Simon: If the Israelis were to give Arafat everything he's asking for in Washington, here, a state in the West Bank with half of Jerusalem as its capital, dismantling of Israeli settlements, this would not be enough, this would not be a real peace.
Netanyahu: No because he's saying that what he wants is...to...flood Israel with millions of Palestinian refugees, which means the end of Israel.
Simon: The peace process was a two-state solution?
Netanyahu: Well they're talking about a one-state solution. One without Israel and it seems that the Palestinians don't want peace next to Israel or even a piece of Israel; they want all of Israel.
Simon: Are you saying that if Israel were to give the Palestinians everything they say they want, state in the West Bank, no Israeli settlements, East Jerusalem as its capital, Palestian sovereignty on the Temple Mount, that there could not be peace?
Netanyahu: Not if they continually educate their children to work for the elimination of Israel....They must face reality; Israel is gonna stay here. And once that acceptance of Israel's right to exist, not only the fact of its existence, permeates through the collective Palestian consciousness, then you can probably resolve such questions as border issues and other issues that have plagued this...conflict.
To his own people King Hussein said, as Anwar Sadat said: It's over, no more war, the peace is real. Arafat has not done that, he's done the very opposite.
Simon: Do you think he can do it? D you think he might do it?
Netanyahu: Well he hasn't done it so far so. My approach would be, let's do this instead of seeking the grand messanic, warm peace that has eluded us, the one shot deal, I would approach it in an entirely different way. The first thing is I would stabilize the situation.
Simon: Can you do that?
Netanyahu: You have to stop the ...use of violence. There are ways of doing it;...just by being a little more focussed, maybe a little...broader use of other means rather than force, administrative means or economic means that go to the regime itself rather than the...people.
Simon: In other words really squeeze them.
Netanyahu: The regime not the people. ...Right now what we're doing is what ...very comfortable for Arafat and the Palestinian leadership. He's got the Palestinian public and children in the pot, Israeli soldiers in the pot and he's cooking it to whatever fire he wants.
Simon: Do you think the Israeli army is not doing everything it could to dampen the violence.
Netanyahu: It's not a question of using overwhelming force but using it actually in a differet way, much more targeted to... achieving an end to violence rather than in a slow and steady escalation.
Simon: What's the difference between a cold peace and a cold war?
Netanyahu: Once the situation has stabilized, we have every right to demand of our Palestinian neighbors the change of message that is a message of reconciliation and peace as opposed to a message of incitement and war. We'd like to see the Palestinian textbooks changed so those Palestinian children learn to live with Israel.
Simon: So you think there could be one day real peace between Israel and the Palestinians?
Netanyahu: Yes I think there could be a better peace. I don't think that the Palestinians any more than the Chinese are going to become Western democracies. But I think the ability of the leader and the small clique around him, to control the minds and hearts of a couple of million people at a time and many more possibly, that's going to disappear from the face of the Earth.
Simon: Do you try to persuade them to accept less than East Jerusalem as their capital, for example?
Netanyahu: That will have to be taken in one way or...the other off the table....We have a very powerful attachment to that.
Simon: You are aware that the Palestinians are equally adamant about history?
Netanyahu: That's clearly not going to be resolved. And I think that once it's understood that there are issues that are not going to be resolved.
Netanyahu: Certainly not until the regimes around us change.... So until the nature of the regimes change, you're going to have a cold peace. ... What we have right now is a hot war, semi-hot.
Simon: OK, so if you're right, if Arafat ferments violence when he doesnt get what he wants at the negotiating table. But you say hes not going to get what he wants at the negotiating table. So you're the one fermenting violence, and Israel will go on deterring it.
Netanyahu: Well didn't happen with me, did it? He did it for a couple of months. he did it once or twice. but he stopped because he knew that the response would be very powerful indeed.
Simon: Well the cost he's facing right now? Palestinians killed every day.
Netanyahu: That's not a cost for him. That's a cost for the Palestinian people. It's a cost for the Palestinian families. But it's not a cost for the Palestinian leadership.'
Simon: So how do you make the Palestinian leadership feel the crunch?
Netanyahu: By letting the Palestinian leadership feel the crunch.
Simon: How do you do that?
Netanyahu: Well the economic assets that they control, and other things that are available.