"We want a demilitarized Palestinian state that recognizes the Jewish state." Photographer: David Paul Morris/Bloomberg
"We want a demilitarized Palestinian state that recognizes the Jewish state." Photographer: David Paul Morris/Bloomberg

Israel’s prime minister, Benjamin Netanyahu, has some uncharacteristically positive words for one of U.S. President Barack Obama’s most controversial foreign policy initiatives: the deal struck last year to remove chemical weapons from Syria.

I met Netanyahu last Friday afternoon in his bunkerlike office in Jerusalem. During the course of our discussion, I asked him about the famous “red line” crisis -- Obama’s last-minute decision to abort a missile strike and instead negotiate the destruction of Syria’s chemical weapons stockpile -- that colors so much of foreign-policy commentary today.

Netanyahu issued what was for him a full-throated endorsement of an Obama initiative, calling it “the one ray of light in a very dark region.”

“It’s not complete yet," he went on. "We are concerned that they may not have declared all of their capacity. But what has been removed has been removed. We’re talking about 90 percent. We appreciate the effort that has been made and the results that have been achieved."

The chemical weapons of Syrian President Bashar al-Assad's regime have posed a murderous threat to Israel, and there is broad relief in Jerusalem that this particular menace appears to be dissipating. Obama actually gets more credit for the deal in Israel -- particularly among leaders of the country's national-security apparatus -- than he often does in Washington.

Netanyahu is only intermittently pro-Obama, of course. The two men have a famously contentious relationship. During our discussion, Netanyahu did not hesitate to highlight broad areas of disagreement with the U.S. administration, particularly on matters related to the ongoing Iran nuclear negotiations and the defunct Israeli-Palestinian talks led by Obama's secretary of state, John Kerry. The latest round of peace talks failed, according to U.S. negotiators, in good part because of Israel’s insistence on expanding settlements in the West Bank.

Netanyahu was careful to stress his pro-American bona fides, and he vociferously denied recent reports that Israel is engaged in aggressive acts of espionage in the U.S. “Israel has not conducted any espionage operations in the United States, period. Full stop,” he said. “Not direct espionage, not indirect espionage, nothing, zero."

The prime minister was expansive; he had just completed what both Israeli and U.S. participants described to me as a productive meeting with U.S. Secretary of Defense Chuck Hagel. (It is my impression that Netanyahu would prefer to see Hagel -- who was accused during his confirmation process of being anti-Israel -- than to find the indefatigable peace processor Kerry showing up in his office.)

But Netanyahu, though seemingly relaxed, was also quite difficult. We spent the first 10 minutes of our discussion renegotiating the terms of our meeting (when I could use a digital recorder, topics we could cover on the record, and so on). I quickly remembered a truism about Netanyahu: that he would give live television interviews on background if such a thing were possible.

We soon enough turned to business -- first, to the mostly dead peace process. In his most extensive comments to date on the reasons he thinks the process has failed, Netanyahu made it clear he believes his Palestinian counterpart, Mahmoud Abbas -- who sometimes refers to Netanyahu as “that man,” according to officials -- is unable or unwilling to grapple with the core issues of the conflict. Netanyahu also hinted that he is weighing suggestions from a large number of Israelis that he should consider taking unilateral steps to disengage from sections of the West Bank that are heavily populated by Palestinians, even if this means uprooting Jewish settlements.

“We want a demilitarized Palestinian state that recognizes the Jewish state,” Netanyahu said. “How do you get that if you can’t get it through negotiations? It’s true that the idea of taking unilateral steps is gaining ground, from the center-left to the center-right. Many Israelis are asking themselves if there are certain unilateral steps that could theoretically make sense.”

But he was quick to add that Israelis -- himself included -- don’t want a repeat of their Gaza experience. In 2005, then-Prime Minister Ariel Sharon unilaterally withdrew Israeli soldiers and settlers from Gaza; it was soon taken over by the radical Islamist group Hamas, which has since used the territory to launch rockets at Israeli civilian targets.

