Speaking at a United Jewish Communities (UJC) event in Jerusalem, the opposition leader said, "We need a new approach. The old one failed to yield results. We should build from the bottom up by improving the lives of our Palestinian neighbors."
He warned against the ramifications of the harsh situation. "Their lives are not good under Hamas. There is poverty, there are no social institutions and the economy is bad. People in such a situation are easily inclined to give up on peace and join radical Islam.
"We must change our neighbors' lives from the ground up as a crucial steo towards peace," Netanyahu said, pledging that "a government headed by myself will gradually help restore the Palestinians' economy."
According to the Likud leader, the Palestinian economy is quite small, including less than two million people, and he as prime minister led a similar process with the Israeli economy. Improving the Palestinian economy's efficiency, he said, would contribute to stability and cooperation in the entire region, with the help of Egypt and Jordan.
Netanyahu also addressed the eastern threat, saying that "today there is a consensus in the world in regards to the Iranian nuclear plan. Israel will take every measure to defend itself against this threat."
'Prosperity reduces terror'
"This is not an alternative to negotiations; it's part of its infrastructure," he explained. "Thus far we have focused on political negotiations, investing 99% of our efforts in them, while only 1% was invested in improving the economy.
"I will change this proportion. It's a known rule worldwide: Economic prosperity significantly reduces terror and the foundations of war."
The Likud chairman clarified, however, that his diplomatic approach remained unchanged.
"I have always been clear about my views, supporting a united Jerusalem and allowing not one Palestinian refugee enter Israel. This stance of mine has not changed."
Netanyahu also unveiled his economic doctrine for handling the global financial crisis. "The State of Israel is like a skillful mammal. We are a small country and we can take advantage of the global crisis and grow out of it.
"One main thing I plan to do in order to encourage growth is to dramatically reduce taxes. We must also advance the paving of roads and railways and increase the releasing of land in order to encourage construction."