Abu Dhabi: Now is the moment when the international community have got to act decisively on the Palestinian-Israeli conflict, which can be solved and will be solved. The question is when, said Quartet envoy, Tony Blair.

"There is only one solution which is the two-state solution. However difficult, the thing that is impossible is a one-state solution. So, actually, we have no alternative, but to try to create a Palestinian state alongside the state of Israel. And the work that I do is [to] focus particularly on trying to build that state from the bottom up," said Blair, on a visit to the UAE to attend the World Congress of Muslim Philanthropists.

Blair explained: "We need three things in the present situation – the re-launching of credible political negotiations, so the details of that state can be negotiated and worked out. Secondly, we need major changes in the West Bank, transformative changes.

Last year, the economy in the West bank at least before the conflict was growing, but we need transformative changes there to allow the Palestinian people to enjoy proper freedom. And thirdly, we need a different approach to Gaza, where we open Gaza up and help people there."

Blair said he believes "the decisions that the international community takes in the next few weeks will actually determine the next few years. If we take the right decisions, there is a plan around these three principles, that would be credible and that would within a year deliver us significant change."

Speaking of the challenges, Blair said now the politics on the Palestinian side are very difficult and we don't yet know the nature of the new Israeli government and the American government is in a state of transition. So there is a lot of political uncertainty, but whatever happens we will come back to these basic three elements.

But there is a nascent difference between Washington and its European allies about how to get there. The US Administration sees little future in Fatah-Hamas talks on a Palestinian unity government, without two preconditions: a Salam Fayyad premiership and – the very unlikely – agreement by Hamas to the famous Quartet principles, including recognition of Israel.

Otherwise the US still appears to prefer a "West Bank first" strategy in which Hamas is ignored and improvements in the West Bank economy and resumed political negotiations would pave the way for President Abbas to win elections next year.

The Europeans – including Britain – would prefer to wait for the outcome of Fatah-Hamas talks, and judge it accordingly, arguing that a technocratic unity government provides the best chance both for Gaza's post-war reconstruction and for preventing Hamas from scuppering any diplomatic progress.

Blair, however, said the important thing is that people feel America is really committed to driving this process forward. I think the new administration has indicated seriousness of intent right from its first day and President Obama made it a major issue.

So I think at the present time the Europeans and Americans are trying to make sure they are all on the same page. And I believe there would be an agreement or could be an agreement around those three issues.

Admitting that a lot will depend on the nature of the new Israeli government, Blair said nonetheless there every prospect that we can move this forward and although some people worry about the nature of the new Israeli government, there might be an important thing to get an empowered Israeli government in place because as a result of what was happening in the last two months, the whole peace process is being in suspense really.

"We just need the Palestinians to resolve their issues, Israel to get a government and the neW US Adminstration to work with them and push it [the process] forward."

On whether Benjamin Netanyahu told him that he could contemplate an eventual Palestinian state, Quartet envoy Tony Blair said he's always made that clear to me. Now his view is for him to speak for himself but he is of the view that we have to build that state from the bottom up. He believes the Palestinians are not in a position where they can run their state effectively. "My view is if the context is right it is possible that we can reach a peace agreement with him."

On Israeli brutality, Blair said of course [Palestinian] rockets should not be fired on innocent Israeli civilians … that's completely wrong. But the destruction on the Palestinian side HAS been devastating, the loss of civilian lives, loss of lives of many children and we need to find a better way for solving this because it would be really difficult for people to make progress and talk about peace because they have the memory of death and destruction on such a scale.

Blair does not share the view that Annapolis was a hollow process. "The two sides did discuss for the first time in depth all issues: territories, Jerusalem, refugees, water, security. I think what we've learnt from the last year, is that we cannot ignore Gaza and pursue the rest of the process … it will not work … I never though it will work and it didn't. The approach that we need to take has to deal with the politics, the West Bank and Gaza and if you leave any of these items out that won't work."

Religious faith not an historic relic

To understand the world in this present day, you have to understand religion, whether you yourself are religious or not. Whatever you personally believe as a leader, understanding religion is an important part of understanding the modern world. There was a view 10 or 20 years ago that people would leave aside religious faith which would be a thing of the past and regard that as an historic relic.

But actually what's happened is that the issue of religious faith has become very, very important. And it will be of the same significance to the 21st Century as political ideology was to the 20th Century.

In an era of globalisation, there is nothing more important than getting people of different faiths and cultures to understand each other better and live in peace and mutual respect and to give faith itself its proper place in the future.