Vice premier supports economic sanctions against Iran

I wouldn't like to darken the future with belligerent declarations," he said at a news conference when asked about the possibility of a pre-emptive strike. "I do hope that the problem can be solved economically, politically and psychologically."

Mr Peres also reiterated Israel's long-held policy of "strategic ambiguity" about whether it has nuclear weapons, which is meant to deter potential Arab and Islamic foes, including Iran - a policy Prime Minister Ehud Olmert appeared to veer from in December with remarks that implied possession.

Israel is widely believed to have the Mideast's only nuclear arsenal, but Peres said the only thing his nation has ever declared is that it will not be the first in the region to use nuclear weapons despite the many threats against it. "We've learned that suspicion is enough. We don't need anything else," he added.

Peres lauded Japan's policy of restraint towards North Korea and its nuclear program.

Iran is not only a problem for Israel, Peres said. A fanatic, dangerous leader trying to obtain nuclear weapons was an existential threat to the entire world.

According to Peres most Iranians were in favor of economic development and opposed the nuclear project.

"The Iranians want to go back to national responsibility and economic prosperity instead of the poverty and corruption that dominates the Ayatollahs." He mentioned Iran's 20 percent unemployment rate and stated that "you can't feed children on enriched uranium."

Referring to the Palestinian unity deal he said that he could not understand how such a government could be formed before the factions reach agreements between themselves. "Abu Mazen (Mahmoud Abbas) is willing to recognize the State of Israel, accept former agreements, stop terrorism and talk to Israel. Hamas says no to all these. What are we going to talk to them about?"

"If Hamas decides to recognize Israel, honor prior agreements and release the kidnapped soldiers, Israel will talk to them. We are not fighting the Hamas party but their religious extremist policy," he added.

Japan to donate $100 million to 'Valley of Peace'

Peres is heading an Israeli delegation to Japan to meet with the Japanese prime minister, along with Palestinian and Jordanian delegations. The delegations are set to announce a unique joint economic project "The Valley of Peace." The Japanese plan is to turn Jericho into an agricultural enterprise, including an airport for exporting produce.

"Japan has decided to donate $100 million to this project," said Peres, "with most of that money going to the Jordanians and Palestinians. Japanese companies are encouraged to donate funds to the scheme."

Peres said he believed that "until today we have wasted too much time on strategies and diplomacy and not enough on the economy. Israel and the Palestinians have an agreement with Jordan to make the border economically affluent," he said.

Reuters contributed to the report