CHARLIE ROSE, Host: Welcome to the broadcast. Tonight, Israel's ambassador to the United States, Itamar Rabinovich.

CHARLIE ROSE: Yesterday, the main assembly of the Palestine Liberation Organization revoked a 32-year-old charter calling for the destruction of the Jewish state. In response, Israel's ruling Labor Party voted today to drop a clause from their platform ruling out a Palestinian state. The PLO vote keeps a promise made in the peace accord with Israel and comes while fighting in southern Lebanon between Hizballah and Israeli defense forces continues. Joining me now from Washington, Israel's ambassador to the United States, Itamar Rabinovich, who just returned from Israel, I think yesterday. Mr. Ambassador, thank you for joining us.

ITAMAR RABINOVICH, Israeli Ambassador to the U.S.: Thank you for having me, and good evening, Charlie.

CHARLIE ROSE: What do we expect next in the fighting between Israel and Hizballah on- in Lebanon?

ITAMAR RABINOVICH: What we would all like to see is an end to that fighting. The Secretary of State has been in the Middle East since last Saturday doing yeoman's work and working even physically very hard to try to negotiate an end to that. Tonight, late into Middle Eastern time, there was still no resolution. The Secretary, around midnight Middle Eastern time, was making his way from Damascus back to Jerusalem, and we all hope that tomorrow, Friday, we'll finally see an end to this.

CHARLIE ROSE: Why tomorrow, Friday?

ITAMAR RABINOVICH: It cannot be done tonight. Right now is very late at night in, in the Middle East. There is no agreement yet, and hopefully, the elements of the deal that I believe have been there for a few days now could be put together and give us a deal that would mean a cease-fire, a new set of understandings, and a period of calm and stability along the Israeli-Lebanese border.

CHARLIE ROSE: You're a scholar of Syria, and you know Assad. Could he stop this in a second?

ITAMAR RABINOVICH: A second may be too dramatic, but he could put an end to it. There are two elements in this situation that can put an end to this, baring of cou- not mentioning, of course, Hizballah itself. One is Iran, but Iran is not interested. It actually pours motor oil onto the fire. And Syria. Syria cannot issue direct instructions to Hizballah because Hizballah takes direct orders from Iran. But Syria holds sway in Lebanon. It has 40,000 troops in Lebanon, and if Assad wants something either to happen or not to happen in Lebanon, he can have his will happen.

CHARLIE ROSE: It's his sphere of influence. So why doesn't he do it?

ITAMAR RABINOVICH: That's- there is not a short and a simple answer to, to this question. He, he is not a happy man. He, he is not happy with the state of the peace process. He is not happy with Hizballah's relationship with the United States. He is not happy with the fact that others in the region have been making progress in the peace, that Jordan has peace with us, that the Israeli-Palestinian tract if proceeding after all, that Prime Minister Peres was invited to, to visit Oman [?] and Goddar [?] just a couple of weeks ago, that we have relations with Morocco and Tunisia. He is not happy with that, and where he can make that unhappiness felt is mostly in Lebanon.

CHARLIE ROSE: What will it take to make him happy?

ITAMAR RABINOVICH: I think a number of elements can make that. There has to be a prospect of political settlement involving Syria and Israel, and Lebanon and Israel. And this is something that we are also interested in. There has to be a fair deal for the present, which I believe is available; and there has to be the exercising of American influence. Assad is not only negotiating peace with us, he is also negotiating a new type of relationship with the United States. This is something-

CHARLIE ROSE: Has the United States offered, in your judgment, a sufficient inducement to him to fill that element of the equation?

ITAMAR RABINOVICH: I think so. I think the fact that he has met with American presidents, that President Clinton went to Syria, all of this, you know, has happened already, and there is the prospect of what may happen when there is peace and stability in the region. You know Assad very much- or Syria very much wants to get off the terrorist list. That is something that Congress has to approve, and that is something that can only happen when the original reasons the put Syria on that list are removed. And this is something that the Administration cannot make happen: This is something that can only happen in a state of peace and when all relationship between Syria and terrorist organizations is brought to an end.

CHARLIE ROSE: So you don't want the United States Congress to take that action until Syria has done- has, has what? Eradicated itself as a home for terrorist organizations and terrorist figures?

ITAMAR RABINOVICH: There is, of course, the question of what we want, but first and foremost, what the United States itself wants, both Administration and Congress. And by the way, not just the United States and Israel. There is also Turkey, a very important state in the Middle East, that has its own grievances about the Kurdish underground or opposition organizations in, in Syria. And Turkey has also raised its voice in that contest. It's a very complex issue involving more than just us and Syria.

CHARLIE ROSE: What do you think the significance of the Palestinian assembly voting to remove that aspect of the covenant that's been central to any kind of peace between Palestine and- the Palestinians and the, the Israeli government?