Nevertheless, Netanyahu said that something must be done to prevent the collapse of Israel as a Jewish-majority democratic nation. “We don’t want a binational state, and we don’t want a Palestinian-Iranian state next door,” he said. “There is an emerging consensus that we don’t have a partner who can challenge constituencies, do something unpopular, do something that is difficult. Abbas has not done anything to challenge the prevailing Palestinian consensus."

Similar criticism has been leveled at Netanyahu, both domestically and internationally. Obama administration officials and European leaders doubt his willingness to confront the powerful settler lobby head-on in order to convince Palestinians that he is ready for painful compromise. He rejects this criticism.

“Look at what I’ve done,” he said. “I gave the speech at Bar-Ilan University, a religious university, five years ago recognizing the two-state solution. Second, I tried a 10-month [settlement] freeze, and Abbas did nothing. Then I did something that was the toughest of all -- I released terrorist prisoners, killers of innocent people. That was the hardest decision."

“And what has Abbas done? Nothing," he said. "He’s refused to entertain Kerry’s efforts to try and lock horns on the core issues. He internationalized the conflict. He went to the UN organizations in express violation of Oslo and all the interim agreements. And now he’s embracing Hamas" by bringing the organization into a unity government.

I asked Netanyahu why he simply doesn’t bypass the current impasse and declare an indefinite settlement freeze, particularly in areas outside the thickly settled suburbs of Jerusalem and communities near Tel Aviv. Right now, the burden is on Netanyahu to prove that he is interested in compromise. Such a move -- while politically difficult -- would shift the onus onto Abbas and restore some of Israel’s international standing.

“I don’t think it would work. Having tried once, I saw that it doesn’t work,” he said, referring to the time-limited settlement freeze during Obama's first term. “The Americans said the only way Abbas is going to come into negotiations is either you release prisoners or freeze settlements: Choose. We chose [to release prisoners]. We made it very clear to the U.S. and to the Palestinians exactly how much we would build, including in Jerusalem. We built exactly what we said we would build in every one of the tranches. It wasn’t that we surprised anyone with extra construction."

Here are excerpts from our conversation. I’ve edited my questions for length and clarity.

Chuck Hagel and Benjamin Netanyahu in Jerusalem on May 16. Photographer: Mandel Ngan - Pool/Getty Images
Chuck Hagel and Benjamin Netanyahu in Jerusalem on May 16. Photographer: Mandel Ngan - Pool/Getty Images

JEFFREY GOLDBERG: The peace process is in a coma. When do you go to a Plan B? How do you extract Israel from a situation that many people say is unsustainable?

BENJAMIN NETANYAHU: There are a couple of points of consensus in Israel that are beginning to emerge. The first point of consensus is that we don’t want a binational state. Another point of consensus is that we don’t want an Iranian proxy in territories we vacate. We want a demilitarized Palestinian state that recognizes the nation-state of the Jews. Now how do we get that? The Palestinians don’t agree to recognizing Israel as the Jewish nation-state, and it’s not clear to me that they’ll agree to elements of demilitarization that are required in any conceivable plan that works.

GOLDBERG: A lot of people in Israel, from [former Israeli Ambassador to the U.S.] Michael Oren to [former head of Israeli military intelligence] Amos Yadlin, are looking at the idea of taking unilateral steps to disengage from the Palestinians.

NETANYAHU: We want a demilitarized Palestinian state that recognizes the Jewish state. How do you get that if you can’t get it through negotiations? It’s true that the idea of taking unilateral steps is gaining ground, from the center-left to the center-right. Many Israelis are asking themselves if there are certain unilateral steps that could theoretically make sense. But people also recognize that the unilateral withdrawal from Gaza didn't improve the situation or advance peace -- it created Hamastan, from which thousands of rockets have been fired at our cities.

GOLDBERG: So you’re still committed to negotiations?

