FRANK SESNO, Newsmaker Saturday: Did the Madrid Peace Conference bring Middle East antagonists closer together? Where do they go from here? Can an ancient conflict give way to a modern peace?

And welcome to a special edition of Newsmaker Saturday. From Madrid, I'm Frank Sesno. Questions for our guests today, Zalman Shoval, Israel's ambassador to the U.S. and a delegate to the Mideast Peace Conference. And, Mamdouh al-Aker, a Palestinian delegate, also in Madrid.

Madrid as turning point. Gentlemen, for the last three days, we've been hearing the sides talk past one another. I'm wondering what you might have to say now to one another?

ZALMAN SHOVAL, Israeli Ambassador to the U.S.: Well, I don't think we really talked past one another. Maybe in the speeches we did. But then we met from time to time after the speech making, and I think what really counts is the fact that we are here and that we want to continue.

Dr. MAMDOUH AL-AKER, Palestinian Delegate to Madrid Peace Conference: Yes, indeed, actually I was quite excited when we met after the -- during the conference, because as I mentioned to you my impression was when I heard about Mr. Shoval that you had a very negative image about me, because as I mentioned to you the other day that during my detention, and in response to the letters you received on my behalf, in the letters sent by the Israeli embassy, I was described as a hostile terrorist activist. So I'm very glad now we are sitting together in a completely different spirit.

SESNO: Just as background, Dr. al-Aker, you were imprisoned for 40 days earlier this year?

DR. AL-AKER: Yes.

SESNO: For what charges?

DR. AL-AKER: That I was involved in hostile activities, which, and as a matter of fact --

SESNO: You're from the West Bank?

DR. AL-AKER: Yes, I'm from Nablus and Ramallah, stationed in Ramallah. I was under solitary confinement for 40 days, and during the interrogation, and even after that I was not presented with any charge sheet, and I was not tried. I was released on bail pending my trial, and then everything was lifted. And I was very pleased that, mentioning this to Mr. Shoval, that here am I. Do I look to you as a hostile activist? Terrorist activist?

AMB. SHOVAL: Well, you don't. But you know when you have a country in the situation where such a lot of terrorism is going on, you have to be very, very cautious. And sometimes the people who are not directly concerned are the victims of that. I'm happy to hear that you have not been a terrorist, and I hope we are on the way to peace.

DR. AL-AKER: I do hope so. But just an example, that sometimes we label somebody else's activities, and we rush to terrorist and hostility, while all during that time when I was detained, the only thing I was involved in is to give guidelines to my people during the gulf war from a medical perspective.

AMB. SHOVAL: I'm sorry you didn't give better guidelines to your people in the gulf war not about medical perspectives, because the way most Palestinians behaved during the gulf war made us as well as most people in America a bit concerned.

SESNO: Let me ask you both now, the subject at hand that we've been talking about in Madrid and looking forward to, I suppose you could say, are these bilateral discussions that are supposed to start. Now, the Palestinian delegation has said that it will meet with an Israeli delegation on Sunday, tomorrow. What will you be talking about? In particular, how are these two sides, are you gentlemen going to resolve the issue of the location of these talks after this opening session in Madrid?

DR. AL-AKER: Yes. Although the location is important, but I think we have one problem. To my surprise, I thought that our Israeli counterparts are coming with a commitment to the framework of these negotiations -- and as this framework was put during the, in the invitation letter and in the letter of assurances, and as well, during the closing remarks of Secretary Baker on Friday when he summarized the framework, precisely as a triangle of peace, security and land -- my disappointment that it seems to me that the Israeli side is not committed, yes, to this framework. I hope I'm wrong in this.

AMB. SHOVAL: I don't know exactly what framework you refer to, but the framework, unless we got different texts of invitations, is that we should start bilateral talks immediately and multilateral talks two weeks from now.

DR. AL-AKER: It's precisely so.

