Foreign Minister Avigdor Lieberman said Sunday he would rather go to elections than put the prisoner release deal back on the table.
"We are in a crucial moment of peace talks," he said at the Jerusalem Post conference in New York. "What happened in the last few days was Palestinian blackmail. We are ready for any kind of discussions, but we're not ready for blackmail."
The foreign minister said that there are currently three options on the table: "The package deal that includes our willingness to free terrorists is not an option. The second option is forming a new coalition and the third option is going to elections. I personally don't think we are in a position to back out and return to a package deal and release terrorists."
Lieberman added that "a new coalition is also not an option for us."
"The first two options are unacceptable for Yisrael Beiteinu, and if the alternative is to surrender to the Palestinians' threats, or pay an enormous price to maintain an alternative coalition - then we'd be better off going to elections."
These comments were met with ambivalence in the opposition.
Meretz leader Zehava Gal-On said Lieberman was " exposing the Israeli government's (attitude of) noncompliance."
When he supported the fourth prisoner release in the cabinet, "Lieberman knew that it meant releasing terrorists," Gal-On said. "Now it turns out he is a serial commitment-breaker and noncompliant."
"Maybe we should go to elections and get rid of this bad government," she concluded.
Opposition leader Isaac Herzog (Labor) welcomed Lieberman's assessment going to elections was preferable, saying that "in light of the continuing failure of the current government in every single field, going to elections is not a threat - but a hope."
"Lieberman has removed his mask and returned to his old role and in light of that I expect (Finance Minister Yair) Lapid and (Justice Minister Tzipi) Livni to reach the obvious conclusion, and leave this coalition," he added.
While Israel is interested in continuing the peace talks, the Palestinians' moves are making it difficult.
"The Palestinians are making unilateral steps and must pay a price for any unilateral step. Their decision was clear - to break away from all of our understandings. Despite the moves they made, we are willing to continue with the negotiations," he said.
When asked about the possibility of Palestinian Authority President Mahmoud Abbas turning to the International Criminal Court against Israel, Lieberman replied: "Sometimes it's better to keep silent."
Lieberman asserted that the Palestinian Authority doesn't exist de-facto.
"There are two separate entities: the first is 'Fatahland' in Ramallah, and the second is 'Hamastan' in the streets of Gaza. As far as I recall, the elections in the PA were supposed to take place in 2010, and it's 2014 now. Abbas' first priority is not the peace talks, but his struggle against Mohammed Dahlan."
Lieberman also talked about the criticism against Israel in the international community and the concern the Israeli government will be blamed for the failure of peace talks.
"What we're seeing is not even hypocrisy, it's not even criticism over the State of Israel's legitimacy. This is pure anti-Semitism. There's nothing more popular in the Western world than criticizing Israel."
He went on to attack the world for preferring to criticize Israel and ignore what is happening in Arab states.
"Hundreds of thousands are slaughtered every day in Syria, Iraq, Libya, Egypt and Lebanon. The Islamic extremists are getting stronger every day and everyone focuses on us and the conflict with the Palestinians. The Assad regime is slaughtering thousands and I didn't see any discussions at the (UN) Security Council (about it). Everyone is silent and prefer dodging (the issue) and deal with the Judea and Samaria settlements instead. This is real hypocrisy and we are willing to face this challenge and eventually we will win," he said.
The foreign minister also slammed the Boycott, Divestment and Sanctions (BDS) Movement against Israel.
"If you take all of the BDS organizations, their goal is not the Palestinian state, it's to undermine the State of Israel. Their obvious public stance is that Israel has no right to exist and it is very important to explain that to all of our partners. I think we're doing well and we know how to handle this problem."
He noted that Israel was more associated with being a Startup Nation than with the Israeli-Palestinian conflict, and claimed that while "international leaders have clearly stated their opposition to boycotting Israel, the issue is exploited for domestic purposes."
Speaking of the possibility of the US releasing Israeli spy Jonathan Pollard as a part of any deal, Lieberman said: "First of all, this is an American issue and this is a big concern for us. The man has been in prison for 29 years. If we're willing to release terrorists then we obviously think Pollard should be released for, primarily, humanitarian reasons."
Touching on the Iranian nuclear threat, Lieberman said Israel was closely monitoring what was happening in the Islamic Republic.
"For us, this is our biggest challenge. It's not just (Iran's) nuclear capabilities, but the strong message that comes out of the Islamic Revolution that has turned into the world's biggest financer of terrorism. We are seeing (Tehran's) involvement in Syria and Lebanon and of course its attempts to assassinate our diplomats. We are keeping all options on the table and when we say it, we mean it."
Moran Azulay contributed to this report.