Tony Blair: The potential for Palestinian business

BETHLEHEM, West Bank (CNN) -- Since stepping down as UK prime minister last year, Mideast envoy Tony Blair has been working on behalf of the Mideast diplomatic quartet which comprises the United Nations, European Union, Russia and the United States.

Blair has focused his efforts on improving the economic situation in the Palestinian territories and was a key supporter of the recent Palestine Investment Conference.

MME's John Defterios (JD) caught up with Blair (TB) at the conference in Bethlehem started by asking him whether the Palestinian territories can have a prospering economy without political stability.

(TB): I think there's no doubt at all there's a fantastic amount of opportunities here in [the Palestinian territories.] Even though the difficulties are very obvious. But sometimes from the outside, people don't understand that, yes of course you've got major political problems, you've got problems of movement, restrictions and so on, on the West Bank, but also you've got amazing tourist potential, some great industry here and a very intelligent, capable, creative workforce.

(JD): There's $7.5 billion pledged by the Paris donor conference but about 10 percent of it has been released so far. There is a lot of goodwill but does the delivery have to happen faster to keep up momentum?

(TB): The $750 million is mostly budgetary support and that's what is needed for the moment but we will have to keep that going. And then there's a whole lot of project support. There are major infrastructure projects that we've now got agreement to do -- water and electricity and there are road projects. If we want the economy to grow here the infrastructure's got to be capable of sustaining that economic growth. And then there are major housing projects too.

(JD): I spoke to a number of Palestinian businessmen and they say they feel suffocated by the road blocks and the check points right now, especially in Nablus. How do you guarantee transit for an investor who comes in? What do you do about this politically?

(TB): You do two things. First of all, some of what we're doing, in terms of building the industrial parks and the agri-industrial corridor, for example, around Jericho and down in the Jordan valley. You do it by positioning the investment very close to the exit routes for exported goods. And the rest, the most important thing, is to get these access and movement restrictions progressively lifted.

And that means the security capability for the Palestinians has got to be there and we're trying to build that now. It means also obviously that Israel is prepared to make these changes in the regime of occupation here in the West Bank.

(JD): What's your instinct on whether Israel really wants a two state agreement?

(TB): My instinct is that Israel does want a two state solution. Look, because I keep saying to people, there are only two alternatives, a two state solution or a one state solution. But if it's a one state solution, then there's going to be a hell of a fight over whose state it is. Now, of course it's going to take time to do, but there isn't an alternative and there's nothing in my view more fundamental or more important to the overall stability of this region and to the relationship between Islam and the West. Which is not to say that this conflict is the source of the problems -- it's not.

(JD): But it's at the heart of the problems?

(TB): Resolving it would make a big difference.

(JD): President Bush would like to see an agreement before he leaves office, is that still realistic? Some in the Middle East -- like Prime Minister Nazif of Egypt who I spoke to last week -- think it's optimistic.

(TB): It all depends what happens, is the truth. I mean for that to happen there need to be two things in my view. The situation in Gaza needs to be stable, we need to help the people in Gaza whilst not allowing extremists to indulge in their extremism. But, if the negotiation that's taking place at the moment is successful and we get some calm in Gaza that would help. We need real change here on the West Bank. You know if the package of measures we agreed with the Israelis is introduced the people will notice a difference in their lives. And then, if the context of reality is propitious and supports the politics, then the politics can succeed.

(JD): We've had a lot of progress in the last week, as you know. In Lebanon and then talks between Israel and Syria taken place with Turkey involved. In your view, can this lead to real progress on that front?

(TB): Yes I think that it can. The best thing that can happen for the moment is that we almost get a kind of breathing space in the international community where we can recalibrate our strategies, work out what the right way forward is.

(JD): Is there a downside to this that Israel has too many balls in the game right now? Talking with Syria, activities in Lebanon, discussions on Palestine. Are you concerned that it could all collapse?

(TB): Yes I think it can keep all these things in play perfectly easily, but nothing must make us lose our focus from the Palestinian track.

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