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PIERS MORGAN TONIGHT

One-on-One with Prime Minister Benjamin Netanyahu

Aired March 17, 2011 - 21:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


PIERS MORGAN, HOST: I'm here in Jerusalem at the private residence of Benjamin Netanyahu, Israeli prime minister.

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER: My brother lost his life in the battle against terror. Made a profound impact on me, I have to tell you. It changed my life and (INAUDIBLE) into its present course.

MORGAN: This is his first interview since all the wave of uprising through the Middle East.

NETANYAHU: Here's Israel. My finger covers it. So it's a tiny country, tiny, surrounded -- well, shall we say living in a very tough neighborhood.

MORGAN: I want to know one thing. What does this mean for the peace process, for the Israelis, and the Palestinians?

NETANYAHU: We want peace more than any other people. We pray for peace, yearn for peace, dream about peace.

MORGAN: When are we going to see a deal?

This is a special edition of PIERS MORGAN TONIGHT.

Prime Minister Netanyahu, first of all, thank you very much for inviting me to your residence. I want to start with the appalling events in Japan and get your take on what's happened there and your view of what this means for nuclear energy.

Of course, you have two reactors in Israel. What do you think?

NETANYAHU: First I think it's a -- it's a terrible tragedy because everybody -- I look at the pictures in Japan and I think what every Israeli thinks and I think what every person in the world thinks, this could be us.

Thousands, tens of thousands of people lost their lives. Hundreds of thousands, perhaps millions, perhaps tens of millions living under a cloud. And I think -- first of all, I think about the fortitude of the people of Japan and their suffering. Their stoicism. And I admire that. And yet at the same time, I think of their great agony and their anxiety.

You know, there's a difference between natural disasters and what we see today. Because you have an earthquake that passes, but this is different. This is a confluence of a natural disaster and a manmade disaster.

And the cloud of radioactivity, the uncertainty of what will happen with it is the cloud that hangs over the people of Japan, and I think right now hangs over the world.

It certainly caused me to reconsider a project of building several nuclear power plants. I have to tell you I was a lot more enthusiastic about it than I am now. In fact, you'd have to give me a very good argument to do it. And fortunately, we found natural gas so --

MORGAN: When you say that --

NETANYAHU: We could -- we could make up the difference.

MORGAN: Are you saying that you might actually stop any kind of nuclear energy program in Israel?

NETANYAHU: We didn't have any civilian nuclear energy. We had some research plants, but not anything on a significant scale. And I don't think we're going to pursue civil nuclear energy in the coming years.

I think, you know, we always -- we always blame Moses that he was a -- our greatest leader and one of the most gifted people in the world. He brought us the moral code and so on. Belief in one god. But then he was a bad navigator. He brought us to the only part of the Middle East without any gas, without any oil.

Turns out he wasn't such a bad navigator because he found some gas offshore. So I think we'll go for the gas. And I think we'll skip the nuclear.

MORGAN: Let's turn to the reason I'm here, the winds of change in the Middle East. You have not given a major TV interview since all this began in December in Tunisia. Let me take you back to December and the events in Tunisia.

Did they take you by surprise? What was your immediate reaction? And did you ever imagine that it would create the kind of domino effect we've been seeing?

NETANYAHU: First, it didn't begin in Tunisia. It began in Tehran a year and a half ago. Millions went to the streets and called for freedom, for democracy, and this repressive regime. And they were put down brutally. And then it -- you know, it came back in Tunis and then from Tunis it went to Cairo and then from Cairo it's going everywhere.

Did I expect it at this time? No. Did I expect it at one time and sometime? Yes. Because the spread of information technology creates an inevitable conflict that is in many ways the 20th century passed by a lot of the Arab world and the Muslim world, and then in comes the information technology of the 21st century and is telling all these people what they missed out on. And this creates the turbulence. Will it end quickly? I doubt it.

MORGAN: I mean, the big question everyone has been asking repeatedly in the last two months is what does this mean for Israel.

