Bibi shares his housing problem with Mubarak find

In Cairo yesterday, both Hosni Mubarak and Benjamin Netanyahu played Mr Nice Guy. All the Egyptian president wanted was "a fair and lasting peace". All the Israeli prime minister wanted, it seemed, was "peace with all our neighbours and with everyone else in the Arab world".

All this fuss about the new Israeli settlement - henceforth to be called neighbourhood - on territory captured in 1967 was, it turned out, merely a housing problem, according to Mr Netanyahu. Why weren't new buildings going up in Gaza, Amman and Cairo? Only the occasional drumming of Mr Mubarak's fingers on the lectern suggested that he thought this was all a pack of whatever-you-would-have-said-it-was if this wasn't the Middle East.

The press conference at the Cairo presidential palace at Ittihadiya had a surreal quality. If Yasser Arafat and his henchmen were talking of Domesday, if Mr Mubarak had previously talked of explosions, scarcely a hint emerged that something was rotten in the state of the peace process. Indeed, at one incredible moment, the eloquent Mr Netanyahu spelt out just why the Palestinians should be grateful to him and his government. In eight months, he said, his Likud administration had "redeploy-ed" from Hebron, released wo-men prisoners, "effectively [sic] lifted closures" and transferred to the Palestinian Authority remaining tax monies - "all in a very short time."

The Israelis had dedicated $50m (pounds 31m) to Palestinian "infrastructure" and planned new schools and roads for them. "We have decided not only to have infrastructure in the Arab neighbourhoods of Jerusalem but to enable 3,000 - 3,015 to be exact - housing units for Arab residents of Jerusalem for the next three years" as well as 2,500 units for Jewish residents.

One began to wonder, listening to this sound-bite brilliance, whether Mr Arafat might not be in trouble. Might not Mr Netanyahu - given his concern for the Palestinians - be elected the next President of the Palestinian Authority? And given Mr Netanyahu's apparent desertion of his Likud supporters, Mr Arafat could presumably stand as next Israeli prime minister. So I asked Mr Netanyahu whether Palestinians would be able to buy homes in Jewish west Jeruslam. Mr Mubarak's eyes, hitherto fixed upon the press, swivelled to the Israeli prime minister who was standing to his left.

"All of its [Jerusalem's] residents are able to participate in elections," the Israeli leader replied. Jerusalem was "one municipality", he said. "I don't think there's any limitation on the purchase of houses, as far as I know. I think there is no limitation on houses anywhere." It was all about "the availablity of housing". If this was true, then tens of thousands of Palestinians could bid for homes in Israel. So did Mr Netanyahu accept that UN Security Council resolution - calling for the withdrawal of Israel from all occupied land in return for security for all the states in the area - remain the foundation and basis of the Middle East peace process? It was "a basis", he said. The key word, of course, being "a" rather than "the".

You had to pinch yourself during their press conference yesterday to remember that the whole show was on the rocks. Egyptian journalists stood up to accuse Mr Netanyahu of reneging on the whole agreement - what of the evictions, the closing of Palestinian offices, the Jerusalem tunnel, the delays in the implementation of withdrawals, they asked? And Israeli journalists asked why Mr Mubarak's police had accused an Egyptian of spying for Israel, why Egyptian journalists had attacked Israel, why the Egyptian government had prevented Cairo businessmen from increasing trade with Israel?

The Egyptian press dutifully referred to the new housing scheme on occupied land by its Arabic name of Abu Ghoneim; the Israeli press - and, of course, CNN's reporter - dutifully called it by its Hebrew name, Har Homa. Only after Mr Netanyahu had played the peacemaker yet again - Jerusalem was "a city of peace", he said, a "living city" with "a housing shortage of immense proportions", conceding only that it was "a point of great emotion, great contention" - did the Egyptian president quote from the Oslo agreement - that Jerusalem was supposed to be part of the final status talks under the Oslo pact - and added: "I'm concerned - I'm afraid this may create problems in the future."

It is not difficult to find fault with Mr Mubarak - Egyptian police torture, flawed elections and executions come to mind - but one could only admire his honour yesterday. He was an Arab host and he would not insult his Israeli guest. Yet if the impending disaster in the Middle East was merely the result of a local housing crisis, why on earth were we all gathered here to listen to these two men?