I heard you say about the current peace talks with the Palestinians, “Prime Minister Benjamin Netanyahu paid with prisoners in exchange for negotiations, and that’s something that isn’t done.” Why?

Because one of the basic principles of negotiations in the absence of trust is that you only give concrete compensation in exchange for concrete compensation.

Because you can’t rely on the other side.

Precisely. So we paid with hard currency for nothing. And also, negotiations are in the interest of both sides. If you have no interest in entering negotiations, then neither do I.

How do you understand Netanyahu’s behavior? And the present negotiations?

Pressure. Pressure. The Americans know that Netanyahu can be pressured. To me it doesn’t look like genuine negotiations, it looks like a smokescreen, because I know what genuine negotiations look like − [they involve] a mobilization of systems. [Ehud] Barak and [Ehud] Olmert set up negotiation administrations; dozens, if not hundreds, of people were working on it. Besides, Tzipi Livni, as Olmert’s foreign minister, made [Palestinian Authority President] Mahmoud Abbas a very far-reaching offer, and Abbas turned it down. So will Netanyahu give more now?

So what is it, lip service?

Yes. Unless Livni, with her brilliance − and I’m really not being cynical − is conducting negotiations over a different agreement. Something that’s not a final status agreement.

You oppose a final status agreement, don’t you? You think that there’s a basic mistake in the way the negotiations with the Palestinians are being conducted?

Yes. Since 2000. Ehud Barak’s basic mistake was that he had no understanding of processes. He screwed up the process, since at the time there was willingness and ability on both sides. Since 2000, certainly since the death of [PLO leader Yasser] Arafat, I think the basic mistake is that we’re trying to reach a final status agreement. And in my opinion it’s something that’s irrelevant and not within the scope of either side.

You think that an interim agreement would be a better idea.

We have to reach an agreement to establish a Palestinian state with permanent borders, and to arrange the issues of security and the economy.

The question of Jerusalem remains open, like another border conflict − for example, like the one between the United States and Canada or Mexico. We’ll also talk later about the issues of the refugees and the end of the conflict. The present situation is simply a preservation of the status quo, which works against Israel. We’re going to a place where things will erupt in violence and still there will be a Palestinian state.

How would you define negotiations? Arm wrestling? A game of chess? Poker, maybe?

All of the above. All those games you mentioned are aimed at a result. Which is nice, because this is Western thinking. When you move eastward, you get an entirely different atmosphere. Take Chinese thinking, for example: what is Tao? Tao is the “way.” For a Chinese person, negotiations aren’t measured by the result. They look at the way, at the relationships. For a Chinese person, there’s no significance to signing an agreement. In effect, after you sign it the negotiations begin. It drives Westerners crazy. They sanctify agreements and the bottom line. Only someone who lives in the East or is profoundly familiar with the concept knows that’s how it works. You have to understand that it’s a different paradigm.

For the Russians, too, the standards are completely different. I once flew to Moscow and a young businessman was sitting next to me. He told me that, after a period of five years, he was about to close a deal for 20 million euros, and it was about to happen now. During this visit. I asked him how many trips he had made already and he said, “This is the second time. I’ve already been here once, I wasted 5,000 euros.” I told him that for a transaction of that size with Russians, he would have to invest at least 100,000 euros and half a year of trips and meetings, and host them in Israel and build a genuine relationship with them.

When you move east from Israel, you can’t think instrumentally. When you introduce the dimension of haste that typifies Israeli conduct − that everything has to be here-and-now − you see how we very often miss out on deals because we aren’t sufficiently aware of this procedural dimension. You have to invest a lot of quality time to build relationships.

That doesn’t suit the Israeli temperament very well. Roughly speaking, you can see that in the negotiations with the Arab world.

We also suffer from hysteria, combined with an insane sense of independence: “I don’t need anyone, I know everything by myself, move over, bro’, everything’s fine.” We have so much to sell to the world, but when we come to sell it, we screw up.

No statement embodies that better than Ehud Barak’s assertion, “Give me five minutes with [Syrian President Bashar] Assad in the room and I’ll bring about an agreement.” Ehud, you didn’t understand a thing.

You advised him.