NETANYAHU: Well, you know, we all have our hopes, and we all have our fears. You're looking at this and, you know, two places cheered what was happening in Cairo. One was Washington and its allies, the other was Tehran and its allies.

You know they weren't seeking the same outcome. You know there's a fundamentally different outcome that each was seeking. We had all hoped and still hope that you'll have a democratic transformation. That the -- you know, the Google kids and the Facebook kids, you create a Google heaven and a Facebook paradise and all these people will come to power.

That's obviously what people in the West and people in free societies would like to see. It's not clear that that would happen.

MORGAN: What is -- what is the nightmare scenario for you?

NETANYAHU: That you get another Iran. That you -- you had a revolution five years ago in Lebanon. A million Lebanese, that's equivalent to 20 million Egyptians, walked in the streets of Beirut chanting for freedom, chanting for secular reformist, liberal Lebanese state.

Five years later, Lebanon is controlled by Hezbollah which is controlled by Iran. That's what we don't want to see. We don't want to see the stark medievalism that represses women, that crushes the rights of people, that rolls us back a millennium, that fosters violence and does everything that we abhor that it would take over.

And I think these are the two poles. One is real Democratic change and the other is a descent to militant Islamism that squashes all freedoms and threatens the peace of everyone.

MORGAN: I remember watching the scenes from Tahrir Square in Cairo when they were jubilant at the thought of Mubarak going and then we cut the scenes from Gaza where there were equally wild celebrations.

And as you say, they were not celebrating the expansion of democratic freedom in Egypt. They were celebrating the overthrowing of Mubarak and the possibility perhaps for them to do a similar thing potentially in Israel.

NETANYAHU: Well, look, Mubarak kept the peace. Egypt kept the peace for over 30 years, and it should be remembered and appreciated. The people in Gaza, those who are affiliated with Hamas want to see the collapse of the peace and the eradication of Israel. They're supported by Iran that has given them tens of thousands of mortar shells, rockets. They fired already 6,000 rockets and missiles on Israel. So clearly that's not a force for peace or for progress. There are other people in Gaza, but they're in fact subjugated by Hamas. They're not given any choice anymore than the people in Iran were given any choice. They're given a real choice for freedom. They're knocked down -- you know, if you can give me a deal, if god came down from the heavens and said, here, I'll give you a choice, OK, this revolution from the Khyber Pass to the Straits of Gibraltar that is shaking everything in place except us because we're an open, democratic, prosperous society.

But everybody else is suffering this groundswell, this earthquake, this sandstorm, volcanic eruptions, OK, but it also includes the place where it started Tehran, and Tehran is transformed into a democratic society, I would say it's worth it because the Middle East would have a brilliant future.

MORGAN: How unnerved --

NETANYAHU: But there is something that -- I think if you want to know the worst outcome, the worst outcome is Iran where this all started, stays immune to it, continues its repressive, brutal regime, develops nuclear weapons, exports terrorism everywhere and muddles in -- meddles, rather, in the other places and transforms them into so- called Islamist republics.

And I'd say that is the worst nightmare.

MORGAN: I mean there could -- there can be no doubt that Ahmadinejad and the Iranians would be looking at the situation, looking for opportunity. There be can no doubt that. They've made their intentions with Israel very clear.

You must have pretty disconcerted by losing Hosni Mubarak. I mean to other people he may be a dictator, to Israel, he's been a pretty good friend, isn't he?

NETANYAHU: Egypt under Sadat and then under Mubarak kept the peace and I think that's something extraordinarily valuable. And I think the first order of the day is to make sure that any future government in Egypt maintains the peace.

The fact that we have these -- you know 30 years with Egypt, 20 years with Jordan of a real peace is something that I can appreciate because --

MORGAN: Were you sad to see him go?

NETANYAHU: Well, I was -- I was concerned that we might have the opposite of what people want, and what we all want. We want to see a democratic reformed --

MORGAN: Did you speak --

NETANYAHU: I called him once, he didn't return my call. He was otherwise engaged. But I can appreciate the fact that Egypt was at peace. And I think we want -- our main concern is to make sure that it continues in peace. If it gets to an open reformist democratic society, we'll be the first to cheer because a genuine democracy is a friend of peace.

