Exclusive: Condoleezza Rice Hopeful for Mideast Peace

Wednesday morning President Bush hosted the Israeli and Palestinian delegations at the Mideast Peace Conference in Annapolis, Md. "Nightline" was granted extraordinary behind-the-scenes access to the conference.

In an interview with "Nightline" co-anchor Cynthia McFadden, Secretary of State Condoleezza Rice said "the stakes are high," noting that failed efforts at peace in the region in the past have often led to more violence.

"I clearly understand that failure is not an option here," Rice said. "And I think that the parties understand that. But inaction's also not an option. Doing nothing is also not an option. If you do nothing to try to resolve this conflict, [if] the parties don't try to resolve this conflict, you're going to have years and years more of the deprivation, the humiliation of the occupation, and of the terror associated with this for the Israelis. And that's not an option either."

"Both sides, I think, were thrilled about yesterday because it gave them a kind of international boost," Rice said, adding that President Bush was also "very pleased."

"Of course, he's been a big part of making this happen … and he was able to really kick this off in a good way. And everybody feels good about what happened at Annapolis, but everybody also knows that it's only a first step," she said.

Rice said the overarching goal is "to make certain that the establishment of a Palestinian state can really help the security environment for Palestinians, for Israelis, and for the region, because the creation of a Palestinian state is a new factor in the Middle East. It will need its own security forces, but it will also need security arrangements that will have to in part be negotiated."

"We often talk about security for the region, but we have to start first with security for the Palestinian people. And then, of course, Israelis, who will be withdrawing from the West Bank when this agreement is done have to be certain that they are not compromising their security."

The Two-State Solution

Rice said the negotiations are in too early a stage to discuss the possibility of a military presence on the ground to maintain that security but added that "I don't really think that American boots on the ground are going to make sense in this conflict. … There may be a role that international experts can play in the way that they are right now at various crossings, helping with customs, helping with border control. There are going to be very many things that the international community can do, and of course, that's a part of providing for security."

Rice said that the Bush administration's position is that "ending the occupation that began in 1967 [will] require a negotiation on mutually agreed borders, and those mutually agreed borders, of course, will have a security component. States have to be secure. … But we want the parties to negotiate borders."

Rice called the question of the future of Jerusalem "the most difficult issue."

"This is going to be very hard for the parties," she said. "As you know, there's a lot at stake here. There is a lot that is not just territory in reality, but a lot that goes to the very core of these religions. But it's important that Jerusalem, of course, is a city where all are able to feel that they can get to their sites and the like. But this is one that the less said the better. Let's let the parties deal with these very difficult issues."

"It's clear that they're going to have to overcome some of the hardest elements of the psychology that keeps these two peoples from solving their conflict. And in that, of course, overcoming long years of suffering, long years of grievance. I thought that Prime Minister [Ehud] Olmert spoke very effectively yesterday to the suffering of the Palestinian people, which was an extraordinary thing for an Israeli prime minister to say and to acknowledge."

Rice on Ahmadinejad

Iranian President Ahmadinejad called the Annapolis meeting a failure and said that Israel is "doomed to collapse."

"Well, he says all kinds of things," Rice responded. "And it's really a pity. You know, it's a pity that a great culture and a great people like the Iranians are represented somehow by someone who talks about wiping a fellow member state of the United Nations off the map; someone whose policies are leading to widespread inflation and economic depravation for the Iranian people; someone whose policies are isolating Iran so that it sits in chapter seven status, along with other bad actors in the international community; someone who has led Iran on a course that means that the Iranian people are being deprived of their rightful place in the international system."

To those who suggest that the real impetus for the Annapolis conference was to further isolate Iran, Rice said "the reason for the Annapolis conference is to launch these peoples toward peace."

"We talk about the two-state solution. And, you know, it sounds rather antiseptic, 'the two-state solution.' What we're really talking about is people; people whose lives will be better when there are two states, living side-by-side in peace and freedom; when Israelis don't have to go to bed wondering if there are going to be bombs going off, because of terrorism; when Palestinians no longer have to suffer the humiliations of occupation, where they go to a checkpoint and they're told they can't go on that road just because they're Palestinians. That's what we're talking about. And that's why Annapolis was important. It takes place in the context of a greater struggle, between extremism and moderation."

In response to the riots in Gaza in anticipation and throughout the conference, Rice said "there will always be those who reject a peaceful way. But I don't believe that that represents the great majority of the Palestinian people."

Speaking about Hamas, who also was not invited to participate in the conference, Rice said, "Hamas is going to have to make its choice. But Hamas cannot have it both ways: be a part of peace and continue to make terror and war."

'Nobody Wants to Go to War'

On the subject of the war in Iraq, Rice said she resents the notion that the Bush administration was looking to go to war against Iraq.

Nobody wanted to go to war," she said. "We would have gladly not gone to war against Iraq if Saddam Hussein had been willing to live up to the obligations that he undertook first in 1991, then in 1998, and again in 2002. … Nobody wants to go to war. You go to war when you really have not very good options. And with Saddam Hussein, with whom we were still in a state of conflict after 1991, who was shooting at our pilots in the no-fly zones that were there to keep him from attacking his neighbors and attacking his own people, who was continuing to defy the international community, that's why we went to war."

Rice said the decision to hold the conference now, in the last year of the Bush administration, is not out of concern for its legacy.

"I can tell you, there are a lot easier ways to get a legacy than to try to end a conflict that is now 60 years old, that people have tried to end repeatedly over time and have never been able to do it. But we're doing it because we think it's the right thing to do. We're doing it because we think it's the right thing to do for Palestinians and Israelis, for the region and, frankly, for American security as well.

"And when I sat there yesterday and I looked around, and I saw the Palestinians, now really anxious to try to build a state, and I saw the Israelis wanting the Palestinians to have their state, I thought: What a difference from 2001, when the president fist talked about a Palestinian state and made it a matter of American policy. … I thought, 'We've worked at this the right way.' And now we've got a chance. So let's try to make it happen.

"Everybody is going to have to compromise," Rice said. "And when I hear Palestinians and Israelis through Mahmoud Abbas and Ehud Olmert talking about painful compromises, I think that's what they mean.When I hear them saying that they know that they're going to have to overcome years and years of grievance, I think that's what they mean.… But ultimately, you have to put historical grievances behind you. Ultimately, you have to put unrealistic aspirations behind you, that you will get it all. And then you can get an agreement.

"And what I have felt from these Palestinians and these Israelis is that they understand that, and that they're now going to go to the table to try to determine the contours of -- the composition of a Palestinian state so that they can finally live side by side in peace and security."