To say I advised him would be somewhat pretentious. I was on his negotiating teams. At Camp David there were 12 people on the mountain, and I was on the second team, in the place where they discussed water-related and other general arrangements. We were sitting there, and on television we saw Barak pushing Arafat, and I remember saying at that moment, “Friends, we can pack up, no agreement will emerge here.” They asked me why. I said, “You don’t do such a thing to an Arab. You don’t do such a thing to any negotiating partner.” What for us is considered being chummy, in the Arab world was translated as an insult and as a realization that Israelis understand only force. And in fact, several months later they showed us the meaning of force.

That really was a moment that embodied the difference.

True. In the business world we see a new generation of Israeli executives in recent years, who studied and worked abroad and were exposed to cultural differences, and have understood that there are other ways to succeed − not necessarily in the crude and hard-hitting Israeli way. Israeli creative thinking, the idea that everything is possible and there are no limits − and this ethos that built the country for us here − is our iron fist. But this fist must be wrapped in a velvet glove − that is, in the ability to talk to others more softly and gently, to invest more in building relationships, to be aware of the process.

Does that approach have any takers, by the way? Is there any kind of mentality anywhere in the world where this [Israeli] manner of conducting negotiations could be an advantage?

No ... It simply doesn’t work. There isn’t a single culture that shares these traits with us. The French or the Americans are aggressive, but they have a business culture and a tradition.

Yes, the Americans simply use sugar coating.

Precisely. If you threaten an American, his pleasantness disappears immediately. They’re no less aggressive than the Israelis, if not more so, and that’s why it’s often easier for Israelis to conduct negotiations with them.

What about trust? How do you stimulate trust?

Your working assumption is that trust is important.

Isn’t it?!

Not necessarily. A year and a half ago, I was invited to a conference of the American Bar Association in Washington. The subject of my speech was negotiations in a no- to low-trust environment. I told them: Look, the entire classic Harvard concept talks about building trust. But I come from a tough diplomatic neighborhood. How do you begin genuine negotiations with Hamas or with [captive Israeli soldier] Gilad Shalit’s captors? I want to kill you, you want to kill me. I don’t believe you, you don’t believe me, let’s sit down and talk.

And still, we reach agreements. Tahadiyeh [lull] No. 1, tahadiyeh No. 2, [then-missing soldiers Ehud] Goldwasser, [Eldad] Regev, and Shalit. You make deals with your worst enemies. You don’t believe them at all, because trust is not a condition.

What is the negotiating concept for releasing hostages? You conduct negotiations with a captor who killed two hostages a moment ago, and reach an agreement with him. Do you believe him? Not at all. If you have the option you shoot him between the eyes. But you base negotiations on other things.

These Western ideas of trust as a preliminary condition to negotiating − I don’t accept them. If there’s trust, great. If there isn’t, there isn’t. I distinguish between trust and respect. When I respect you, I convey to you that I respect you although I don’t believe you. That I respect the fact you’re sitting with me and not shooting at me, and now let’s see how to continue.

And that activates an essential sociological component − mutuality. Do you think we trusted or relied on Gilad Shalit’s captors? Not at all. But there was a strong mediator, and mutual respect that was created via that mediator.

Let’s talk for a moment about those Gilad Shalit negotiations.

It was a fascinating process. [Negotiator] Hagai Hadas created an excellent team, with players who formulated the components of the negotiations in terms of intelligence, operations, negotiations, awareness. There was a very strong, effective mediator. We brought [the agreement up] for a decision in December 2009 − the deal was 95 percent ready, but Netanyahu and [Hamas political bureau chief Khaled] Meshal were not ready to make the decision. Two things happened in September 2011: Syria began to burn beneath Meshal’s feet; Rothschild [Boulevard, in Tel Aviv, where that summer’s social protests were centered] was burning beneath Netanyahu’s feet. Both sides had something that wasn’t there in 2009.

The stimulus.

Yes. And they [Hamas] got a deal that was at least as good as in 2009.

With an emphasis on at least.

Let’s leave it at that.

How does this whole business take place? Where do you sit? How does it work?

Hundreds, if not thousands, of hours of preparation. The professional team that worked with Hadas dealt with all the theoretical elements of the negotiations and their integration. You sit and analyze all the players from the Hamas side up to the level of the psychological profile, analyze the [psychological] effects, which “levers” can be activated via third parties, how you actually prepare for a meeting with the mediator. What the stages are. There’s a lot of work on the names − who [which freed prisoner] goes where, the future of each of those released. And then you talk to the mediator.

What’s the biggest obstacle in negotiations?

There are strategic obstacles. In other words, I enter negotiations with you and didn’t check that the maximum you’re willing to pay is nowhere near the minimum I’m willing to accept. There’s no area of agreement.

