My gut feeling is that Meir Dagan is mistaken about Iran. The former Mossad chief recently said it would be stupid for Israel to attack Iran. For three years there was great tension in the international community over the possibility that Israel would launch a surprise attack. But then just last year, the tension subsided. The success of the clandestine struggle against Iran and of economic sanctions against the regime have put off the moment of truth. Prime Minister Benjamin Netanyahu and Defense Minister Ehud Barak are not as crazy as some tend to present them. Strategic Affairs Minister Moshe Ya'alon, Minister Benny Begin and Intelligence and Atomic Energy Minister Dan Meridor are on their guard. There is no real proof that a nuclear attack by Iran is imminent. We could be surprised - it is possible we are being misled. But as of now, the impression is that the time Dagan gained vis-a-vis Iran has not run out. It is very important to the Israeli leadership that the option of a real military deterrent be on the table, but Israel does not intend to make hasty use of that option.

My gut feeling is that Dagan was absolutely right about the Palestinian issue. What we see today is not only Israeli diplomatic paralysis. What we see is Israeli diplomatic failure. In the bunker in Jerusalem they still don't understand this. But Palestinian Authority President Mahmoud Abbas has roundly beaten Netanyahu. Abbas has corralled Israel's prime minister to the abyss. At first he took terror out of the Israel-Palestinian equation and thus garnered sweeping international support. Then he maneuvered Israel toward the settlement front, where it has no chance. Finally, he moved the battle from negotiations to the United Nations.

Thus, in three brilliant moves, Abbas forced a diplomatic checkmate on Netanyahu. He took advantage of Israel's lack of initiative to push it to the wall. As opposed to Netanyahu, Dagan reads the map well. He understands that Israel cannot reach comprehensive peace right away. He understands that it is impossible to conduct negotiations with a Fatah-Hamas government. It is clear to him that Israel must not compromise on refugees, and must not withdraw to the 1967 borders without peace. However, Dagan also understands that Israel cannot make itself an object of hatred by the United States, Europe and the moderate Arabs. Dagan understands that Israel must change its relationship with the Palestinians. Dagan believes that Israel must embark on a realistic Israeli peace initiative. When Dagan spoke at Tel Aviv University last week, he recalled the Saudi peace initiative and in so doing, the former Mossad chief drew fire. But the truth is that the Saudi plan no longer exists, because it has been replaced by the Arab peace initiative, which Dagan does not support. And so Dagan's creative diplomatic idea is different: Recognize a Palestinian state, as long as it is not within the 1967 borders.

Dagan believes that if the question of a state is separated from the issue of borders, a two-state situation will emerge that will serve both the Israelis and the Palestinians. Negotiations to be conducted between the two states, with the help of the Saudis, will eventually determine the borders. However, at the first stage, Israel will have to give the Palestinians large areas in the West Bank without uprooting settlements. That way the Palestinians can build their state in temporary borders without endangering Israel. That will prevent the outbreak in September of a diplomatic-security conflagration. It will ensure that we do not repeat the tragic mistakes we made before the Yom Kippur War.

The criticism over Dagan's remarks on the Iran issue is understandable. Dagan disrupted the policy of nuclear ambiguity, eroded deterrence and brought up matters that are better left unspoken. He did this because of his real concern for Israel's future and out of noble patriotic motives, but he did not act according to procedure. One can understand those who were infuriated by what he said.

In contrast, Dagan's remarks on the Palestinian issue were courageous and impeccably correct. They had to be said. On the diplomatic front, the former Mossad chief did not harm state security, but rather, he sought to wake us up. Dagan's alarm bell and his diplomatic idea must rouse us from slumber and generate an immediate change in direction.