"The only way to keep Israeli values as a democratic state is by adopting the idea of two states for two people," one for Israelis and the other for Palestinians, Livni said at a conference held by J Street, a dovish pro-Israel lobbying group.
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"The words Israel and peace are not in contradiction, they must live together," she said. Yet "so do two other words: peace and security."
Livni at J Street confrence (Photo: AFP)
"We live in a tough neighborhood, and even after a peace agreement is reached it will be and remain a tough neighborhood."
Israel, Livni added, is not the only country that sees "the grave threat" coming from Iran or from radical fundamentalist Islam in the region.
"We have common interests with other Islamic and Arab states," she said.
These countries "feel like us that these are threats," but "feel they cannot express this shared interest because we have this ongoing existing conflict between us and the Palestinians," Livni said.
Peace talks between Palestinians and Israelis were officially re-launched in July with support from US Secretary of State John Kerry.
Speaking before the UN General Assembly on Thursday, Palestinian President Mahmoud Abbas demanded that any peace deal with Israel be permanent, calling new US-brokered talks a "last chance."
Separately, Israeli premier Benjamin Netanyahu left for New York early Sunday in a bid to challenge Iran's "charm offensive," and the view that the country is less of a nuclear threat under its new, more moderate president.
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