Another type of obstacle is tactical. An entire realm of negotiations gets stuck because there’s no chemistry between the negotiators, because suddenly the mandate of one of the sides has expired, because there was a change in the market and at the moment the deal isn’t worth it to you. There are lots of factors. You have to understand where the “no” is coming from. That’s crucial. Most people hear the “no” and then begin to push. Why? It’s worth your while. Take it.

I’m now working with a small startup that is conducting a lawsuit in the United States against a very large company that simply doesn’t show up at the negotiations. At first I couldn’t understand why. They’re about to be hit with a ruling that will cause them to lose a great deal of money. When I started to look into it someone told me, “Listen, they’ll prefer to pay $120 million after a court decision, rather than reach an agreement on $80 million – because if they reach an agreement on $80 million, there are another 1,000 companies like you that can claim their technology was stolen. They’ll realize that this company is willing to compromise.”

So according to you, behind every process or result there’s a solid rationale, and all you have to do is discover it.

Absolutely.

What about irrationality?

There’s no such thing. A client once said to me, “I prefer to pay you $1,000,000 and not to pay that scoundrel $100,000.” Is that rational? Absolutely not. As far as I’m concerned, there’s no such thing as an irrational player. Opposite me there’s a player, and he has a rationale. Either I understand him or I don’t.

One of the things that was very interesting during the period of the Shalit negotiations was that we as professional teams tried to avoid legislative initiatives that would worsen the conditions of Palestinian prisoners. The thinking behind the legislative initiatives was that just as Gilad Shalit was rotting in jail, the prisoners would suffer, too. But what’s the Palestinian rationale? The more the prisoner suffers in jail ...

... the more of a martyr he is.

Precisely. He’s a living shaheed [martyr]. His value increases. The Arab has a different rationale. I’m not judgmental toward him. It’s simply a different rationale.

Is there fairness in negotiations?

Prof. [Daniel] Kahneman said that the concept of fairness is always subjective.

Like the concept of rationality. Like any concept, actually.

Right. People often use the argument that something is not fair. But what do we mean by unfair? If we’re now splitting $100 50-50, that’s fair, right? But if you’re starving, it’s probably unfair.

So there’s no fairness. And there’s no rationality. But there must be psychological biases. How do you work with them? What will you do if I’m convinced that the company I’m selling is worth far more than the market price, only because I started it?

That’s what we call the “ownership effect.” When I sell something, I’ll evaluate it at more than it’s worth; when I buy, at less. So I won’t say to you, “What, are you nuts? Do you think that’s what your company is worth? Who will buy you?” I’ll say, “Look, there’s a very big gap between us. I think it stems from the fact that you invested a great deal in the company, and started it with your own two hands. Would you be willing to get an evaluation from a professional?”

What do you do in the opposite case? When you have overvalued?

I’ll evaluate the gap objectively. The ownership effect. I know that it’s a bummer for me to sell my company. I know its market value is $100 million and I want $150 million. So I’ll think about what I can include in addition. For example, potential. I’ll say, “Listen, it’s true that we did an evaluation of $100 million, but you’re buying it because you’re an outstanding manager. And you have four successes on your record, and another certain success here, and I want to be part of that success.”

But are you flattering me or do you mean it?

I mean it. I use an argument. I tell you that you’re talented, that you’ll derive more value from my platform, and I want to be a part of it.

Very smooth.

Why? That’s how the Eilat port was sold for 30 percent more. We came to [Avi and Rafi] Nakash and said: “It’s true that you’re the winner and the only one competing for the tender, and it’s true that the price is NIS 100 million. But because you know that there’s potential, and you’re buying because you know your abilities − let’s make a deal that if you profit from the port within 10 years, the government will also benefit.” And they agreed. The sale price was higher than the price with which they won the tender.

What are the basic traits that make a person a better negotiator?

You have to be a people person.

Are you a people person?

Of course. Someone who doesn’t like the company of people can’t survive in this profession. He has to know how to communicate; he has to be flexible in his thinking, because you’re constantly trying to find the right way. Creativity is very helpful. The person also has to be reasonably assertive.

What about likable?

It helps, but not when you get to the hard core. It’s good for the foreplay. Without mentioning names, one of the most talented negotiators on the State of Israel’s diplomatic teams is not nice at all. A person with whom I wouldn’t have coffee. But he’s an exceptionally talented negotiator.