AMB. SHOVAL: And I think we are going to meet, hopefully, tomorrow, on Sunday, with you, the Jordanians -- I don't know about the Syrians, but that's a problem you and they will have to solve -- to start discussing interim arrangements for the next five years with regard to Judea, Samaria and Gaza, what you call the West Bank, and I think that is the framework.

DR. AL-AKER: Yes, actually, this is where we differ. Interim arrangements, it is not happening in a vacuum. It is happening within a framework to reach peace, to have territorial solution, and to have security. Because for you, maybe, the interim arrangement will lead to autonomy. To me, and to the understanding, the way we understand it, and the way it was put, as I said, by Secretary Baker on Friday in the closing remarks to the conference that all the negotiations has to be kept within this framework. We want to reach peace, which has to be built on justice and international legitimacy, but at the same time, two important aspects, the rest of the triangle, is the security and land. So I want to see the interim arrangements leading to my control over my occupied land, and at the same time I'm willing and quite ready to see and to satisfy reasonably the security needs of Israel.

SESNO: These are the things that you gentlemen, your sides are going to negotiate over, whether we're talking about an interim arrangement, self-government, autonomy, call it what you will, the talks have to begin. The question of venue, of location is still a problem, though, as I understand it. The Israelis have proposed holding these talks, very much want to hold these talks in the region, in Israel, or in a West Bank town. How do you feel about that?

DR. AL-AKER: Actually to me it's quite odd to have negotiations, being occupied, to negotiate with your occupier, with this situation as if the negotiations will be under duress. We have, we are living under the situation, the conditions of occupation. We have curfews. We are -- our telephones are tapped. I'm sure offices are bugged.

AMB. SHOVAL: We can have these negotiations in any Arab country. I hope they won't tap your telephones there. They won't have curfew. Why should we talk about peace between us and you and the other Arab states far away from the region. We live in that region. Let's sit down there and discuss peace. There's no problem about that.

DR. AL-AKER: Yes, but the way we understand bilateral talks, that at one time it will be held in an Arab territory, the other time in an Israeli territory.

AMB. SHOVAL: Right.

DR. AL-AKER: Especially now taking into consideration the Palestinian delegation being under occupation, with the conditions we are having, I think it is quite impossible with this imbalance and asymmetry between our conditions. So it is, to my mind, it is only natural and logical to have the negotiations, at least to start with, until a certain stage, on a neutral ground. This is the way the, in Vietnam, for example, when the negotiations about Vietnam, it was carried on in Paris. Recently the Cambodian problem, it was negotiated in Paris.

AMB. SHOVAL: For different reasons. You have many friendly Arab countries surrounding us. We can have them there. We can have them on the border. That shouldn't be a problem. But we have to go back and forth to our governments, and we have to make decisions, and I would say it's an expression of the spirit of peace and of living together in the area if we have these talks in the area.

SESNO: Ambassador Shoval, are you saying that you'd be willing to have these talks, Israel would be willing to have these talks only in an Arab country, permanently set, say, in Cairo?

AMB. SHOVAL: No. No, we want to change between Israel and the Arab countries, but if our Palestinian colleagues have a problem like Mr. al- Aker just said, I don't think it's a terrible problem. We can have the talks with you, for instance, in an Arab country.

SESNO: Secretary of State Baker said if these sides deadlock over the simple location of the talks the world will not understand. Are you going to be able on one day, on Sunday, in Madrid, to solve this issue, to find a compromise location? Or is this going to break down? AMB. SHOVAL: It's not going to break down, because I believe, I hope that our Arab friends from the territories, and the Arab states -- certainly Jordan; I don't know about Syria -- have a stake in arriving at peace.

SESNO: So does Israel.

AMB. SHOVAL: And certainly Israel is always said that.

SESNO: Breakdown or compromise?

DR. AL-AKER: Yes, actually, we have made a lot of difficult and even painful discussions to come to Madrid. And again, why to leave Madrid? Now we have this atmosphere, and a peaceful conference, and Madrid, especially to us, with our Jewish and Arab histories, it means a lot. So why to move from that country.

AMB. SHOVAL: It means some good things. It means some bad things.

