UPDATED Gaza Latest: Ship Sent by Gadhafi's Son Breaking Israeli Blockade?

UPDATE 1315 GMT: Yousseuf Sawani, a director of the Gaddafi International Charity and Development Foundation, says there are no plans for the aid ship to dock at the Egyptian port of El-Arish.

"This is definitely a part of the campaign against the ship, a campaign of distortion, but we are definitely heading towards Gaza, because that is where aid should be heading to," he told Al Jazeera.
"This is a purely humane mission, it is neither provocative nor hostile," he said.

Israeli Foreign Minister Avigdor Lieberman maintained that West Jerusalem will not compromise: "I say very clearly, no ship will arrive in Gaza. We will not permit our sovereignty to be harmed," Lieberman said on Army Radio.

Gaza Special: UN Cancels Middle East Session But Begins Freedom Flotilla Enquiry

UPDATE 1030 GMT: The Libyan Government has told Greece that the aid ship will dock in el-Arish on the coast of Egypt's Sinai Peninsula.

"We confirmed their destination in talks with the Libyan ambassador and the ship's agent," Greek foreign ministry spokesman Grigoris Delavekouras told the Associated Press.

A Moldavan-flagged ship named "Amalthia", carrying aid from Libya, is departing from the Greek port of Lavrio, with 12 crew, 15 activists and supporters, and about 2,000 tons of humanitarian aid. The goods are supplied by the Gadhafi International Charity and Development Association, which is headed by Saif Al-Islam Gaddafi, the second-born son of the Libyan leader Muammar Gadhafi.

On Friday, Israeli ambassador to the UN Gabriela Shalev wrote to UN Secretary General Ban Ki-moon:

Israel calls upon the international community to exert its influence on the government of Libya to demonstrate responsibility and prevent the ship from departing to the Gaza Strip.

Israel reserves the right under international law to prevent this ship from violating the existing naval blockade on the Gaza Strip.

Reportedly having reached an agreement with both Greece and Moldova, Israeli Foreign Ministry announced on Saturday that the captain of the ship changed the destination to Egypt's el-Arish port.

Later Saturday, Palestinian Legislative Council member Jamal Al-Khudari and Israeli Arab MK Ahmed Tibi (Ra'am Ta'al) told the Palestinian news agency Ma'an that the aid ship will head to Gaza's port in the coming hours and will not be diverted.

Israel Video & Transcript: Netanyahu on CNN's Larry King

CNN's Larry King interviewed Israeli Prime Minister Benjamin Netanyahu about issues such as Palestine, Iran, Iraq, Lebanon, and relations with Washington.

Beyond his main theme of the "need to bolster Israel's security" vis-a-vis Iran's potential nuclear threat and its "terrorist proxies" in Lebanon and Gaza, Netanyahu --- following the political gifts he was given by the White House --- called on Ramallah to sit in direct negotiations if they want any further steps on the status of Israel's West Bank settlements. So, there will be no extension of the current moratorium on construction when it expires in late September.

The five parts of the 40-minute video are placed amidst the transcript:

[youtube]http://www.youtube.com/watch?v=tBiQsjcvDNI&feature=related[/youtube]

US-Israel Video: Obama “The Problem For Some Might Be My Middle Name”
Middle East Inside Line: US Secretly Pledges Sale of Nuclear Technology to Israel (Ha’aretz)
Israel-US Analysis: Netanyahu Wins — 1, 2, 3, 4 Times — in Talks With Obama (Yenidunya)

LARRY KING, CNN HOST: Tonight, a prime-time exclusive. Israel's Prime Minister Benjamin Netanyahu on the Palestinians.

BENJAMIN NETANYAHU, PRIME MINISTER, ISRAEL: I think it requires courage on the Palestinian side to say, hey, it's over, no more war, no more bloodshed, we're going to make a genuine peace with Israel.

KING: Peace talks.

NETANYAHU: President Abbas, the Palestinian president, meet me and let's talk peace.

KING: And Israel's bond with the United States.

NETANYAHU: We have both common values and unfortunately common enemies.