A genuine democracy with all the institutions and the checks and balances of a democracy and the free press --

MORGAN: How fearful are you -- how fearful are you --

NETANYAHU: That's peace.

MORGAN: How fearful are you about the Muslim Brotherhood? There are two schools of thought. One is that they are not contaminated with too much fundamentalism. Others think they may well be.

NETANYAHU: That's what people said about Hamas. That's what people said about Hezbollah. That's what people said about Khomeini. And I remember -- you know, I gave you the example of the cedar revolution, the secular liberals open pro-western cedar revolution in Lebanon.

There was a revolution in Iran in 1979. And it began with Shapur Bakhtiar. Remember him? He was (INAUDIBLE) and it opened government and so on. And he disposed after three months.

So the question is, what do you get? You get 1979 in Iran or you get 1989 in Western Europe -- in eastern Europe? In eastern Europe they turned towards democracy. In Iran they turned towards a backward theocracy.

And I have not seen a single case in which the Muslim Brotherhood of its very shades and views turns toward the European liberal model. They invariably turn to more closer or identical to the Iranian model.

MORGAN: Let me take a short break. When we come back, I want to talk to you about Libya, Gadhafi, and the peace process.

(COMMERCIAL BREAK)

MORGAN: Back with Prime Minister Benjamin Netanyahu.

Let's turn to Libya where it's a pretty disconcerting picture is now emerging where Gadhafi appeared to be on his way out but has now fought his way back and appears to be winning the battle against the protesters. No one's intervened on the behalf of those protesters.

What do you make of what's happening there?

NETANYAHU: Well, Gadhafi is no friend of Israel, no friend of the Jewish people. And I think his people can see now he's no friend of the Libyan people. This is a man who helped explode civilian airlines in the skies, he's fostered terrorism. He's done a lot of terrible things. So I don't think anybody would be sorry to see him go, I wouldn't.

MORGAN: What if he doesn't go? NETANYAHU: I think -- I think the case of Libya is an interesting place where values and interests cohere. You know as a leader you often have a situation where you want to advance a set of values, free democratic societies, and at the same time, you may have overriding interest that force you to think otherwise.

I don't see that conflict in the case of Libya. I think he could be done away with, and I think everybody would benefit.

MORGAN: I mean, everyone seems to be in agreement that he's got to go. My point is that he's not going. And he's made it clear he won't go. And he appears to be winning his battle by mercilessly killing any protesters.

We are seeing something that's bordering on genocide here. Is there not a moral compunction for America, for the West generally, to get in there and sort this out?

NETANYAHU: I think it's one of those cases where the moral compunction as you said and the -- and the interests cohere. I don't think it's a problem so I wouldn't rule out very firm action against Libya. I think that's something that should be considered.

MORGAN: If America --

NETANYAHU: I'm sure it is being considered.

MORGAN: If America decided to take military action, would you support that?

NETANYAHU: Certainly wouldn't be against it.

MORGAN: Moving to Saudi Arabia, some fascinating developments in Bahrain where it would appear that Saudi forces have been in there. And that's a pretty surprising development, isn't it? What do you make of that?

NETANYAHU: I don't think it's surprising at all. I mean I think they're concerned with a possible Iranian takeover of Bahrain which would put Iran effectively within spitting distance of the Arabian Peninsula.

Now Saudi Arabia is working to protect its own interests, but there is a very large global interest in making sure that the world's oil wells, that the largest reserves of the world's oil supply do not fall into Iranian or pro-Iranian hands.

MORGAN: You refer regularly to Iran. Everybody knows your view about Iran, that they believe in extermination of all things Israel.

NETANYAHU: It's not only that they believe it, it's -- look at what they're doing now.

MORGAN: What I was going to ask, flip it on its head, and what are you doing about that, given that you know that is their position? I mean rather than wait for other countries to intervene on your behalf, what is Israel actually doing right now to combat this incredibly serious threat?

