but that conflict could be coming to an end if you believe what israeli prime manager benjamin netanyahu told me this week. >> i think there's one other thing. i think that i could deliver a peace agreement. i could get the israeli people to follow me, if i believed that i have a serious partner on the

other side willing to make the necessary compromises on the palestinian side. >> would you accept their belief, though, that they should have a country which is contiguous? >> yes. >> not islands here, islands here, but one space? >> yeah. >> no checkpoints? >> i don't want to govern the palestinians. i don't want them as subjects of israel or citizens of israel. i want them to have their own independent state, but a demilitaryized state. >> those words, contiguous and not swiss cheese are essential in the age-old debate over land. arab newspapers seized on those words and turned them into front page headlines. here's one. netanyahu tlars for the first time support for a contiguous, demilitarized palestinian state. that's for a palestinian paper. and another one netanyahu supports establishing a

contiguous palestinian state. that word is crucial. in the united states bipartisan. two very different republican and democratic administrations have pressed israel to relent on a contiguous state for palestine. >> swiss cheese isn't going to work when it comes to the outline of a state. >> the palestinian people must have the right to govern themselves and reach their full potential in a sovereign and contiguous state. >> contiguous and no swiss cheese. well, after the controversial statement by president obama that he made right there, contiguous, prime minister netanyahu intentionally refused to use the word contiguous when you addressed a joint meeting of congress. so how significant was that answer prime minister netanyahu gave to my question. dennis ross has worked most recently for president obama. his career has been focused on bringing peace to the middle east. jamie reuben is a former

assistant secretary of state and state department spokesperson. thanks to both of you for joining us. dennis, let me start with you. the palestinian authority responded to what the prime minister said in our interview. they said, quote, an immediate and complete halt of all settlement activities, dismantling of the settle maintenance, resolution of the two states are the actions they need to go with those words. obviously actions speak louder than words. but clearly the prime minister was saying something when he said yes, contiguous and no swiss cheese. >> well, he was saying in fact obviously actions speak louder than words. but clearly the prime minister was saying something when he said, yes, contiguous and no swiss cheese. >> well, he was saying in fact what's going to be essential if you're actually going to produce a two-state outcome. it has to be a credible, viable state and, therefore, the word contiguous is meaningful. i think what you got in terms of palestinian response is that they continue to question whether or not he's really prepared to do that. that's why they impose these kinds of conditions like a settlement freeze saying if he can do that, then that proves he's actually serious.

the israeli side of the argument will be you're imposing conditions on me that you imposed on none of my predecessors. i'm making a very clear statement. i'm committed to a two-state outcome. he also used the word an independent palestinian state with you. he was very clear. the word demilitarized frankly back at camp david, back in the clinton parameters, we always operated on the premise that we were talking about a nonmilitarized palestinian state so that is something that has been consistent over time when we talk about a two-state outcome. >> jamie reuben, let me ask you because this is so crucial and obviously there aren't talks going on right now but the prime minister has now moved the line but i want to throw up a map for people to see. 1967, orange you see, that's the palestinian area. and now you see how it is. it's swiss cheese right now. so how do you get that today map to be contiguous? and obviously gaza, we're not even talking about that, whether that would be included in the

definition of the term. >> well, that's right. i think the way you get the pieces of the palestinian territory attached to each other is some of the settlers have to go back to israel. and i think the reason why the palestinians focus on the issue of settlements is because they regard that as a indicator of whether the israeli leader in negotiations is prepared to do the hard things, namely to get all of those hundreds of thousands of israelis who have been given special privileges to live in the west bank, whether he's prepared to see them come home. obviously big chunks of the west bank that israel has settled would be part of israel in exchange for traded parts of israel. that's always been an understanding between israelis and americans and palestinians. but we are so far, erin, from a negotiation where this could be worked out. i would have to say i don't know if dennis would agree with this,