SESNO: We're not going to solve it --

AMB. SHOVAL: This is not the problem today.

DR. AL-AKER: For both our histories there is something positive and something negative.

SESNO: We're not going to solve this now. We've got to take a break. We'll come back. Please stay with us.

[Commercial break]

SESNO: And welcome back to this special edition of Newsmaker Saturday from Madrid. Our guests today, Mamdouh al-Aker, who joins us now, a delegate from the Palestinian-Jordanian delegation to this peace conference, and Zalman Shoval, the U.S. ambassador from Israel -- or Israel's ambassador to the U.S., also a delegate here.

I'd like to ask you both, at this conference, as it convened, Secretary of State Baker, clearly frustrated that there hadn't been a little bit more spirit of compromise, perhaps, more progress toward these bilateral discussions which we've just been batting around here, called on both sides to engage in confidence building measures, and to do them now. What would each of you like the other to do? AMB. SHOVAL: Well, if the question is directed to me --

SESNO: It's directed to both of you.

AMB. SHOVAL: I would like the Palestinians to stop terrorism, to stop violence against us, and against themselves. As far as we are concerned, we are offering them -- and we have offered for the last 13 years -- self-government to take care of their own affairs. We want them to run their own affairs.

DR. AL-AKER: Under occupation. To run our affairs under occupation.

AMB. SHOVAL: That is right. Because we want you to run all your daily affairs except those which concern our security. But that's a lot more than you ever had before. Admit it to me. You didn't have it from the Jordanians, certainly didn't have it from the British before, the Turks. Let's take one step. You have always rejected our proposals in the past. The Palestinian residents in the territories were the main victims of extremism, of the PLO, of the Arab states who told you, hold out, don't take compromise. I think you have changed your mind, now, but let's go ahead with it.

DR. AL-AKER: Look at it, now. You are referring to us as the Arab residents in the territories. I think the first, the very important first step is to treat me as equal. I'm a people. And this is the cry of our people, that we are people. We are not just residents or inhabitants of Judea and Samaria. We are the Palestinian people. This is one thing. The moment you recognize me as equal, I think the whole atmosphere will be different.

SESNO: Ambassador Shoval, do you recognize them as equal? Do you recognize them as a people?

AMB. SHOVAL: Look, let's leave history aside.

DR. AL-AKER: This is not history. We've had -- I am a people.

AMB. SHOVAL: No, no, no. Let me speak out. I say let's leave history aside, but I recognize that there is today a group of Arabs in Palestine who used to be in Palestine who consider themselves a separate people. That's all right. Otherwise we wouldn't be sitting here. I have no problem with that.

DR. AL-AKER: I recognize you as a people.

AMB. SHOVAL: Yes. I have no problem with that.

DR. AL-AKER: The Israeli people. I'm ready to --

AMB. SHOVAL: I have no problem with that. Otherwise we wouldn't negotiate with you.

SESNO: And to be fair, Dr. al-Aker, do you recognize them in addition to being as a people, as a country?

DR. AL-AKER: As a people --

SESNO: As a nation?

DR. AL-AKER: Yes, as a nation, and a state. And this is the spirit, now, we have come to this conference, and not only in this conference, but in the Palestinian National Council in 1988, we have said that we are ready to compromise, and to have the two state solution.

AMB. SHOVAL: But, Mr. Arafat the next day in Paris said kaduk (ph.). And he said what we promised in Algiers to compromise, this is not up to me. We'll have to decide it.

DR. AL-AKER: Let us back to the confidence building measure. I think the very important step is to recognize each other, to treat each other with the principles of mutuality and reciprocity. Now, I'm now coming to this conference with open heart, open mind, and trying to reach out to the other, and saying here we are. Let us treat each other as peoples entitled to the same right. I'm not ready to deny you any right which I ask for myself, and you should not deny me any right you wanted for yourself. You have the right for self-determination. We have the right for self-determination.

SESNO: Let me ask you this, I've ask you both to pose to the other what you'd like to see as confidence building measures. What would you each offer the other as a confidence building measure? What will you offer the Israelis?