NETANYAHU: Well, the first thing I've been trying to do for a long time, for -- you know, for about 15 years, I think, I was elected first time 15 years ago, and I went to speak at the -- before the joint session of the U.S. Congress. And I said that the single greatest threat facing the world and my own country was the arming of Iran with nuclear weapons.

And since then what I've been trying to do is to alert the world and the leaders of the world that it's not merely our problem, that it's their problem because Iran today is -- in Afghanistan, it's in Iraq, it's gotten control of Lebanon. It's gotten control of half the Palestinian society --

MORGAN: Do they have nuclear weapons, do you think?

NETANYAHU: It's working to get them. It's in a point --

MORGAN: How close do you think they are?

NETANYAHU: I think they're getting a lot closer.

MORGAN: Should they be transparent about their nuclear program?

NETANYAHU: Even to the extent that they are transparent, it's very clear what they're doing. They're -- they've enriched enough material now almost for three nuclear bombs. They tried to re-enrich it again, but that's what they're doing. They -- they're building long-range ICBMS, not only to reach us. ICBMS, they don't need to do that.

MORGAN: What do you do about this country which is apparently arming itself to the teeth, possibly getting nuclear weapons, and you're its number-one target? What are you doing about it?

NETANYAHU: Well, one of the things that we're telling people is that sanctions by themselves are not going to be enough. That the only thing that will work is if Iran knew that if sanctions fail there will be a credible military option. Now this is not just our problem, this is the problem of Europe, of the United States.

MORGAN: Are you talking United Nations?

NETANYAHU: I'm talking about a credible military action that the --

MORGAN: Led by who?

NETANYAHU: Led preferably by the United States. It's not that complicated. Could be done. It's not easy, but it's not impossible.

MORGAN: What is credible military action against Iran? What does that constitute?

NETANYAHU: It means action that will knock out their nuclear facilities and -- (CROSSTALK)

MORGAN: You're talking air strikes? Or could you contemplate some kind of land invasion?

NETANYAHU: Well, I think the United States has proven great effectiveness and I'm going to divulge a secret to you about their capabilities. They're actually greater than ours. You know, I mean, the American Air Force, the American army is bigger than the --

(CROSSTALK)

MORGAN: If for --

NETANYAHU: Than the Israeli army and they are --

MORGAN: But if for whatever reason the Americans --

NETANYAHU: -- capable of doing this.

MORGAN: -- choose not to do this, the threat still remains.

NETANYAHU: Yes.

MORGAN: And you're still the number-one target, would you act unilaterally militarily?

NETANYAHU: No, we always reserve the right to defend ourselves. That's been one of the tragedies of Jewish history, that the Jewish people were thrust into a state of defenselessness. We were attacked again and again and again with viciousness and never had the capacity to defend ourselves.

MORGAN: Does Israel --

NETANYAHU: We do now have that capacity.

MORGAN: Do you have nuclear weapons?

NETANYAHU: Well, we have a longstanding policy that we won't be the first to introduce nuclear weapons into the Middle East, and that hasn't changed.

MORGAN: So you don't have any?

NETANYAHU: That's our policy. Not to be the first to introduce nuclear weapons into the Middle East.

MORGAN: But if you take an assumption that other countries may have them, then that may mean you have them.

NETANYAHU: Well, it may mean that we don't pose a threat to anyone. We don't call for anyone's annihilation. We don't foster terrorism. We don't threaten to obliterate countries with nuclear weapons. But we are threatened with all these threats. We have not fired thousands of rockets into our neighbors. MORGAN: Is it right to expect countries like Iran to be transparent about their own nuclear programs if you're not transparent yourself?

NETANYAHU: Well, Iran is a signatory to the NPT. I mean this is the absurd thing. Everybody says take the nonproliferation treaty and expands it and bring Israel into it. No, the problem in the Middle East is not that countries don't join it, it's that those countries who join the nonproliferation treaty have violated it left and right beginning with Iraq under Saddam Hussein, going on to Libya, Syria, recently.

