Transcript: Secretary of State Hillary Clinton on 'This Week'

Who would have predicted that Ariel Sharon or Ehud Olmert would have reached the conclusions they reached about what was in Israel's best interest? Who would have predicted that even Prime Minister Netanyahu, in his earlier term during the 1990s, would have made some of the decisions he made?

STEPHANOPOULOS: But his team says now that, if you continue to push this, it's going to bring down his government.

CLINTON: We are setting forth our views. Obviously, decisions about how to go forward are up to the Israelis and the Palestinians. But I think it is an appropriate role for the United States -- and, certainly, it is what the president has decided -- to make clear some of the obstacles he sees.

Now, remember, the Israelis made a commitment in the road map in the prior administration.

STEPHANOPOULOS: But they say that includes an understanding for natural growth inside the settlements.

CLINTON: Well, that was an understanding that was entered into, so far as we are told, orally. That was never made a part of the official record of the negotiations as it was passed on to our administration. No one in the Bush administration said to anyone that we can find in our administration...

STEPHANOPOULOS: Not Elliot Abrams? He wrote about that.

CLINTON: Nobody in a position of authority at the time that the Obama administration came into office said anything about it. And, in fact, there's also a record that President Bush contradicted even that oral agreement.

But the fact is that the road map, which was agreed to officially, adopted by the Israeli government, said something very clear about settlements.

So I think that what the president is doing is saying, Look, everybody should comply with the obligations you've already committed to. And for the Palestinians, let's not forget: They must end incitement against Israel. They must demonstrate an ability to provide security.

STEPHANOPOULOS: That's what I wanted to ask you about.

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OBAMA: It is a great pleasure to welcome President Abbas...

(END VIDEO CLIP)

STEPHANOPOULOS: Abbas was in Washington last week. He had an interview in the Washington Post where he sure seemed to suggest that he doesn't have to do anything right now.

CLINTON: Well, I think you're seeing public positions taken, which is understandable in a process like this. But we've made it very clear to President Abbas what we expect from him, as well.

STEPHANOPOULOS: How about Iran? You were quoted in the papers back in March when you met with the foreign minister of the UAE that you were skeptical of the possibility that diplomacy would work to stall or stop Iran's nuclear ambitions. Are you still that doubtful?

CLINTON: Well, I am someone who's going to wait and see. I mean, I -- I want to see what the president's engagement will bring. We have a team of people who we have tasked to work on this. I think there's an enormous amount of potential for change, if the Iranians are willing to pursue that.

STEPHANOPOULOS: Well, what do you think they want, deep down? You know, you read some of the public declarations by their supreme leader and others saying that they consider nuclear weapons un-Islamic, and yet they continue to pursue the nuclear program.

CLINTON: But, George, one of the values of -- of engagement is, we need to have better information, and maybe about each other, not just about a one-way street of information.

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