Barak: Peace deal still possible

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Israeli Defence Minister Ehud Barak has said Israel can and must reach a peace deal with the Palestinians within the next three years.

Mr Barak said Israel's new PM, Benjamin Netanyahu, would propose a plan to the US "in line with the principle of "two states for two nations".

Mr Netanyahu has so far refused to back the principle of Palestinian statehood.

His government says it is deciding its policy, but its foreign minister has said the peace process is a "dead end".

When a political settlement is signed with all the neighbours, it will stipulate a Palestinian state alongside the State of Israel, with the two living side by side Ehud Barak

In his first extended interview since Mr Netanyahu took office, Mr Barak said "the leaders are not so far apart in terms of what the final settlement will look like".

The centre-left Labour leader pointed out that the right-leaning prime minister backed the 1993 Oslo Accords, under which Israel agreed to hand territory back to Palestinian control.

"When a political settlement is signed with all the neighbours, it will stipulate a Palestinian state alongside the State of Israel, with the two living side by side," said Mr Barak.

He said Mr Netanyahu believes it is "impossible to leave things in a state of paralysis", warning that the international community might lose interest or shift its support to the creation of a single state - which would most likely have a non-Jewish majority.

Iran concerns

On combating what some in the international community believes is Iran's quest for nuclear weapons, Mr Barak said "we are not removing any option from the table", in reference to a possible military strike.

But he warned against belief in "a heroic operation that will end everything", in reference to a single strike in 1981 on a nuclear reactor Iraq had begun building.

"Here we are up against something far more complex, sophisticated and extensive," he warned.

His comments came as Foreign Minister Avigdor Lieberman gave a much more cautious view of the prospects for peace, in an interview with the Jerusalem Post.

He said peace would be "impossible" unless the Palestinians recognised Israel as a Jewish state, a demand not included in previous agreements, and which Palestinian Authority President Mahmoud Abbas has dismissed.

Mr Lieberman stressed boosting the Palestinian economy rather than moving towards statehood, and referred to the model of Cyprus, where he said there is "stability, prosperity and security" without a peace agreement.

"I think in this way it is clear what kind of solution we prefer," he said, although he also said Israel does not want to rule over the Palestinians.

Critics believe Mr Netanyahu's campaign policy of "economic peace" amounts to limited Palestinian self-rule in areas of the West Bank that would fall far short of the contiguous, sovereign state Palestinians are seeking.

Mr Netanyhu is scheduled to visit US President Barack Obama on 18 May, when he is expected to unveil his policy on peace efforts.

Mr Obama's administration has repeatedly stressed its commitment to a two state solution.