By CNN - September 23, 2009

Joining me now here is the former British prime minister, Tony Blair. He is also the Middle East peace envoy for the quartet, the U.S., Russia, the U.N., and the European Union.

Welcome. Welcome, indeed, Mr. Blair.

TONY BLAIR, FORMER PRIME MINISTER OF BRITAIN: Thank you.

AMANPOUR: Did you hear any of the discussion between Saeb Erakat and Dan Meridor?

BLAIR: I heard just the bit at the end there.

AMANPOUR: It's a bit of a he said/she said. And the issue is to start negotiations. We just saw that nine years ago this whole issue ended in stalemate, and now President Obama at the U.N. today is calling for a resumption, but they've dropped their demand or their preference that a full Israeli settlement freeze should be the best condition to do that. Do you think there's any chance of getting these two sides together now?

BLAIR: Yes, I think there is, and I think that's what will happen, actually, over the next few weeks.

AMANPOUR: What leads you to believe that?

BLAIR: Because I think that -- that, in the end, the issue really is this: What is the context within which this negotiation is being launched? The worry for the Palestinians is that, if you don't lay down some -- some conditions, right, let's have a settlement freeze or this or that...

AMANPOUR: Which has been an international condition since time immemorial.

BLAIR: Absolutely. That's -- that's absolutely correct. So what they say is, if you don't lay down these conditions, the negotiation won't be credible. What the Israelis say is, look, we'll negotiate without precondition. We're not prepared until we start negotiating to yield this or yield that.

Now, personally, I think what -- what will happen and should happen is that we try and put together the best possible context of the launch of the negotiation. It may not be everything that everyone wants, but get the thing underway, because the issues, as you rightly say, I mean, they've been canvassed many times.

Actually, the Annapolis process went into them in a fair amount of detail. And -- and the two sides reached not agreement exactly, but they - - they narrowed the differences.

AMANPOUR: Can I just play a little bit of what Prime Minister Netanyahu said to Wolf Blitzer on CNN yesterday about his version and his vision of peace?

(BEGIN VIDEO CLIP)

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER: I think that prosperity is good for peace. I don't think it's a substitute for a political peace, but I think it really enables it, because young Palestinians see there -- there is a future there. I mean, they -- they -- they have jobs. There are investments. There are buildings sprouting out in Palestinian cities like Ramallah and Jenin and not missiles, as in Gaza, but, you know, high rises, apartment blocks, office buildings. This is what I'd like to see.

(END VIDEO CLIP)

AMANPOUR: So he's thrilled about the economy. I mean, the economy is kind of a no-brainer. Obviously, everybody wants to see people having a better life. But it does look as though that that is what they're more interested in right now, the economy rather than the hard political decisions.

BLAIR: No, you've got to be interested in both. I mean, look, my theory of this is absolutely clear and simple, which is that you've got to negotiate from the top down, build from the bottom up.

The economy matters. I mean, prosperity matters. And it's true: The Palestinian economy on the West Bank, now that we've eased some of the restrictions, got some of the -- and this is obviously what I'm working on -- got some of the -- the projects going and so on, Israeli Arabs coming in to the West Bank...

AMANPOUR: I mean, the figures are amazing. It does look like a renewal there economically.

BLAIR: There's a lot happening. But nobody's under any illusion at all: Without a political settlement, it won't last. So we need both.

AMANPOUR: You know, the Israelis are always saying that they don't have a partner for peace, and yet Terje Roed-Larsen's -- Middle East envoy and president of the IPI -- has got an exclusive new poll, basically a new poll which says that attitudes are changing, Palestinian attitudes are shifting, much more ready to be flexible, much more ready to compromise. Fatah is -- is -- is going up, his popularity. Is that -- is that not something that the Israelis should seize upon right now?

BLAIR: Yes. I mean, I think that's why I actually do believe that we will launch the negotiations in the next few weeks. And then people have got a choice to make.

I mean, there's no doubt, if you want to resolve these issues -- territory, the land swaps that'll take place, refugees, the security issues, even Jerusalem, which is very, very sensitive and very, very difficult -- if you want to settle these issues, you can.

But essential to doing that -- and this, I think, is the critical point -- Israel will not negotiate a Palestinian state unless they're sure that state will be securely and properly governed. That's the importance of the work that is happening with Prime Minister Fayyad now. And the Palestinians won't make the compromises necessary to agree a state unless they think they'll actually be able to run it, that the Israelis will get out, leave them to run their own territory.

AMANPOUR: I want to show you some more of this poll regarding the United States, attitudes by the Palestinians to the United States. Basically, the poll is saying that the U.S. has 80 percent unfavorable rating from the Palestinians, only 16 percent favorable. Barack Obama himself personally, 69 percent unfavorable, 27 percent favorable. And more importantly, can President Obama make progress on peace between Palestine and Israel? Fifty-six percent say unlikely, forty-one percent say likely.

Now, since the United States is the main interlocutor, so-called honest broker, power broker, where does that leave everybody, if them and also the Israelis don't have that much faith in President Obama, either?

BLAIR: Look, I think it's not very surprising to get those type of poll results because of the history of all this. The basic point is this: If you ask people whether they want the two-state solution, Israelis and Palestinians, they'll say yes. If you ask them whether they think they're going to get it, then based on their recent history, they say no.

But it's our job, in a sense, to bridge that credibility gap. And I think it is bridgeable.

AMANPOUR: So how do we bridge it? Because you've laid that -- laid out the positions. We've had the two gentlemen from the Israeli side, the Palestinian side. There was a -- no matter the spin that's going on right now -- and there is a lot of spin -- President Obama really did want to see a settlement freeze. He sent his envoy, George Mitchell, who worked with you on Northern Ireland, over and over again, and they didn't get it.

They shook a hand. It didn't seem to be more than a photo-op, and he's dropped the demand for a settlement freeze. So how is he credible either for the Israelis or for the Palestinians?

BLAIR: Because I think, if you look at what this now needs -- and in any of these situations, you never achieve exactly what you want -- I think what we need to do is basically to launch the negotiation with as -- as good a context that launches it with some credibility, that deals with issues like settlements, but also the obligations, obviously, of the Palestinians, some of the other issues around access and movement and -- and so on.

So you launch the negotiation with a time limit, with the credibility that that context of agreement should give it, and then you carry on the work of building from the bottom up. And that means both trying to encourage the West Bank economy, but also -- and critically -- relieve the situation in Gaza and start to get Palestinian politics to come around to a more unified position.

But, you know, in the end, it's not impossible to do this if people want to do it.

AMANPOUR: Isn't that always the case?

BLAIR: It is, but you -- sorry.

AMANPOUR: We have to continue this conversation online, but I've got 15 seconds to get out of this. I wanted to ask you: Do you think in a week, a month these negotiations will restart between both sides?

BLAIR: I think in the coming weeks they will, yes.

AMANPOUR: All right. Well, that's optimistic.