They're all signatories of the NPT. They all developed nuclear weapons program. Syria just did that and was exposed and Iran is doing it every day. So they're all --

MORGAN: Do you think it's a bit of a sham? The nonproliferation treaty?

NETANYAHU: I think it's ridiculous. I think the problem in the Middle East is one that the signatories of the NPT was violated and secondly that they're focusing their attention on Israel that when the problem in the Middle East is this tyrannical, Medieval regime, terrorist regime of Iran in which the mullahs and the ayatollahs want nuclear weapons with which they openly threaten to wipe out -- to make another holocaust, to wipe out the Jewish state.

But that's just for starters. They say that we're the small Satan, that the United States is the great Satan. And I suppose Europe -- I don't want you to be offended, you're sort of a middle- sized Satan. All of these have to be dominated, obliterated, terrorized and they're actually true to their word.

MORGAN: When we come back, I want to talk to you about the Middle East process here in you relation to the Palestinians.

(COMMERCIAL BREAK)

MORGAN: Prime Minister, there was a horrific murder of the Fogel family last week, the details of which are chilling to read. What was your reaction to that? And where are you with the investigation into the perpetrators?

NETANYAHU: This was horrific. It was savagery. I mean, several Palestinian terrorists came into a home of this Jewish family, the West Bank. They stabbed a three-month-old baby girl in the heart, cut her throat. They stabbed her four-year-old brother in the heart, cuts him in the throat.

They stabbed the father with another child and stabbed the mother and left them dying in blood. And I visited the family and saw the 12-year-old girl, a sister, who came home and saw this unbelievable massacre. So obviously the first response is sheer horror.

And my second response was to send a message to the settlers to contain their rage and not respond, because we'd have a cycle of reprisals. So I asked them not to take the law in their own hands, not to have vigilante actions, because this would -- could generate a bloodbath.

I thought that was important to stop that. But we're now looking for the killers. We'll find them.

MORGAN: There was, to put it mildly, a raised eyebrow collectively around the world, first at the horrifying nature of this attack, and secondly, at your response. The premise of they murder, we build. You ordered the building of 500 more building settlements. It's a strange moral equivalence, prime minister.

Part of the problem that you face now in Israel is perception around the world. Your P.R. is not good, as you know. When people heard about what happened, I think the international community completely on your side and the people of Israel. When they see you immediately ordering more settlements -- I'm sure you did it to calm down the people, as you say -- a lot of that sympathy erodes.

People think, come on, there's got to be a better way of responding to this kind of thing than doing that.

NETANYAHU: Well, I wanted to send three message. The first one I told you about, and that is a message of restraint to settlers. The second is a message to the terrorists. And I was telling them, I know you think you're going to uproot us with this savagery, with violence, with terror. You're not going to uproot us.

So you kill us, you want to drive us into the sea, that's not going to happen. The only way we'll have a settlement is through peaceful negotiations. So you kill, we'll build. But coincidentally, I chose to build in the large populated areas that are going to stay in Israel anyway, and not 500 new settlements, but 500 apartments, which is very different.

Third, I wanted to send a message to the international community. I said to the international community that rushes to condemn every building that is built -- you know, a Jew builds an apartment in the Jewish homeland, what a terrible crime.

But they seldom go and condemn this kind of savagery without any ands, ifs, and buts. I wanted that condemnation. I was glad to see --

MORGAN: But is that true? Is that true? Does the community really not just condemn that kind of outrage out of hand? Because I read that they did. The point about the settlements is surely that you are trying to get a peace process that works. You're trying to get to some settlement.

You know, the Middle East Quartet only yesterday said they've almost given up hope that peace is achievable at the moment. You were the first prime minister of Israel to be born after '48. You have a key position in history here.

You've been prime minister before. You didn't get the peace process through then. You've got another chance now. Doesn't part of you, Benjamin Netanyahu, look at yourself and think, I want to be the guy that makes this happen, not the guy that didn't make it happen?

