This is a partial transcript from "On the Record," November 11, 2004, that has been edited for clarity.

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GRETA VAN SUSTEREN, HOST: Tonight, the future of the Middle East peace process hangs in the balance after the death of Yasser Arafat (search). The Palestinian leader has been hailed by a hero by some and viewed as a terrorist by others…

Who will replace Yasser Arafat, and what will new Palestinian leadership mean for the chance of peace in the Middle East?

Joining us is New York is Dore Gold (search), former Israeli ambassador to the U.N. and author of the new book, "Tower of Babel." And in Washington is Ghaleb Darabya (search), the counselor for political and congressional affairs to the Palestinian mission.

Ghaleb, when was the last time that you spoke to Yasser Arafat?

GHALEB DARABYA, COUNSELOR, PALESTINIAN MISSION: I spoke to President Arafat during the summer, while I was in Gaza. That was last August.

VAN SUSTEREN: When you spoke to him, how did he address two questions — one is the use of violence, and two is the chance for peace and resolution in the region?

DARABYA: To be honest, Greta, I do not get a chance to talk about these issues with him. It's more — we talk about more of administrative work. But let me tell you something about our president, the father of the Palestinian people, who has been a brother and a father to all Palestinians. He's a man of great — a very brave person, a man who managed to get the Palestinians united through four decades of their conflict, and he represented the aspiration of the Palestinian people for freedom and dignity.

VAN SUSTEREN: Ambassador, I guess the simple question is, Now what? In terms of after Arafat is buried, you know, what does it mean for peace?

DORE GOLD, FORMER ISRAELI AMBASSADOR TO THE U.N.: Well, of course, it really depends on two fundamental issues, in terms of the future Palestinian leadership. The Palestinians have to decide by themselves who will be their own leaders, and that will be a decision they will take. But I think it's important to stress — and in fact, we can be hopeful in one important area — that perhaps the new Palestinian leadership will shift away from Arafat's use of violence as a political instrument, from his use of what he called armed struggle, what we call terrorism.

The other issue, however, that has to be also carefully analyzed are, What are the objective gaps between the parties diplomatically? And if you have a new Palestinian leadership that does forsake terrorism, but at the same time maintains Arafat's hard-line political positions, then we may be able to move towards ceasefire. We may be able to move towards limited understandings. But I think we have to go slow and we have to see who exactly is going to emerge and what positions they will put forward.

VAN SUSTEREN: Ghaleb, We're showing video of former president Clinton and Yasser Arafat. It seemed — at least, we were hopeful — that they were coming close in 2001 to some sort of peace between Israel and the Palestinians. Was it close? Did it almost happen that there was some sort of agreement worked out?

DARABYA: Sure. I mean, this is a man who agreed to — has actually legitimized the peace process with Israel, has legitimized the existence of the state of Israel. He made historic compromise with the state of Israel, accepting United Nations Resolutions 242, 338, giving up 78 percent of our historic land, Palestine, to the Jewish state and accepting only 22 percent for the Palestinian Muslims and Christians. So he had a significant impact.

We were so close to reaching an agreement in Taba. The Israelis always claim that they have given us a great concession and generous offer in Camp David. That offer, Greta, was not an offer that any Palestinian could have ever accept, and that is...

(CROSSTALK)

VAN SUSTEREN: All right, let me give...

(CROSSTALK)

VAN SUSTEREN: Let me give the ambassador a quick...

(CROSSTALK)

DARABYA: ... for the State Department.

VAN SUSTEREN: Sorry to cut you off, but I have time constraints, unfortunately. Ambassador, I've got to let you respond to Ghaleb, and then we got to go.

GOLD: Ultimately, peace will be based on U.N. Security Council Resolution 242, which envisioned Israel obtaining, at the end of the day, defensible borders, including parts of the West Bank, and took into account the possibility of Jerusalem remaining united under the sovereignty of Israel. Those are the goals of Israel and any future peace process, and hopefully, we will achieve them.

VAN SUSTEREN: Gentlemen, thank you both very much.

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