In a blunt assessment made as he was traveling to Israel, Panetta said the ongoing upheaval in the Middle East makes it critical for the Israelis to find ways to communicate with other nations in the region in order to have stability.
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"There's not much question in my mind that they maintain that (military) edge," Panetta told reporters traveling with him. "But the question you have to ask: Is it enough to maintain a military edge if you're isolating yourself in the diplomatic arena? Real security can only be achieved by both a strong diplomatic effort as well as a strong effort to project your military strength."
Panetta is scheduled to meet this week with Israeli and Palestinian leaders, and then travel to a meeting of NATO defense ministers in Brussels. His visit comes as Mideast negotiators push for a peace deal by the end of next year, amping up pressure for the resumption of long-stalled talks.
The Pentagon chief said Israel risks eroding its own security if it does not reach out to its neighbors.
"It's pretty clear that at this dramatic time in the Middle East, when there have been so many changes, that it is not a good situation for Israel to become increasingly isolated. And that's what's happening," he said.
Panetta said the most important thing now is for Israel and its neighbors "to try to develop better relationships so in the very least they can communicate with each other rather than taking these issues to the streets."
Panetta, the US' 23rd defense secretary is considered a friend of Israel. During his term as CIA chief he developed a warm relationship with Defense Minister Ehud Barak and his counterparts in the intelligence community.
Panetta has visited Israel many times in order to increase coordination between the two countries while preventing "surprises" from the Israeli side in the shape of an attack on Iran.
Yitzhak Benhorin contributed to the report
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