NETANYAHU: Seven prime ministers have tried to get peace with the Palestinians since the peace process began in Oslo in 1993. Some of them made extraordinarily generous concessions. And it didn't work, because the Palestinians, first under Arafat and now under Abu Mazen, have not picked it up. They refuse to go the distance and actually recognize the Jewish state and make the compromises that are required from both sides.

The entire world is focusing on the compromise that are necessary from Israel's side. And I'm prepared to make a lot of those compromises for peace. But they're not focusing on the fact that the Palestinians refuse to make the necessary compromises that are required on their side for peace.

And the simplest thing to do -- here you're talking about moving the peace process forward. What do you think is the best way to arrive at a negotiated settlement?

MORGAN: Honestly, what do I think?

NETANYAHU: Yeah.

MORGAN: When Sadat came to Jerusalem bearing concessions, it worked. Why don't you go to Ramallah and be the big guy? Why don't you take concessions that are perhaps more than you're prepared to give now and say, I'm calling the bluff here, not just of the Palestinians, but of the international community?

Because I tell you what would happen, the international community is desperate for this to work. They would come with you. And yes, there would be, of course, problems. Yes, there would be more outrages. Everybody knows that. But, in the end, somebody has to be the big guy here. And that could be you, couldn't it?

NETANYAHU: I'm pretty big.

MORGAN: Yeah.

NETANYAHU: We'll have to see.

MORGAN: You are.

When we come back from the break, I want to talk to you more about this peace process.

(COMMERCIAL BREAK)

MORGAN: Doesn't history need people to be courageous?

NETANYAHU: Yes, yes, it does. But peace requires two to tango. What I said -- I suggested the simplest thing -- is exactly what you're saying. I said to Abu Mazen flying around the world -- the Palestinian president. I said don't fly around the world. You want to make peace? Ramallah, where you sit, is ten minutes from Jerusalem, where we're sitting right now. I'm willing to come to you. You can come here. Let's sits down, shut the room.

You know, basically sit down until smoke comes out. That's the way you make peace. That's how we made peace with Egypt. That's how we made peace with Jordan.

MORGAN: Why isn't it happening?

NETANYAHU: Because I think that Palestinian society is split into two; those who are openly calling for Israel's destruction, like Hamas, and those who not calling openly for Israel's destruction but refuse to confront those who do. That's the Palestinian Authority. I think they're timid.

I think they're afraid to actually stand up to these killers. I think it's possible to see achieve that peace. I'll tell you what, I've always wanted it because I went through war. I went through war in Egypt, I nearly drowned in the Suez Canal in the firefight during the war of attrition.

MORGAN: You were shot yourself?

NETANYAHU: I was shot rescuing --

MORGAN: You know the realty of war. They always say military people that have been through that kind of thing, have seen friends, colleagues get killed, they understand better than most the need to bring peace.

NETANYAHU: Not only understand, but cherish it. I mean, I nearly died several times in firefights. I had a brother lost in battle. I had many friends lost. I mean, one of the experiences I remember was as an 18-year-old soldier, just a few short weeks after entering the army, holding a friend who died in my arms.

You don't want war. We want peace more than any other people. We pray for peace, yearn for peace, dream about peace. I want to make sure that the peace holds. And one of the things I've said in this part of the world, the only peace that would hold is a peace you can defend. So I'm willing to make that kind of peace, a peace with security.

MORGAN: What's the concession you're prepared to make to make this happen? You know, if you don't make one, if you don't do something dramatic here, nothing's going to happen. You'll go down as a guy who was prime minister twice and it never happened. I don't think that's a legacy you really want, is it? Why would you want that legacy?

NETANYAHU: The legacy that I want is that I helped secure the life of the Jewish state and its future. We did have -- we did act precipitously. We walked out of Gaza. We uprooted. Talk about concessions. We uprooted 10,000 Israelis out of Gaza, just eliminated the settlement that were supposed to be the obstacle to peace. We walked out. Iran walked in. We didn't get the peace. We walked out of Lebanon, every last one. We walked out. Iran walked in. Now they say just walk out of the West Bank. Make the concession, come on, do it again, third time. I would say the first condition of peace -- we'll make concessions obviously. We'll have to make territorial concessions. That's hard. This is our ancestral homeland.

