the Israelis quietly to reach some sort of an understanding. And in the end, they will probably reach some sort of a vague, ambiguous understanding that will be susceptible to more than one interpretation to allow them to go back. The interesting thing is that the second meeting after the one in Sharm el-Sheikh in Egypt will be at the end of this month, which means two or three days after the expiration of that moratorium.
JUDY WOODRUFF: Around the time. Is there are there is there language they are working on to get around this this moratorium coming to an end, Daniel Levy?
DANIEL LEVY: We have to put this in context, that the existing moratorium is not a moratorium the Palestinians asked for. It's a compromise between the Israeli side and the American side.
East Jerusalem has been given a carve-out exemption 3,000 units already under construction were given a carve-out exemption. So, I think what the Palestinians are saying is, this wasn't our version of a moratorium. This was your version. At the very least, continue your own version.
JUDY WOODRUFF: But what would that mean, in practical terms?
DANIEL LEVY: In practical terms, I agree with Hisham. I think what the Americans will try to do, first of all, is to get the continuation of the existing moratorium. If they don't...
JUDY WOODRUFF: So, no new settlements, no extension of existing settlements?
DANIEL LEVY: To continue to complete the 3,000 units that have been built during this last 10 months, which is about the average per annum anyway, to continue to do things in East Jerusalem, but not more than that.
Absent that, the Americans will probably try and convince the Palestinians to accept some additional carve-out exemption clauses. They very possibly might. For the Palestinians, though, it will be a sign that we're still in the place where the process rather lacks credibility. There are a half-a-million Israelis now beyond the Green Line. The answer, of course, is to get a border.
JUDY WOODRUFF: And, so, the border, but that's not the first issue they're dealing with. I hear both of you saying the first issue is dealing with this moratorium, the the settlements question, getting some kind of initial agreement on that.
HISHAM MELHEM: Because that's an urgent issue that is facing them in three weeks, four weeks. And that's why they can not ignore it. But, of course, you have here a legacy of mistrust. You have a history of mistrust. You have to Palestinians, who have their own doubts about Benjamin Netanyahu. I mean, they have tried him before, 12 years ago. And now they want to take the measure I mean, the Americans wanted to have to create an atmosphere for Netanyahu and Abbas to take the measure of each other.
That's why they had a two-and-a-half-hour meeting today one-on-one, tete-a-tete, and, last hour, Hillary Clinton joined them. And the Palestinians essentially are saying, we came here with an open mind and an open heart to see if this man is serious about peace.
And everybody is becoming Talmudic, watching every word here and there. Yesterday, Netanyahu referred as the West Bank as the West Bank, not Judea and Samaria. Aha. There is something there there. So, the administration is going to face a tough, tough situation convincing them really to work seriously at this time.
JUDY WOODRUFF: So, are you picking up signals in what they're saying and what you're hearing privately that leads you to believe that the will is there, that the groundwork is being laid for real progress?
DANIEL LEVY: It's, first of all, important to clarify, this trying to get past the September 26 settlement hurdle will largely be an American/Israeli conversation. The Palestinians will essentially say, as far as we're concerned, total moratorium. In terms of what one's picking up, we don't know. And on the Palestinian side, they have pretty much exposed their hand. They have accepted a division of the land, 22 percent for the Palestinians, 78 percent.
On the Israeli side and this is the source of huge speculation in the Israeli press the question is, is Benjamin Netanyahu a Menachem Begin, a Likud leader who, in an agreement with Egypt, encouraged by a dedicated president, then President Carter, withdrew right to the '67 line, withdrew the settlements, and made a very important historic peace?
Or is he a Prime Minister Shamir, who went to the Madrid process and said, "I'm going to drag this out for 10 years"?
JUDY WOODRUFF: That and that's in the long run. In the short run, we're looking to see, is there agreement on straightforward issues, the moratorium on settlements? And, today, Hisham Melhem, there's a report late today out of Gaza, the Hamas Islamist faction, saying that there are Palestinian militant groups who have now decided they're going to step up their attacks on Israel.
If that happen, what does that do to this peace process?
HISHAM MELHEM: Unfortunately, the attack recently in Hebron strengthened the narrative of the Israelis, particularly the narrative of Benjamin Netanyahu, and talk security, security, security. And so the whole process is still brittle. And it takes only small groups, not only Hamas, to undermine it. And I think both sides, or the three sides, realize this. And that's why it was very important for all of them to condemn it and to try to contain it and deal with it and go beyond it.
I think Hamas and others, the rejectionists on the Arab side, Palestinian side, or on the Israeli side, when they see real progress and that's the challenge for the administration now and for Netanyahu...
JUDY WOODRUFF: You mean for the Obama administration?
HISHAM MELHEM: For the Obama administration, exactly, and for Netanyahu to prove also his seriousness that he's going to be, as Daniel was saying, have that transformation, that metamorphosis, from the old rejectionist, the one who wanted to give the Palestinians very little, the one who is very it's very hard for him to accept that they have a stake in the land that where these two people exist and, yesterday, he said that, and the Palestinians are taking it to heart.
And that's why they told us, we came here with an open heart and open mind to see if this man is really going to go through this metamorphosis and this this change that would make him a historic leader who would reach this historic compromise with the Palestinians, because, as Daniel said...
JUDY WOODRUFF: So, very specifically, right now, what are you looking for, Daniel Levy, to know whether there's progress or not?
DANIEL LEVY: I'm looking to see the extension at least of this compromise moratorium that has been for 10 months. And I'm looking to see also whether the American side acknowledges that Israel is a reluctant withdrawer, a reluctant ender of occupation, and how do you bring Israel to that position, and probably to acknowledge that, at some stage, you're going to have to broaden the base of who is involved on the Palestinian side, not Hamas directly, but a broader base...
JUDY WOODRUFF: Right.
DANIEL LEVY: ... and in the region. I think you will need to try and get a broader process going, with more Arab states, with Syria and Lebanon.
JUDY WOODRUFF: But, first, this meeting in two weeks. We will leave it there. Daniel Levy, Hisham Melhem, thank you both.
DANIEL LEVY: Thank you.
HISHAM MELHEM: Thank you. < ><-->