NETANYAHU: Let me be clear -- negotiations are always preferable. But six prime ministers since Oslo have failed in their pursuit of a negotiated settlement. They’ve always thought we were on the verge of success, and then [Yasser] Arafat backed off, Mahmoud Abbas backed off, because they can’t conclude these negotiations. We don’t have a Palestinian leadership that is willing to do that. The minimal set of conditions that any Israeli government would need cannot be met by the Palestinians. No matter what the spin is about blaming Israel, do we actually expect Abbas, who seems to be embracing Hamas, to give a negotiated deal? In all likelihood, no. I hope he does, but I’m not sure he’s going to do it.

GOLDBERG: So go back to this question of what to do next.

NETANYAHU: We don’t want a binational state, and we don’t want a Palestinian-Iranian state next door. There is an emerging consensus that we don’t have a partner who can challenge constituencies, do something unpopular, do something that is difficult. Abbas has not done anything to challenge the prevailing Palestinian consensus. In fact, he’s doing the opposite: the Hamas reconciliation, internationalizing the conflict, not giving one iota on the right of return, not giving an iota on the Jewish state. He wouldn’t deal with Kerry’s framework.

GOLDBERG: Do you still think that the Palestinians embrace the idea of destroying Israel in stages -- by setting up a state and then using that state to continue to press their demand through violence and other means for all of Palestine?

NETANYAHU: What the Palestinians keep saying is, Look, we want the maximum. We will not make any adjustments in our demands. Nothing. Not tactical, not strategic. I said to them, You tell me that you want me to draw a map of a state, but you won’t tell me that the state on the map will recognize the Jewish state next to it. They want a map without an end of conflict.

I think Palestinian society is divided into two. The first half openly calls for Israel’s destruction. And the second half refuses to confront this and refuses to confront the demons inside their own camp.

In Israel, there is a vigorous debate about what compromise would entail. There is no such debate in the Palestinian Authority. I’m not talking about Hamas. I’m talking about the so-called moderates who will not talk about the minimal conditions that are necessary for peace from the point of view of any Israeli government and just about any Israeli. They expect us to just leave, shut our eyes, tear out the settlements. Well, been there, done that. We did it in Gaza. And what we got was not peace, but rocket fire.

GOLDBERG: What I don’t understand is why you don’t just leapfrog this negotiations morass and declare an indefinite settlement-building freeze -- not tearing them out, but freezing them? That way, the onus will be on the Palestinian side, not on you, to prove that they are interested in compromise.

NETANYAHU: I don’t think it would work. Having tried once, I saw that it doesn’t work. The Americans said the only way Abbas is going to come into negotiations is either you release prisoners or freeze settlements: Choose. We chose [to release prisoners]. We made it very clear to the U.S. and to the Palestinians exactly how much we would build, including in Jerusalem. We built exactly what we said we would build in every one of the tranches. It wasn’t that we surprised anyone with extra construction.

GOLDBERG: Why continue to grow settlements at all when you’re trying to negotiate? The American critique of your position is that you keep building in ways that set back the possibility of a Palestinian state.

NETANYAHU: The settlements are an important issue, but they are not the core of the problem. This conflict has been going on for almost a century. During the first half of that century, there wasn’t a single settlement. From 1920, when this conflict effectively began, until 1967, there wasn’t a single Israeli settlement or a single Israeli soldier in the territories, and yet this conflict raged. What was that conflict about? It was about the persistent refusal to recognize a Jewish state, before it was established and after it was established.

GOLDBERG: You’ve spoken about this before as an illusion.

NETANYAHU: Just a few years ago, we were told that the Palestinian issue was the core of the conflict in the Middle East. Now you see Syria imploding, Lebanon imploding Yemen imploding, Iraq imploding, Libya imploding. Until three years ago, people believed this, and I was laughed out of court when I mentioned this. This absurdity was widely believed. There was no challenging it.

Syria's Civil War

Then there was a second illusion: that if you solved the Palestinian problem, you’ll get the Arabs to agree with you on a tougher policy on Iran. Well, that’s out the window now because they oppose Iran regardless of the Palestinian issue.