MORGAN: Would you give up East Jerusalem? Everybody tells me you would if it came to it.

NETANYAHU: I don't know what everybody's saying. I'll tell you what we say. We say that Jerusalem has to remain united under Israel. That's our position going into the negotiations. I know it's a very emotional issue for the Palestinians. So we've agreed -- I've agreed to have this issue brought up in the negotiation tables.

We'll have to look for a very creative solution here.

MORGAN: I understand. But that's what you need to do.

(CROSS TALK)

MORGAN: If you made the big move, you know that the international community and crucially America would be absolutely side by side with you. They want this to happen. Also, it's no longer just about Israel and the Palestinians. It's about the region. The whole region's unstable. You have many battles to fight now.

NETANYAHU: The instability in the region is not a result of Israel and the Palestinians. That was never the cause of this instability. It's the dysfunctionality of many of these societies that have failed to --

MORGAN: That wasn't the point I was making. The point I was making, though, is that it's no longer the only story in town, is it?

NETANYAHU: No, it's not.

MORGAN: Isn't this a good time? Ironically, we're sitting here now with this part of the region being one of the calmer places. Isn't that the perfect time to make this happen?

NETANYAHU: If you can be sure of who your partner will be tomorrow. You're not even sure of that. You want to make sure that you have solid bulwarks of security. And you also want mutual reconciliation. We recognize the rights of the Palestinians for a state of their own, even though they're sitting in part of our ancestral homeland. It's very painful to do that.

But I've been doing it. I've been saying it. But they refuse to say that they recognize a Jewish state, a nation state for the Jewish people. I'm talking about those -- I'm not talking about Hamas. I'm talking about the Palestinian Authority that should confront Hamas, and confront their own people, and say, hey, it's over. We give up the ghost of dismantling Israel or dissolving Israel or flooding it with refugees.

It's over. No more war. No more bloodshed, just as Sadat said. I want to hear that clear statement.

MORGAN: Israel's been doing very well economically. You've been growing at five percent a year for a while. There's a real boom going on. Meanwhile, in the Palestinian refugee camps, the conditions are appalling. So you have a real them and us situation. There's no real urgency. And you could easily hide, if you wanted to -- I'm not saying are you doing this.

But you could hide behind the turmoil in the Middle East and say, you know what, we don't need to do this right now.

NETANYAHU: Not at all. First of all, Palestinian economy has been growing at 10 percent.

MORGAN: But there's no equivalence between what's happening in Israel and the state of refugees in Gaza. There can't be, come on?

NETANYAHU: Gaza's growing now at 17 percent because we lifted all the restrictions.

MORGAN: You wouldn't want your family living there, would you?

NETANYAHU: No, of course not. Certainly, I think the people of Gaza would like to be relieved of this Hamas tyranny and this Medievalism.

MORGAN: We'll take a short break. When we come back, I want to talk to you about Israel's position in the world now and the international community's view of Israel.

(COMMERCIAL BREAK)

(NEWS BREAK)

MORGAN: A point you made just before the break, the Palestinians have said that they're prepared to bring Hamas into government. What is your position? Could you ever imagine having any kind of workable administration that involved Hamas?

NETANYAHU: Can you imagine a peace deal with al Qaeda? Of course not. That is Hamas. Well, Hamas has a constitution. If it tore it up and -- the constitution calls for the annihilation of Israel. Not only that, but the expansion of radical Islam throughout the region and the world. If they got rid of that, yes, I could contemplate that.

If they stopped firing rockets or importing now rockets to launch on our cities, as we they -- just intercepted some Iranian rockets yesterday that were intended for Hamas. If they stopped terrorism, if they stopped calling for eradication, yes, of course we'll be happy to talk to them.

But the fact is Hamas has not stopped being Hamas. Hamas continue to call for our liquidation. So what am I going to negotiate with them, the method of our decapitation, the method of their exterminating us? Of course not.

Any country would take a stand against somebody that's completely committed to its obliteration.

