King Abdullah of Jordan sat down at Petra with NEWSWEEK's Lally Weymouth last week and reflected on the state of affairs in his part of the world. He emphasized the need for a settlement of the Palestinian issue and claimed that Iran was no longer such a big problem for his country. Indeed, he sounded a bit like Barack Obama in arguing for the need for dialogue with Iran—a country he has in the past described as a major threat. Excerpts:

Weymouth: Is Annapolis dead?
Abdullah: I'm actually very concerned … I think the peace process has lost credibility in people's minds in this area ... We're all very pessimistic at this stage.

Do you view Iran as the No. 1 threat in this region?
I think the lack of peace is the major threat. I don't see the ability of creating a two-state solution beyond 2008, 2009. I think this is really the last chance ... I am very concerned that the clock is ticking and that that door is closing on all of us.

But aren't you concerned about Iran?
Iran poses issues to certain countries, although I have noticed over the past month or so that the dynamics have changed quite dramatically. For the first time, I think Iran is less of a threat. But if the peace process doesn't move forward, then I think that extremism will continue to advance.

When it comes to Iran, I am quite supportive of what I see in Europe and the West—people who want to engage.

There are certain candidates in the U.S. election who've been calling for dialogue with Iran.
We're a country and a region that supports dialogue as opposed to conflict. If there is conflict with Iran, I'm not too sure where this is going to lead us. I think you're playing with Pandora's box … I think we've had enough crises in this part of the world.

Do you feel that you've been too loyal and staked too much on President Bush, on the Americans?
I think that since day one, the president and I have been very, very honest and very candid on regional issues, and I've always expressed my views on the different countries that surround us and how we need to approach them. Advice is worth what you pay for it at the end of the day.

How do you see things in Iraq today?
I am actually optimistic for the first time on Iraq. I think that Iraqi society is moving in the right direction. It's the first time that I have felt that Iraqis have, as much as they can, bound themselves together into a unity. They have worked together—Kurds, Shiites and Sunnis—for the betterment of Iraq in the last couple of months. Here's an opportunity for Arab countries to reach out, which we haven't done in the past, and extend a hand of friendship to the Iraqis and give them the support that they need to get to the next step. If we don't, I think that it will be a loss for the Iraqis and for the Arab moderates.