Now the last illusion remains: The core of the problem in the Israel-Palestinian conflict is the settlements. That’s about as truthful as the previous illusions. The real issue was and remains opposition to the Jewish state. That’s the demon that they have to confront, just as we’ve confronted the demon of a greater Israel. Not easy, but we did it.

GOLDBERG: A lot of people would say you haven’t done this yet, because you haven’t risked the stability of your ruling political coalition in pursuit of territorial compromise with the Palestinians.

NETANYAHU: Look at what I’ve done. I gave the speech at Bar-Ilan University, a religious university, five years ago recognizing the two-state solution. Second, I tried a 10-month [settlement] freeze, and Abbas did nothing. Then I did something that was the toughest of all -- I released terrorist prisoners, killers of innocent people. That was the hardest decision.

That’s what I did to facilitate the negotiations. And what has Abbas done? Nothing. He’s refused to entertain Kerry’s efforts to try and lock horns on the core issues. He internationalized the conflict. He went to the UN organizations in express violation of Oslo and all the interim agreements. And now he’s embracing Hamas.

GOLDBERG: Why do you think that Kerry and [U.S. special envoy] Martin Indyk believe that the settlements are a great impediment to peace? Indyk in particular has denounced “rampant settlement activity" as a key factor undermining negotiations.

NETANYAHU: Most of the settlement population, between 80 to 90 percent, is clustered in three urban blocs, in suburbs of Tel Aviv and Jerusalem that everyone knows will stay in a final peace settlement. Effectively, the territory that is involved has not increased. It’s marginal. It’s been marginal for the last 20 years. No new settlements have been built since the time I was first prime minister, which was 1996.

What you are talking about is an increasing population within these urban blocs. It doesn’t materially affect the map. If you took an aerial photograph to see how much territory has been "consumed" by so-called "rampant" settlement activity, the answer is practically nothing. If you can make a deal, you can make a deal. The addition of a few hundred housing units a year in this territory doesn’t alter it. Successive Israeli governments have offered deals and couldn’t get them because the Palestinians would not lock horns with the primary obstacle to peace, which is the refusal to end the conflict with Israel once and for all. To recognize that the Jewish people have the right to self-determination, just as the Palestinian people do. My insistence on recognition of the Jewish state is not a tactical PR stunt. It goes to the core of the conflict.

GOLDBERG: There are people in Washington who think that John Kerry is borderline delusional for pursuing negotiations so hard.

NETANYAHU: Kerry made a big effort. We made a huge effort together. I think he tried very hard. It’s a tough go.

GOLDBERG: Come back to this point: If the settlements aren’t a big deal, then what’s a big deal?

NETANYAHU: In the Middle East today, there are two great threats. The threat is militant Islam in its Shia variety or Sunni variety. The threat is what happens when radicals get a state. Shia militants have taken over a state called Iran that is seeking nuclear weapons and which threatens everyone in the region. The Arabs see both threats as supreme. There is very broad agreement. Does the Palestinian issue play a role here? It hinders more open relations, but such relations are taking place anyway.

Iran's Uranium Enrichment

GOLDBERG: What will you say to the Americans if they come to you and say, "We’ve got a deal that keeps Iran perpetually a year or more from reaching the possibility of nuclear breakout"? That seems like a reasonable conclusion, no?

NETANYAHU: I think this is a setup for the same mistake that was done with North Korea. You leave Iran with a breakout capability -- let’s say a year. During that year, you have two problems. Will you muster the political will and capability to deal with this in a year? What if there is another unfolding crisis somewhere? Second, on the matter of inspections that are promised -- they built their underground bunkers when they were under inspection!

Intelligence isn’t perfect -- far from it. Intelligence did not prevent enrichment sites from being built without anyone knowing for years.

Everybody in the region -- everybody -- shares my assessment that what you have to do is dismantle Iran’s enrichment capability. If you leave them with enrichment capability, then everybody will scramble to get their own capability. They might do two things simultaneously: They might actually kowtow to Iran and begin relations with Iran, and at the same time scramble for their [own] nuclear weapons. So this agreement that is meant to stop the proliferation of nuclear weapons will be instead a tremendous force for proliferation.