DR. AL-AKER: Exactly. I think each side should address the main concern of the other side. To me, I believe genuinely that after having been engaged in a lot of dialogues with Israelis, that the main concern is security. So, I want -- I have, my obligation is to address the question of security in a reasonable way.

SESNO: Suspend the Intifada?

DR. AL-AKER: Intifada actually, what is intifada? Intifada is a focus at this occupation.

AMB. SHOVAL: But it's bloodshed. It's bloodshed of Palestinians, and it's bloodshed of Israelis.

SESNO: Gentlemen, we're going to take a break. We'll pick this conversation up in just a moment. Keep your thoughts. Stay with us.

[Commercial break] SESNO: Dr. al-Aker, back to you, what specifically then is the confidence building step that Palestinians would offer Israelis?

DR. AL-AKER: For us, actually, coming to this conference, and accepting all the preconditions and the constraints is something. And --

AMB. SHOVAL: You're doing it for us?

DR. AL-AKER: For both of us. For both of us. And one gesture, actually, our people, in spite of the painful conditions of the occupation, they were able to hand the Israeli soldiers with olive branches. This is by itself is a gesture.

SESNO: Dr. Shoval, what would you offer?

AMB. SHOVAL: On the same day of the olive branches a mother of seven was killed by Palestinians, bus driver, father of five was killed. But let's leave this aside. I know you were not concerned with that. But this explains our concern --

SESNO: All right, ambassador, what will you offer the Palestinians.

AMB. SHOVAL: We offer them -- we offer you from the very beginning even, without negotiating, run your own affairs.

DR. AL-AKER: Under occupation. Run your own affairs under occupation.

AMB. SHOVAL: Yes, okay. Because what are we talking about? What's this whole process about? This is disputed land. You say it's your land. We say we have a right to it too. The whole process is --

DR. AL-AKER: What we say, let us share it. Let us share it.

AMB. SHOVAL: All right.

DR. AL-AKER: What we say, just we want to hear it from you, we are ready --

AMB. SHOVAL: All right. That's what we say. We say Jews and Palestinian Arabs will have to live together.

DR. AL-AKER: As equals.

AMB. SHOVAL: As equals, please.

DR. AL-AKER: Having the same rights. The right for self-determination, the right for statehood, the right for retain -- yes, equals.

AMB. SHOVAL: Yes, but, when you say the right for statehood, that means that we will be excluded from these areas.

DR. AL-AKER: No. No.

AMB. SHOVAL: We will have to find a formula --

DR. AL-AKER: This is a commitment --

AMB. SHOVAL: Where we have to share a land which is dear to both of us. We are ready to it. We are ready. We have been ready for it --

DR. AL-AKER: You have your state, we have our state, as neighbors.

SESNO: Mr. Ambassador, gentlemen, this debate is illustrative, but I want to jump in here. We're almost out of time. What did these three days in Madrid accomplish?

AMB. SHOVAL: Well, they accomplished our sitting together here in CNN, which is important. And I think that's a symbol --

SESNO: But CNN isn't going to solve this problem.

AMB. SHOVAL: Who knows? Who knows? But this is a symbol of us wanting to sit together, because we will have to live together forever in a country which is common to both of us. And, you know, in Madrid, in Spain was the last time Jews and Arabs lived in peace together. Maybe it's a good omen.

SESNO: Dr. al-Aker, what did this accomplish?

DR. AL-AKER: I think -- I agree with Mr. Shoval, that the mere sitting together is something, but I think to get really to business, we need to go to the main issues. Just I want to hear it from our Israeli counterparts that we are ready to end the Israeli occupation and to withdraw. We are ready. Just to say we are ready. Say we are ready to recognize you as people, entitled for all the rights.

SESNO: Mamdouh al-Aker, I appreciate your time. Zalman Shoval, an illustrative debate, indeed. And as Secretary of State Baker said, one must crawl before one walks. The crawling is very slow.

I'm Frank Sesno in Madrid. Thanks for joining us on Newsmaker Saturday.