ITAMAR RABINOVICH: That's very significant in, in a number of ways. First of, of all, it's a piece of very good news that the period in which the, the peace process has not been doing all that well, and it's a reminder to us that there is a still process- there is still a peace process, and that there is hope and prospect for that process. It indicated that Arafat can live up to commitments and a very important commitment. And from an Israeli point of view, the issue of acceptance of Israel in the Arab world and acceptance by our original adversary, the Palestinians, is very important so that in terms of substance, the removal of these clauses is very very significant.

CHARLIE ROSE: And so Rabin and Peres were right to bet on Arafat because he has, at this point, delivered.

ITAMAR RABINOVICH: He has delivered on this, and while underlining the significance of this, I also have to, to mention that Assad- Arafat needs to continue to combat terrorism on a day by day basis, that you do not resolve these issues with one fell swoop or one dramatic act. But the investment in, in peace and the preservation of peace and security has to be done persistently over time.

CHARLIE ROSE: Are you convinced that he is doing that and has done that since your government got rather tough with him after the series of attacks by Hamas?

ITAMAR RABINOVICH: He has been doing that in a very different vein since the end of February, not just because our government has become tough with him, but also because the international community sent a very important signal, and also because he realized that the challenge is not just to us, but also to himself.

CHARLIE ROSE: In what way?

ITAMAR RABINOVICH: Hamas is not just a political rival. Hamas offers to the Palestinians an alternative. Hamas wants to replace him, wants to undermine him and the route that he has chosen. And the terrorist attacks, while they kill Israelis, politically can destroy Arafat and the administration that he has been building.

CHARLIE ROSE: What about the decision by the Labor government, the Labor Party, to not- to drop a clause from their campaign platform ruling out a Palestinian state? Or said the other way, seeming just to say it's okay to have a Palestinian state, reversing a long-standing principle by the leadership of the Labor Party?

ITAMAR RABINOVICH: What the Labor Party has been saying is that this now becomes a legitimate option. It, it does not say that this is something inevitable. We will begin on May 4th a period of negotiations with the Palestinians on final status issues, including statehood, and we have, according to the agreement, a period of three years to complete these agreements. It may take that. It may take less. And this now becomes from the Labor Party's point of view, and if elected, the government's point of view after May 29, it becomes a legitimate option and certainly very encouraging for the Palestinians.

CHARLIE ROSE: Are you, then, optimistic about the peace process because of what has happened in the last 24 hours?

ITAMAR RABINOVICH: I'm more optimistic. I feel that this, this peace process is, is bound to succeed, and that it is irreversible, not because of a romantic belief in peace process, but because if we look rationally at the, at the alternatives of what and how Israelis and Palestinians can live together or coexist as, as neighbors and people who are intermingled with, with one another, I believe that there is no other option. I believe that in the Arab world, by and large, there is a decision, a commitment, a will to disengage from conflict with Israel, an assessment sense that there are other priorities for the Arabs. At the same time, precisely because of this success, other forces, like Iran and, and its allies are determined to destroy the peace process. And I-

CHARLIE ROSE: Did-

ITAMAR RABINOVICH: -I am afraid that there will continue to be a tug of war between these two forces. I also believe that the forces of peace will prevail.

CHARLIE ROSE: Did the bombing of the refugee camp lose for Israel some moral force in the conflict in Lebanon?

ITAMAR RABINOVICH: I wouldn't put it in terms of moral. And it is not a case in which the Arabs are, are angry and outraged and we bask in our righteousness. I think that the very fact that in Israel itself there has been soul searching after this, and that the government and, and public at one were shocked and dealt with it indicates that it is not such a contest between the forces of morality on one hand and the forces of, say, brute force on the other. But it's much more complex than, than that. I think that we are on secure moral grounds because we basically want to go out. I think that there is a fallacy here. It's not a situation whereby Hizballah and other opposition groups in Lebanon want to push an Israel out of Lebanon when Israel wants to be in Lebanon. We want out, and we have offered to the Lebanese government to negotiate our way out. And therefore we are not occupiers. We are not a willing power staying in Lebanon. We are a reluctant power that wants out of Lebanon in terms that will offer our own people and the Lebanese people security.

CHARLIE ROSE: But as you know, morality and, and moral force, like power, is also a question of perception, and your friend, Yitzhak Rabin, was concerned about that after Hebron. He was concerned about that after- during the time of the Intifada.

ITAMAR RABINOVICH: Yes. And it is always difficult to, to argue for your side when 100 innocent civilians were killed on the other side. But given the fact that the U.N. spokesman has verified that Hizballah was using these innocent civilians as a shield and shelter and that we have protested that, that the U.N. has protested that, I think that the moral outrage and the finger that points at the accused should first and foremost be directed at Hizballah and its master in Teheran.

CHARLIE ROSE: Ambassador Rabinovich, thank you for joining us this evening.

ITAMAR RABINOVICH: Thank you very-

CHARLIE ROSE: Pleasure to-

ITAMAR RABINOVICH: -much.

CHARLIE ROSE: -have you on the broadcast.

ITAMAR RABINOVICH: Thank you.