Look at what Iran does without nuclear weapons. They’re in Syria; they’re in Gaza, sending ships with weapons. They’re in Yemen, in Bahrain, Iraq, everywhere. So if [Ayatollah Ali] Khamenei’s Iran becomes a threshold nuclear power, what do you think will happen? Is this going to move Iran into greater moderation, when he has greater force, or is he going to be even less moderate?

GOLDBERG: There’s been a lot of criticism of President Obama on Syria, the "red line" controversy, and the deal he engineered with [Russian President Vladimir] Putin to bring about the removal of Assad’s chemical weapons. It’s now nine months or so after that particular crisis. What’s your assessment of the chemical weapons deal today?

NETANYAHU: I think this is the one ray of light in a very dark region. It’s not complete yet. We are concerned that they may not have declared all of their capacity. But what has been removed has been removed. We’re talking about 90 percent. We appreciate the effort that has been made and the results that have been achieved.

READ MORE: Jeffrey Goldberg's exclusive interview with President Barack Obama

GOLDBERG: Chuck Hagel was just here. He was under fire during his confirmation process for being anti-Israel. How do you view him today?

NETANYAHU: The relationship has truly been fine. Our defense cooperation and intelligence sharing, which has been substantial in both directions, and our work on anti-missile and anti-rocket defense have been very good, and this work continues under Chuck Hagel and President Obama, and I’m pleased with that. That doesn’t mean we can’t have differences of opinion on Iran.

GOLDBERG: So how deep are those differences?

NETANYAHU: The Americans say, "We will not let Iran have nuclear weapons." We say we should not let Iran have the capability to produce nuclear weapons. There’s a difference. If Iran is allowed to maintain what is called a threshold capability, then in all likelihood, they will break out. We think they should be pushed back so that they don’t have that capability to produce nuclear weapons. We need to dismantle their capability, to take away their enriched uranium and, of course, to address the other components of their system. What is the justification for giving it [enrichment] to them? They are a systematic violator of every UN resolution, including a UN report that shows they’re still violating even today.

GOLDBERG: Recently, we’ve seen charges that Israel continues to aggressively spy on the United States. Does your government run spying operations against American targets?

NETANYAHU: This is an outright lie. Since [Jonathan] Pollard, almost 30 years ago, Israel has not conducted any espionage operations in the United States, period. Full stop. Not direct espionage, not indirect espionage, nothing, zero. We do not conduct in any way, shape or form espionage operations in the United States.

GOLDBERG: You just got off the phone with the newly elected prime minister of India. You’re increasingly isolated in parts of Europe. Are you looking east in ways that Israel hasn’t before?

NETANYAHU: We still have a ways to go to solve the Israel-Palestinian dispute. But there is a broader recognition that this issue shouldn’t hold us hostage. Israel is rapidly developing relations in Asia. I was recently in China, and I just came back from Japan. We have conversations with many Asian countries, Latin American countries, African countries. These countries want to seize the future, and they recognize that the only way they can win is to innovate, and Israel is one of the great centers of innovation in the world. These countries understand that they have to upgrade their products and services with technology in order to compete in a rapidly changing world. Israel is seen as an R&D lab by many governments and companies, and they’re interested in Israeli technology. These countries and companies are not being held back by the continuing conflict.

I hope we resolve it, for our sake. I hope we resolve it because I don’t want a binational state. I hope we resolve it because I’d like to have broader and more open relations with the Arab world, and I hope to resolve it in order to remove the unjustified attacks on Israel. But we are proceeding ahead despite this. We don’t mortgage our future to the maturation of Palestinian politics.

To contact the writer of this article: Jeffrey Goldberg at jgoldberg50@bloomberg.net.

To contact the editor responsible for this article: Zara Kessler at zkessler@bloomberg.net.