Let’s talk about emotions in negotiations. What role do they play? How should they be managed?

Emotions are always present. Both in business negotiations and negotiations surrounding a conflict. I like the other party, I feel compassion. I’m arrogant, I’m angry. The problem is that it’s impossible to control feelings and also impossible to ignore them. The research speaks of a strategic and tactical use of emotions. For example, when do you get angry during negotiations? Empirical studies demonstrate that if you get angry at the outset, that’s not so good. But if you’re already two-thirds of the way through and you get angry, and you externalize your anger − that can turn into an advantage and you can achieve a better result in the negotiations. So the trick is to be aware of their existence.

And to leverage them.

If there are positive emotions, such as affection or enthusiasm, the question is how to use them to create positive momentum for progress. And if you see negative emotions, how do you get rid of that? The rule is to take care of it as soon as possible.

Does taking care mean opening up? Saying “I feel you don’t like my offer”?

Yes, but you have to be careful. When you handle emotions, always clear the arena. Very often, negotiations are a show. The CEO is putting on a show for the vice presidents, the legal adviser is putting on a show for the vice president of operations, etc. So when we speak about feelings, you have to find an opportunity for a private conversation: “I saw that when I spoke about the compensation clause, you were angry. What gives?” Usually, if you ask an open question you’ll get a direct answer.

Is it even possible to try to talk about a poker face? Can you hide how you feel?

No. If there’s an experienced person opposite me, he’ll see it. Our body is far less under control than we think. I believe in clean and clear communications. That will make the negotiations effective. If there’s an area of agreement, you’ll reach a result far more quickly. And if there isn’t, you’ll know there’s no deal.

What were the strangest negotiations you ever participated in?

The negotiations for the evacuation of the first roof during the disengagement from Gaza [in 2005]. As a crisis team we weren’t supposed to climb onto roofs at all, but because the commanders in the field wanted the first roof to be over quickly, they asked us to go inside. We consulted for 30 seconds and then climbed onto the roof, knocked on the door and said, “We’re a negotiating team. We want to offer you a deal. You won’t be evacuated by force. Let’s all go to say one prayer together in the synagogue.” I tell that story and I get the chills.

And what’s the source of that idea?

We developed a tool called fast negotiations. You take the initiative and for a very limited time make the other side a very attractive offer that answershis real interests – which you have checked – but with a very threatening stick. You put the guy in a straitjacket of fast decision making, and it often succeeds.

You’re not a religious person, you had no need to pray. Why did you do that?

To create a response to two very strong interests: the feelings that, according to their discourse, they were struggling against the Almighty, and their unwillingness to clash with the army.

So it’s simply emotional manipulation.

It’s not emotional manipulation. It’s a solution that is in his interest.

An emotional exploitation of his need.

Wrong. My need is a quick and nonviolent evacuation; his interest is a dual one: an internal feeling regarding himself and the Almighty, that he didn’t abandon his property; and that he didn’t attack the army. That’s how we meet halfway.

How do you understand Iranian President Hassan Rohani’s attempt to create a dialogue with Netanyahu?

This story looks like a very interesting attempt by the Iranians to leverage their negotiating style. To arrive via a different [negotiating] angle at their strategic objective, which is a nuclear bomb, or a stone’s throw away from a nuclear bomb. The sanctions are very painful for them. They have realized that Ahmadinejadism and confrontation with the West work against them. Because the Iranians are smart, they said, “Let’s talk to the West in its own language.” The Americans only melt if you talk like that. Now the Iranians will say, “Look, we can’t talk when the Iranian people are hungry, so eliminate a few sanctions and we’ll talk real negotiations.” Since the Americans still believe in building trust, they’ll fall exactly at the place where [U.S. Secretary of State John] Kerry forced Netanyahu to release prisoners. They’ll tell the Europeans to eliminate the sanctions, and that’s terrible. That’s what Bibi is warning about.

You think he’s right.

He’s right about that, but his message is problematic. If Netanyahu were to say to Rohani, “Ahalan wasahalan [welcome]. Let’s talk, why not? Here’s what I want. In exchange for removing Israel’s opposition to removing the first sanction, I want those responsible for the [1992] attack in Buenos Aires, and the bones of [Israeli spy] Eli Cohen. We’ll start from there.” But because Netanyahu is not a sophisticated negotiator, he remains isolated. Again, it’s the iron fist and the velvet glove. Netanyahu has only the iron fist.