MORGAN: Can I ask you about the suggestion in parts of the media that there is a growing tide of anti-Semitism in Europe? Do you believe that there is? And if so, why?

NETANYAHU: First of all, there's a difference in the way that the Europeans view Israel and Americans view Israel. But there's also anti-Semitism in Europe. There is the new boiling anti-Semitism of radical Islam that sweeps Europe as a whole. And there's a strange fusion -- that's the only word I can use to describe it -- a fusion with the anti-Semitism of the radical far, far left.

And this is the strangest union you could possibly contemplate, because the radical Muslims, they stone women. They execute gays. They're against any human rights and all, against feminism, against what have you. And the far left that is supposed to be for these things, they all unite on one thing, you know, bashing Israel, bashing the Jewish state.

And that's a terrible union, and one that I think should be excoriated and should be condemned, because the last thing these people have in mind is peace.

MORGAN: What happens if your continued inability to move this process forward means the international community decides that they're going to go away from you, go with the Palestinians, and set up a state of Palestine, recognize it officially? Where does that leave you?

NETANYAHU: In fact, that's what they're doing. They're actually accelerating the movement away from peace, because when the international community says to Israel, you're the only one that has to compromise, but they don't ask the Palestinians to compromise, to actually recognize the Jewish state, to understand that we'll have to have security arrangements, otherwise we could get Iran walking in, again, a third time, into territory that we vacate.

MORGAN: Are the Americans doing enough now?

NETANYAHU: If the international community says hey, listen, let's just line up with what the Palestinians say, why should the Palestinians negotiate? Why should they compromise? Peace requires mutual compromise.

MORGAN: That can't be good for Israel if that happens. And that could happen.

NETANYAHU: In fact, it's happening because a lot in the international community who think that they're advancing peace are lining up unilaterally with the Palestinian demands. And, in fact, what they're doing is they're pushing peace further away, because rather than compromise --

(CROSS TALK)

MORGAN: There's another way of looking at it. They're pushing Israel away. Isn't that worrying for you? What they're doing is isolating you and saying, if you don't do a deal here, and you're in a position to do this, well, OK, we're going to bypass you. That puts you in a more isolated position. Doesn't it?

NETANYAHU: You can't bypass -- you can't bypass the parties to peace. You can't impose peace from the outside. You can't have a fiat or a dictum that says thou shall have peace.

I'm prepared to negotiate a final agreement, but I need a partner. That partner right now, because of the international reflections of attitude against Israel, that puts the onus on Israel's side -- Israel is proven guilty -- is judged guilty until proven guilty. And the Palestinians are deemed innocent.

I say stop giving them a pass. You want peace? You have to get both sides to compromise. And above all, you have to get both sides to sit down and negotiate.

MORGAN: When is the last time you spoke to President Obama about this?

NETANYAHU: I speak to him regularly.

MORGAN: Is he as supportive now as he's always been?

NETANYAHU: I think there's no question he's expressed his support for Israel, especially for Israel's security. I have to say he's acted on it in ways that are not commonly known, because the United States has recently supported our anti-missile defense. We cooperate in security in ways that people don't normally know. So there's been --

MORGAN: Is he personally pushing you to make this happen? Is he saying, we need to do this? What can I do, President Obama, to help you, Prime Minister Netanyahu, make this deal happen?

NETANYAHU: He's said that quite a few times. And I told him what I think is required. And we're engaging in those discussions. I have to tell you a lot of it is not public.

MORGAN: The whole world is looking at Prime Minister Netanyahu to do something. They're looking to you to be the hero, not to be the villain. And I can't believe, given your love of history, given your position in Jewish history, that you don't want to be that guy that delivers what the world wants you to deliver.

NETANYAHU: Well, if I end up meeting your expectations, you'll have to invite me back to another interview, won't you?

MORGAN: I will do that with great pleasure.

NETANYAHU: I'll come with great pleasure.

MORGAN: Prime minister, I look forward to it.

NETANYAHU: Good to see you.

MORGAN: Thank you very much.

NETANYAHU: Thank you.