EGYPTIAN TELEVISION: Secretary Albright, Thank you very much for taking some of your time to join the Egyptian Television.

SECRETARY ALBRIGHT: I am very glad to join you. Thank you.

EGYPTIAN TELEVISION: You are most welcome to Egypt

QUESTION: News reports coming from Israel described your trip as a failure and your talks with the Palestinians and the Israelis as a big frustration. So, how would you in your words describe your trip and your talks to Israelis and Palestinians?

SECRETARY ALBRIGHT: Well, I said as I was leaving that I had come because there was a crisis in confidence. I am trying to help as I can to renew some sense of trust and I myself said that I had only been able to accomplish small steps. Big steps were needed and I was only able to accomplish small steps, which is very sad, I think, because the Israeli people and the Palestinian people would like to see peace. I spoke with a lot of the public, members of the public, and I am convinced that the people in the region want peace and that the leaders have to make some tough decisions.

QUESTION: In your address before the National Press Club last August, you supported the idea that Prime Minister Netanyahu brought to Washington during his first trip to jump into final status talks. Would such a step be a substitute for further redeployment? There is concern here in the Arab world that that would be like a substitute for the further withdrawal of the Israeli troops from the West Bank?

SECRETARY ALBRIGHT: I'm glad that you asked me that question because I did not accept Prime Minister Netanyahu's approach. What I did was to present a different approach and that is parallel tracks or marrying accelerated final status talks to continuing carrying out the interim agreement, because that is the Oslo process, that is the process that the United States is committed to and that is very important. But the reason that I thought it was useful to talk about final status is that the people are frustrated and that they really need to see some concrete results. So our proposal is to do both at the same time.

QUESTION: Was it logical at this moment in the peace process to pursue such a suggestion while the interim agreement terms are bogged down, not honored, not fulfilled?

SECRETARY ALBRIGHT: Well yes, if one doesn't abandon the interim process at the same time because as I said, it provides something concrete, but definitely you cannot abandon the Oslo process. The Oslo process is the basis of how we are going to achieve peace.

QUESTION: Secretary Albright, it has been a long-standing position throughout the different American administrations that the settlement activities practiced by the Israeli government are an obstacle to peace. How would you interpret Israel's blunt rejection, flat rejection of your demand to freeze settlements so that the peace process would go back on track and the peace talks resume?

SECRETARY ALBRIGHT: Let me explain what I said. I did not say bluntly a freeze on settlements. What I had said was that it would be important for creating an environment of confidence for there not to be unilateral acts by either side that preempted subjects that are part of the final status. Settlements, Jerusalem, etc. are part of the final status discussion. What I called for was the creation of an environment that would allow the peace process to go forward. I also am hoping that the first answer is not the last answer and that as the Israeli government considers carefully what I said, that they will see value, as I hope the Palestinians will, in what I called for, which is a time-out to actions that provoke the other side, which includes a war of words and does not help create an environment that helps. And since the Palestinians believe that certain of the unilateral acts are provocative, I would hope that they would defer and a take time-out on this. At the same time I would hope that the Palestinians would take a time out in terms of this war of words and that Arafat does everything in his power, 100% effort to stop terrorism.

QUESTION: Right, but as Israel argues regarding this settlements issue, they said that this is to accommodate the natural growth of the Jewish community while at the same time they are demolishing Palestinian homes, they are denying Palestinians licenses to build their own houses. So how do you see that the situation could be solved between the two parties?

SECRETARY ALBRIGHT: Well I would hope very much that, as I said, there would be a time-out to these kinds of activities and that would allow our suggestion of having the interim process go on and at the same time begin accelerated final status talks.

QUESTION: Final question. In your address before the National Press Club in August, you mentioned that there would be no progress in the peace process without security. Does this mean that you support the idea of security in return for peace rather than land for peace?

SECRETARY ALBRIGHT: Now I also made very clear that the U.S. position is based on Resolutions 242 and 338 including land for peace. That is the basis of Oslo and a whole set of other approaches to the issue. We believe that is important. I do think, and I base myself on this, that the public in Israel, as well as he Palestinians, understand that there need to be compromises in order to have peace. And that the young people of the region are tired of fighting and that they want to have the possibilities of a normal life. The United States wants to do everything we can to help, but it is up to the leaders there to make the tough decisions. The people want their leaders to make some tough decisions.

INTERVIEWER: Right, Secretary of State Madeleine Albright. Thank you very much for your time on a very tight schedule.

SECRETARY ALBRIGHT: Thank you so much