but certainly in the last decade, my observations, we -- it's very hard to envision right now a ceremony on the white house lawn with president obama, prime minister netanyahu and whoever is the palestinian leader negotiated and completing a peace agreement. those kind of ceremonies happened a lot 10, 15 years ago. but we are so far from that for a whole bunch of reasons, one of which is the debate over settlements. >> and dennis, let me ask you a question. let's just -- a fair point that it isn't going to happen. even if he's moved the goal posts closer. but let me ask you this. let's just say that there was a peace deal. what would happen, because so many people -- governments in the arab world cite this conflict over the palestinian issue as a reason for animosity and frustration against israel and against the united states. let's just say it was solved. would there really be peace in the middle east or would this be exposed as a fig leaf that it really was?

>> well, i think it's not that simple a choice, because on the one hand you would remove what is an enduring historic conflict, you would remove what is a symbol of conflict and remove a grievance. but i also think we have to have a perspective here. the palestinian conflict with the israelis is not the reason that we see a huge conflict taking place within syria. it's not the reason you have revolutionary upheaval in egypt. it's not the reason we've seen a fundamental transformation taking place in tunisia. there is revolutionary upheaval throughout the middle east, or at least major parts of it, that are disconnected from this conflict. one of the big sources of frustration for palestinians today is that arabs are preoccupied with the relationship they are going to have with their rulers, not with the palestinians. the world is heavily preoccupied both with the arab upheaval and with iran and not preoccupied with them. so would it be an important thing to achieve and end this conflict? absolutely. would it transform the region?

no, because we see an upheaval that is transforming it. being accused of spying on high-ranking officials but the scandal is here in the united states. and a major development in the trial of john edwards. cell phone conversations between him and his mistress. and rupert murdoch making a surprising admission during the phone hacking trial today. ericas and here's what we did today: supported nearly 3 million steady jobs across our country... ... scientists, technicians, engineers, machinists... ... adding nearly 400 billion dollars to our economy... we're at work providing power to almost a quarter of our homes and businesses... ... and giving us cleaner rides to work and school... and tomorrow, we could do even more. cleaner, domestic, abundant and creating jobs now. we're america's natural gas. the smarter power, today. learn more at anga.us.

internet retailer amazon reported numbers today and they were way better than anybody expected. north american sales alone up 36% from a year ago. also you buy a digital product, like an ebook, most of the amazon products that you buy get shipped to you. so you think that's great for ups, which reported today that online sales was a big reason it shipped a billion packages in the first quarter. a billion packages. that brings us to our number tonight, $9.45. that's how much revenue u.p.s. made per package it shipped. it sounds like a heck of a lot of money, but it's actually well below the average for last year.

one of the reasons the number isn't higher is because of what people buy online. people are buying clothing, books, small electronics and they're buying all the time instead of all at once, which puts u.p.s. in a rather grim position because there's more things being shipped, but they can't charge as much per package because the packages are lighter and people say, hey, i need those cotton swabs, i'll get them in a week. so pretty interesting. good for amazon, not so good for u.p.s. now a story about the mysterious murder of a british businessman in china. it's cost the job of a powerful communist leader who was once viewed as possibly the next president of china. his wife is now the main suspect in the british man's death, suspected of poisoning him with cyanide. the whole scandal has rocked the chinese government to its core with constant rumors of a coup in beijing. today another strange twist. there are new details coming out from "the new york times" that bo was actually spying on the chinese president.

