After more than twenty years of trumpeting its intention to destroy the “Zionist entity,” in 1988 the PLO accepted a small Palestinian state sandwiched between Israel and Jordan. Tunis was reacting to the Palestinians in Jerusalem, rather the reverse. A large segment of the Israeli public was willing to talk about some kind of Palestinian government. Likud and Labour, locked together in a “unity” government, settled on the conditions under which the Palestinians would participate in “regional” elections in the West Bank and Gaza to generate a non- PLO delegation to negotiate the final status of the territories with Israel. While Likud backed away, Labour was willing to negotiate with supporters of the PLO, who, they understood, would unofficially consult Arafat. Faisal Husayni, Fatah's man in Jerusalem, was briefing Israel's Labour Party and figures across the Israeli spectrum. “I've never been in a room with so many security forces when I wasn't manacled,” Husayni quipped at one meeting where a few Israeli intelligence men were present. Ziad abu Zayyad was being invited to lecture to Israeli soldiers. Because Arafat had spoken the forbidden words acknowledging Israel's right to exist, America began to talk officially to the PLO. It was the Reagan administration's last diplomatic act before passing the Oval Office to George Bush in 1989. As Israel stalled over negotiations, an about-to-be-united Europe threatened economic sanctions against Israel, which feared being shut out of its most important market.