Martin Indyk served as the U.S. ambassador to Israel from 1995 to 1997 and from 2000 to 2001. Today he is vice president for foreign policy at the Brookings Institution think tank in Washington.

Assuming Benjamin Netanyahu's government has no intention of extending the freeze on construction in the settlements in September, what impact might that have on direct talks?

I don't envy Netanyahu. The settlement freeze will be difficult for him to extend and difficult not to extend as well, especially if by then direct negotiations have begun. Then Israel will be responsible for blowing up the negotiations. And of course, if he does extend the settlement moratorium, he'll be assailed by the right wing, including members of his own party. It puts him between a rock and a hard place. I don't envy him in terms of how he will deal with this. But again - once the Palestinians are in direct negotiations, what Abu Mazen [Palestinian President Mahmoud Abbas] will particularly care about most - is to move quickly toward an agreement. I might be wrong, but I don't think that either Netanyahu or Abu Mazen - certainly not [U.S. President] Barak Obama, [U.S. Secretary of State] Hillary Clinton or [special envoy] George Mitchell - want to get waylaid again by an argument about settlements. I think they all want to focus on the main challenge which is to reach an agreement on what the borders of the Palestinian state will be. And then the settlement issue will be resolved as a result of that.

Following your recent visit to Ramallah and Jerusalem, you reported a growing optimism, which could signal a readiness for Israeli-Palestinian peacemaking. Have recent Palestinian responses changed your mind?

On the contrary. I was talking about the public mind shift. It's a mistake to get too preoccupied with what is said by either side for public consumption, because what happens privately in these negotiations is what is important. From my own perspective, based on the people I've talked to on the Palestinian side, my strong sense is that Abu Mazen understands the importance of entering the direct negotiations and he is looking for a way to explain it. The most important question is whether he will get an endorsement from the Arab League at the end of this month - that will be the big argument. But my feeling is there will be support for the direct talks.

Dan Meridor recently proposed a kind of partial freeze - to continue building just in parts that are supposed to become Israeli territory after the agreement, plus East Jerusalem.

I don't know whether that will fly or not. It's an idea. It kind of goes back to an idea that [Ariel] Sharon and then [Ehud] Olmert tried to promote with the Bush administration. I can't make a judgment on whether it's going to work or not, but what's critical is that the parties now get into direct negotiations and through these direct negotiations start to establish the seriousness of each side. Netanyahu must be prepared to indicate how far he is willing to go, particularly on the territorial issue, in the proximity talks. If there is a sense of seriousness on both sides on the territorial issue, I think the settlement problem will be resolved.

Netanyahu's recent visit to Washington was described in some reports as a "restart" in relations by some and as a pre-midterm-elections gesture by others. Was it a success?

I think it was a success and I think people have been too cynical about this. Because it does look like Obama veered away from Israel in his first year and now he is veering back towards Israel in his second year. But I think that along the way, both President Obama and Netanyahu learned some important lessons, and this meeting was a reflection of what they learned. Obama, I think, came to understand that he can get a lot more through working with the Israeli prime-minister than working against him. And I think that Netanyahu came to understand that he needs, and can have, an American president at his side, if he is willing to be serious and to take the president into his confidence about what he is prepared to do in those negotiations. I think this meeting was a reflection of the fact that they both came to understand, each for his own reasons, that it's better to work with each other than against each other.

Do you think it's possible to reach an agreement with Netanyahu's current coalition?

Oh, I do. I long believed that this coalition will support him in going into negotiations and potentially coming out of negotiations with an agreement. I know that doesn't reflect conventional wisdom, but first of all, Netanyahu committed himself to this solution. Secondly, [Avigdor] Lieberman is prepared for a radical territorial compromise. My experience with Lieberman is that he is often underestimated because he often plays to his domestic audience. But it doesn't mean he won't support the agreement. His major requirement is separation, and that's what the agreement is about. And there is Shas, and for Shas, it's the matter of price. Its spiritual leader said peace is more important than territory. It doesn't mean it will be easy and there won't be drama and hysteria, but as long as he moves quickly and reaches an agreement before the next election time, he can bring an agreement.

We've seen some attempts to put Israel on the electoral agenda in the United States ahead of the midterm elections. Will it have any effect?

American Jews traditionally are pretty supportive of the Democratic Party. They voted overwhelmingly for Barak Obama, they tend to vote for Democratic candidates and they provide a good deal of funding for political campaigns. So the Jewish factor is always a critical factor for Democratic candidates. I don't think it's telling any secrets that there are a lot of people who have been upset with President Obama. And I think that the White House came to the understanding that they have a real problem there and they are going out of their way trying to show they are friendly to Israel and committed to peace. Republicans will try to exploit the anger, and Democrats will do their best to convince there is no reason for anger. But after all, these are local elections.

You said in the Middle East Policy Council that Iran is not interested in peace in the Middle East. Other participants on the panel claimed it's impossible to marginalize Iran and its proxies if one is interested in moving the process forward.

I have had enough experience with the Iranians to understand very clearly that they can exploit the Palestinian-Israeli conflict. That's always been their policy. So can you imagine you can strike a peace deal with them, when they want to promote violence and terrorism? President Obama tried to engage them. President [Bill] Clinton tried to engage them. In terms of preventing them from interfering in Arab affairs - the best way to do that is trying to resolve the conflict, but they won't cooperate in the process.

And what about the notion that their nuclear-program clock is ticking?

There are so many clocks ticking in the Middle East. [Egyptian President Hosni] Mubarak's clock and [Lebanese Prime Minister Saad] Hariri's clock, or Saudi King Abdullah's, or Bibi Netanyahu's electoral clock. So it's a problem and the best way to try to affect the clocks' ticking is to take the initiative and move ahead with it, instead of reacting.

Do you believe that Turkey is really shifting its alliances away from the West, and is there anything the U.S. or Israel can do?

It's very important at this stage to calm the waters and it may be that the Turkish government also wants to calm things down and then diplomats can go to work on both sides' concerns. [Turkish] Prime Minister [Recep Tayyip] Erdogan sees an advantage in using Gaza to build his position in the Arab world, but there are dangers here if Turkey pushes it too far - particularly in its relations with the U.S. And if they really want to play an effective role in the Middle East, they must be able to influence the resolution of the conflict. And if they don't find the way to resolve the conflict with Israel, they simply won't be able to play this role.

There has been some talk recently that it's about time for Israel to give up its nuclear ambiguity. Does that sound reasonable to you?

I think that Israel needs to be creative in the way it deals with this problem and find a positive approach of the kind that Yitzhak Shamir found.