we actually joked about this on our show and said this is what it was going to be, he's a spy. we thought it was a joke. through all of this their son, a graduate student at harvard, has been out of the public eye until now. here at harvard's iconic campus, the scandal that has turned the chinese communist party upside down is playing out ivy league style. this is where 24-year-old graduate student studies public policy and where he's tried to keep a low profile in this offcampus apartment in the weeks after his family's secrets were spilled out on the front pages of newspapers around the world. >> it's very rare for someone to take on a persona like that at harvard. >> he has been portrayed as a playboy, the privileged son of a powerful leader. at home at china and at boarding school in england, he developed a reputation as a spoiled party boy with a weakness for sports

cars, champagne parties and girls. in china he spent time with mary ann and abby huntsman, daughters of jon huntsman, the u.s. ambassador to china. this week we finally heard from him for the first time since the scandal broke. he told the harvard crimson, i am deeply concerned about the events surrounding my family. he also felt the need to defend his rumored lavish lifestyle. my tuition and living expenses are funded exclusively by two sources, scholarships and my mother's savings. my examination records have been solid throughout my schooling years, and i have never driven a ferrari. he made no mention of his long-time family friend, neil haywood, allegedly murdered in his hometown, poisoned by his mother. >> after weeks of people talking about what he's doing, he wanted to at least get his voice out there and clear the air. >> the statement to the harvard newspaper caused the website to crash, presumably from all of the international intrigue.

but here at harvard, it was nearly impossible to find anyone who would talk on the record about him. at his luxury apartment, we were told to leave. the statement to the university newspaper is all we'll hear from the mysterious bo xilai. we have new information in from cambridge tonight. according to a source familiar with his academic performance, in one class at harvard, he did not turn in a single assignment. yet the following year he was one of 21 students awarded a coveted research grant in policy analysis from harvard's kennedy school of government. fellow student expressed dismay that harvard awarded a prestigious grant to a student that didn't meet minimum academic standards. a pretty interesting development and certainly flies in the face of what bo xilai is saying about himself. a columnist for forbes, i met with him before the show and asked him what the united states

should do about the scandal. >> the police chief defected to the u.s. or at least tried to and we had to make a decision. we decided to stay out by throwing him back. other officials could come to the united states and force us to make that decision all over again like who do we not help by taking all of these officials. so it gets to be the point where we may have to sort of become much more involved. >> and there is a way that the united states could do that, right? which is short of really giving asylum to these people but would cause real issues for china? >> the one thing that we could do, if the obama administration leaked to the press, for instance, the bank account details of a chinese leader we didn't like or the u.s.-based assets -- >> so then everyone would see how loaded, how rich, how corrupt they are? >> right. this is important because his wife was supposedly involved in getting hundreds of thousands of dollars out of china and his son

is involved, who's paying for this so this is how the united states could have a role if they wanted to. >> and what do you think is going to happen next? when are we going to see them? >> i think we'll see more and more officials decide to leave. i think we're going to see -- the chinese people almost express disgust in a more public manner because they are in a very real sense seeing this play out in front of them and they're saying what's going on here? >> all right. the obama administration launches an attack on mitt romney today. joe biden going on the attack. it's fun to watch. and sex for cash. a new report accusing secret service agents of partying with strippers a year before the latest scandal. ♪ [ camera clicks ] ♪ it's hard to resist the craveable nature of a nature valley sweet & salty nut bar.

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joe biden went after mitt romney today and he also touted the president's top achievements. >> if you're looking for a bumper sticker to sum up how president obama has handled what we inherited, it's pretty simple. osama bin laden is dead and general motors is alive. >> john avalon is with us, riamm salem. you said this would be a nice

bumper sticker so i guess it's nice to hear them taking your idea. >> i think it is a strong argument to make. it's strong, optimistic and unapologetic. you're going to own those key accomplishments. so i do think it's a smart argument for them to make. >> foreign ppolicy, how important will it be. there he was talking about osama bin laden, up got the iran issue where personally mitt romney's proposed way of dealing with it looks identical to barack obama's, but 16 points is the margin where the electorate thinks obama is stronger as commander in chief than mitt romney. >> that's a very, very big gap and something he's going to have to close. the question is, is it going to be a salient issue and the issue going to get voters to decide. republicans traditionally have an advantage of the idea of foreign policy and military strength. so the question is can romney capitalize on that in the future. >> chris, i want to show karl

rove's superpac rolled out an ad trying to hit president obama on something he thinks is pretty good about himself, being cool. take a look. >> oh, yeah. ♪ i am so in love with you >> oh, yeah. >> nice. >> he's a jackass. he's a jackass. >> obama, obama. >> all right. which reminded me of a celebrity ad in 2008. >> he's the biggest celebrity in the world, but is he ready to lead?

