No no no, you got it wrong! Well, at least it's different from the version I heard, which makes more sense.
In "my" version, Sharon and Arafat are sitting down to talk peace accords and such. But before they begin to get down to business, Sharon says that he wants to tell a little story.
"When Moses received the Ten Commandments on Mt. Sinai 5,000 years ago (or so), he had to remove his sandals in the presence of the Most High. But when came back down the mountain, he found that someone had stolen his sandals from where he had left them."
Arafat frowned. "Who would do such a thing?"
"The Palestinians."
Arafat exploded. "That's a lie - it cannot be! There were no Palestinians back then!!"
Sharon was pleased. "Good, now that we've agreed on that point, we can start to talk."