Palestinians want a state of their own. They want to live in freedom. They want to get rid of the terrible misery in which they are living. They are ready after fifty years to accept a state of their own in 22 percent of what used to be the country of Palestine. I think it is the height of stupidity on our part if we don't grasp this opportunity.

If you are a Jewish Israeli, you go to Gaza, you get the villa of your life, the villa which you did not dream of ever getting in Israel, a beautiful two-story villa with green meadows and so on, practically for nothing. Then you put up hothouses of tomatoes or flowers; you take the very Arabs from whom you grabbed this land and employ them as laborers in your hothouses. Israeli law does not apply in Gaza: There is no minimum wage, no annual vacation, no compensation for dismissal - so you get the work very, very cheap. It is a wonderful setup economically.

I have always been conscious of the importance and the strength of nationalism, and this has led me straight to the acknowledgment of the nationalism of the Palestinian people. I believe there is no way around this: We have to have a solution based on two national states, which will hopefully live and grow together and establish a relationship between them in something like a European Union.

There are lots of grounds for hope in Israeli society. We are seeing Israelis getting fed up with war, looking for solutions. The youngest soldiers are refusing to serve in the Occupied Territories. Some are volunteering for army combat units but are refusing to serve in the Occupied Territories. We have the elite of the Israeli army, the air force pilots, some of them refusing orders which they consider illegal.

You must get Israelis to understand the feelings and the hopes and the traumas of the Palestinians. You have to get the Palestinians to understand why Israel is behaving the way it does: What is the legacy of the Holocaust, what are the fears of average Jewish people?

What is the alternative to peace? A catastrophe for both peoples [Palestine and Israel].

Sharon's so-called two-state solution will be, let's say, twelve Palestinian enclaves, which will be called a Palestinian state. It will be connected by, perhaps, a series of bridges, tunnels, and highways, which can be cut off at any moment at the whim of the Israeli government or Israeli army.