>> do you think this one will be effective or just make people chuckle? >> i think people will certainly chuckle and you have to give people credit for being creative and entertaining. at the end of the day the bumper sticker we were talking about speaks for itself. you have detroit and you have bin laden. what both issues go to is he has demonstrated he is capable of doing the job, he has what it takes. ultimately these elections will come down to one issue and that is the trust issue. who do you trust on foreign policy? who do you trust on the economy? and on that very simple issue of trust, he has a significant advantage right now. so while i think the celebrity is fun and we can chuckle about it, i think there's a big difference between four years ago and today because of the successes that he has demonstrated and specifically at the trust issue. >> but it's a classic karl rove move. he's going at his opponent's strength, trying to turn that strength into a liability. saying look, you may like president obama personally and think he's cool, but how has it helped you in your bottom line, especially you young voters. the difference as chris just said, in 2008 mccain could make that argument because here's a

guy that had been in the senate less than four years. now he is president of the united states and just to dismiss him as a celebrity doesn't cut it. >> bottom line maybe he just gets young people don't vote at all. >> yeah, certainly a lack of enthusiasm on young voters will be a big issue for the president. another way of looking at this is that -- you know, is that when you look at this larger landscape and the cool issue, it's something that is -- it's trying to turn a strength into a weakness. and i think that's certainly an effective tact. >> thanks very much to all three, appreciate it as always. still outfront -- >> liar, liar, pants on fire. >> media mogul failed. >> i failed. i'm very sorry about it. >> agents provocateur. >> they were working very hard to try to get the strippers back to their hotel rooms. >> i'm confident we'll get to the bottom of it. >> all this outfront in our second half.

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we start the second half of our show with stories we care about where we focus on our own reporting, do the work and find the outfront five. first, new details in the search for a missing soldier from ft. bragg. north carolina police just

released this photo of private kelli bordeaux taken on the night she disappeared. a police department spokesman would not tell outfront who gave them the photo, only saying officers obtained it as part of their investigation. the 23-year-old was last seen in a bar at fayetteville about two weeks ago. 600 volunteers helped search for bordeaux today in the area around the bar and her apartment. number two, the obama administration has approved a broader use of drones to target suspected terrorists in yemen. this is according to the "wall street journal" and the "washington post." the new authority allows the military and cia to fire at militants even when their names aren't known but are declared high-value targets. a similar policy is in place in pakistan. sources tell us there has been an increase in counterterrorism strikes in yemen by u.s. drones and manned fighter jets. number three, charles taylor, the former president of liberia has been found guilty of war crimes. an international court convicted taylor of planning, aiding and abetting war crimes committed during its civil war.

judges found taylor used so-called blood diamonds to fuel atrocities carried out by rebel forces, including murder, rape, slavery and using children as soldiers. sources tell me taylor may select a new defense attorney and will be sentenced next month. number four, filings for jobless claims fell by a thousand to 388,000, the 12th straight week. there was an upward revision to the prior week's numbers, which is not a good sign. economists say next week's key number will let them know whether the recent downturn is seasonal or the start of a new trend and broader weakening in the economy. it's been 266 days since the u.s. lost its top credit rating. what are we doing to get it back? today spain felt the downgrade pain as they cut the credit rating from a to bbb plus. that means it will cost them more to borrow. spain already has a youth unemployment rate some say nearing 50%. the john edwards trial has already revealed a wealth of embarrassing details about the

former presidential candidate's personal life. now more details are coming to light today. a federal judge rejected an appeal by edwards' mistress, rielle hunter, to keep certain evidence sealed, like phone records.