The Knesset opened its winter session on Monday, with Prime Minister Benjamin Netanyahu saying that he would be willing to extend a construction freeze in West Bank settlements if the Palestinians recognize Israel as a Jewish state.
"Unfortunately up until now the Palestinians have not responded to this call and the United States are searching for different ways to continue the talks," he said.
"I made this message clear in quiet ways last month, and I am saying it here, now, in public: If the Palestinian leadership will say unequivocally to its people that it recognizes Israel as the nation state of the Jewish people, I will be willing to gather my government and ask for another suspension of construction for a limited time," Netanyahu said.
"The US is making various suggestions and we are considering them seriously in relation to Israel's interests, first and foremost security and the promise of continued existence," Netanyahu said.
"The refusal to recognize the rights of the Jewish people and its historic connection to the place is the root of the conflict and without solving this, the conflict will never end. Regarding security, any peace agreement between ourselves and the Palestinians must be based on rigid security arrangements."
Immediately after the prime minister's speech, the Palestinian Authority issued a statement rejecting his demand. Nabil Abu Rdainah, spokesman for Palestinian President Mahmoud Abbas, said a return to peace talks required a freeze on settlement building. "The issue of the Jewishness of the state has nothing to do with the matter," he told Reuters.
Ahmed Qureia, a member of the Palestinian Liberation Organization, also responded to Netanyahu's speech, hinting that the latter was trying to buy time.
"The current situation can stand no more manipulations. This stance is actually evading a true and serious peace process that will afford both sides their rights according to international law," he said.
Top Palestinian negotiator Saeb Erekat accused Netanyahu of "playing games" by linking settlements and Israel's national character. "I don't see a relevance between his obligations under international law and him trying to define the nature of Israel," he said. "I hope he will stop playing these games and will start the peace process by stopping settlements."
Erekat added that the recognition of a Jewish state "has no connection to the peace process or Israel's unfulfilled commitments. We reject the demand."
Netanyahu: We had peaceful ties with Iran (Photo: Gil Yohanan)
In his speech, Netanyahu also hinted at a comparison between Turkey and Iran. "We must not succumb to illusions that a peace agreement alone will solve (our problems). We once had normal, peaceful ties with an important country. This country is called Iran. We also had a wonderful friendship with another country – military cooperation, full diplomatic relations, visits of heads of state, and 400,000 Israeli visitors. This country is called Turkey. I still hope we can rehabilitate relations with them, which deteriorated without our desire," he said.
"Things have changed, in Iran and, unfortunately, in other places, and no one can promise us that a similar thing will not happen after a peace agreement is struck with the Palestinians. This is why we must willfully and fearlessly insist on solid security arrangements on the ground."
On the subject of Israeli-Arabs Netanyahu added, "Israel is the nation state of the Jewish people as well as a democratic state of all its citizens in which its Jewish and non-Jewish citizens enjoy equal rights".
"There is no state in our region that maintains the rights of the individual and the rights of the minority as Israeli democracy does," he said.
Netanyahu also addressed criticism against an amendment to the Citizenship Act approved recently by the government, which will obligate new citizens of Israel to pledge their allegiance to a "Jewish and democratic state".
He quoted Israel's first prime minister, David Ben-Gurion. "The state that will rise will be Jewish in its function, purpose, and aim. Not a country of Jews settled in a land but a state for Jews, the Jewish people," he said.
"In 1992, in the Basic Law of Human Dignity and Liberty the Knesset set a law defending the dignity of man and his liberty in order to anchor in a basic law the values of Israel as a Jewish and democratic state."
Opposition chairwoman Tzipi Livni spoke after Netanyahu, and addressed her entire speech to him. "Maybe you think you can appear to some of the public as a strong prime minister, but you have led to this situation out of weakness and inability to make decisions," she said.
"I don't understand how you can explain your priorities. Why is a confrontation with the US better than a confrontation in the coalition? Your only ideology is what you tell the entire world: I have political problems."
Livni added that her party, Kadima, had succeeded in building regularly in settlements "because we were believed – in the world and the negotiating room". Netanyahu knew, she added, "that the Palestinians have agreed to a demilitarized state", but the government's inability to make decisions have not led it to accept this.
Knesset Speaker Reuven Rivlin criticized the government's conduct, accusing Netanyahu of using the plenum as a rubber stamp and trying to create a "mini-presidential" regime.
"There have been ongoing attempts to empty the Knesset of content and to turn us, its members, into a rubber stamp," he said.
"The government must not force the Knesset to approve moves in devious ways," he added. Rivlin also spoke out against the Ministerial Committee for Legislation's approval of the referendum on withdrawal from Israeli lands, calling it an example of "bypassing the Knesset and weakening its power".
President Shimon Peres said "Israel has learned from its mistakes", referring to the Yom Kippur War protocols released recently in honor of its anniversary.
"Despite all the difficulty and the pain, this House has created a majority in favor of the principle of two states for two peoples," Peres added, prompting MKs Michael Ben-Ari and Yaakov Katz of the National Union Party to walk out.
"We stand before a historical decision. In the coming weeks efforts will be made to renew negotiations. Will we know how to decide correctly?" he asked. "I believe in our power to succeed in this historic test. The decision has fallen to our generation and will affect the lives of many generations to come."
Reuters and Ali Waked contributed to this report