"You [Israel] have given Gaza a little breathing space," he said. "You are still operating in the West Bank, you are still fighting terror there, because you didn't extend the cease-fire there. If you look vis- -vis Gaza, Israel is no longer doing anything against the Palestinians in Gaza, but still bad things are happening to Palestinians, so that is good for you because it shows the Palestinians that terror is not in their interests because it will be directed against them."
This process, he said, is leading to a decline in Hamas's support, and an increase in support for Fatah. Fatah, he pointed out, accepted the three international principles, "so that is good for your security."
"I often believed that back in the days of the second Intifada, Hamas had a good deal. They could hit you, and you would hit back at Fatah," Jones said.
As a result of this policy, the US ambassador said Hamas was able to build itself up in the eyes of the Palestinian community as the resistance fighters, while Israel was weakening their internal enemy.
"You were making them stronger politically, and you were making them stronger militarily vis-a-vis their rival within the Palestinian community," he said.
Now that Israel was not hitting back, however, Jones said that all of a sudden Hamas was "not getting any legitimacy from your activities, so there seems to be this tension growing with Fatah."
Instead of gaining legitimacy from Israeli responses, Jones said that what Hamas is doing is "killing Palestinians, and they are killing Fatah activists... of course Fatah hits back, but I think this is good to show Hamas for what it is - it is a terror organization, and they exercise terror against Israelis normally, but they also exercise terror against their own society."
The bottom line, he said, was that "reducing the Israeli-Palestinian violence shows the real problem here, which is terror, and I think that is good for you. So I think it [the policy of Israeli restraint] is improving your security in the long-run."
Regarding the recent visit of US Secretary of State Condoleezza Rice, Jones said Rice "picked up" Foreign Minister Tzipi Livni's ideas about a need to provide a "political horizon."
Jones said it was important to give both sides "an idea of what we're talking about, what we are getting into."
Rice is expected back in the region within a month for trilateral discussions with Prime Minister Ehud Olmert and Palestinian Authority Chairman Mahmoud Abbas. Jones stressed that these would not be "negotiations," but rather "discussions" of all the major issues that would have to be dealt with during the final stages of implementing the road map.
According to the plan articulated recently by Livni, negotiations with the Palestinians over statehood would take place even though they have not implemented the first stage of the road map - uprooting the terrorist infrastructure - but that Palestinian statehood would only materialize once the Palestinian obligations under the road map were met.
The logic behind this approach is to give the Palestinians incentive to either vote Hamas out of office or get the organization to change its stripes so that the road map could be implemented and statehood could be achieved.
The full interview with Jones will appear in Friday's Post.