Housing and Construction Minister Meir Sheetrit told a visiting American Jewish Committee delegation on Tuesday that the Saudi initiative for peace between Israel and the Arab world could provide the key for Middle East peace.
Addressing some of the plan's details, Sheetrit told the AJC that Palestinian refugees should not be allowed to return to Israel, but that on the issue of borders, a land exchange would be possible.
On the specific problem of Jerusalem, Sheetrit said there was no way Israel would give up the Old City, and the Palestinians knew this very well and that every moment of bloodshed before reaching the solution was a shame.
A common interest, namely the Iranian threat, could be what brings Israel and moderate Arab countries such as Egypt, Jordan, Morocco, Tunisia and Gulf States together, said Sheetrit.
Criticizing Prime Minister Ehud Olmert, who recently expressed interest in the Saudi plan, Sheetrit said he had suggested Olmert consider the Saudi peace plan months ago, but was rejected.
Sheetrit also pointed out that he had mentioned the Saudi peace plan to former Prime Minister Ariel Sharon as far back as 2002, saying that he opposed part of the plan's demands, but that it was a good foundation to start talks.
Sharon, according to Sheetrit, also ignored his pleas.
Calling for an end to the bloodshed, Sheetrit urged the Palestinian and Israeli governments to hasten negotiations through direct dialogue, saying that problems could be solved.
On a pessimistic note, Sheetrit told the delegation that Israel was currently at a dead end with the Palestinians, since Hamas would not recognize Israel, and Fatah's Abbas was too weak to deliver a peace agreement.