KING: Was his meeting with President Obama a turning point finally marking a thaw in an icy relationship? Benjamin Netanyahu for the hour is next on "Larry King Live."

(END VIDEO CLIP)

KING: We only go back -- well, almost 30 years. B.B., that's his nickname, but I have to refer to him as Prime Minister Netanyahu because that's formality here. Benjamin Netanyahu, the Israeli prime minister in New York, a city he knows very well, used to be ambassador to the U.N. Let's get right to it. It's good seeing you again, by the way.

NETANYAHU: Good to see you, Larry. You didn't have to reveal how far back we go together.

KING: That's right, you got a point. A few months ago, you went to the White House. It didn't go too well. What changed yesterday?

>NETANYAHU: I think there's an underlying relationship there that people don't appreciate. We have our ups and downs. People focus on the downs and the downs are exaggerated and sometimes distorted. But there is ups and there's a basic bedrock of identification, common values between Israel and the United States. The president gives it expression. I give it expression. And yesterday's meeting gave it expression. I think there is a solidity of ties between Israel and the United States that the president of the United States and the prime minister of Israel reflect in their meeting

KING: No matter who holds the posts?

NETANYAHU: I think every prime minister, every president, has his own points, his own viewpoints, but there's a common position of friendship and a basic alliance that is there, that really is continued by all leaders, whoever they are. That was definitely the case yesterday.

KING: Mr. Prime Minister, have there been times, though, since President Obama took office, where you felt that friendship or that tie weakened?

NETANYAHU: No, a lot of things that the public is not aware of that throughout the year and some that I've been in office, we've had continuous cooperation in the fields of security, in the fields of intelligence, in the fields of vital strategic importance to Israel and the United States. And that seems to go unnoticed or unremarked. People always focus on differences of views that we may have. They're minor compared to the things that unite us.

We have -- Israel is the only democracy in the Middle East. America's the world's greatest democracy. We have both common values and, unfortunately, common enemies. The people who attack the United States and the Middle East attack Israel. The people that we are fighting are the people you are fighting. So there's a great commonalty, a great cooperation that goes underneath the surface. And sometimes, I'm happy to say, it does come to the surface. It did yesterday. It really should be an indication of something that guides our relationship throughout.

KING: So there's no time that you question President Obama's commitment to your country?

NETANYAHU: No. And I think there's no time that he questioned Israel's unwavering commitment as a firm American ally. I would say there is no greater ally, no greater friend of the United States, than Israel. And there is no greater friend and no greater ally of Israel than the United States.

KING: There were those who were saying, though, in the past few months, until that meeting yesterday, the relationships were at the lowest they have been in 35 years. Do you buy that?



NETANYAHU: Look, no, I don't. I think the support for Israel and the American people and the intertwining of interests and cooperation between our governments is increasing all the time. It's obscured by the bumps on the road. But there's no question that the road is going forward and going upwards, I have no doubt about that.

KING: All right, let's get into some things. Mr. Prime Minister, you say that you want to have direct talks with the Palestinians. So when are you and President Abbas, the Palestinian Authority, going to sit down? When's it going to happen? It's so frustrating to the world --

NETANYAHU: That's a very -- that's an excellent question that I've been asking for a year and a quarter, ever since I got into office. On day one that I got in, I said President Abbas, the Palestinian president, meet me and let's talk peace.

And I use this forum today, on the "Larry King" show, to say, President Abbas, meet me, and let's talk peace. We all have our grievances. We all have our, you know, our questions and things that we want answered. But the most important thing is to get together, sit down in a room and begin to negotiate peace. You cannot resolve a conflict, you cannot successfully complete a peace negotiation if you don't start it.

And I say let's start it right now, today, tomorrow, in Jerusalem, in Ramallah or anywhere else. I'm prepared to go to a warm city like New York or a cool city anywhere. Let's get on with the business of talking peace and concluding the peace agreement.

KING: So, forgive me, what's holding it up? He could watch this show. We did a show some years ago with Arafat, with Yitzhak Rabin and King Hussein of Jordan, a historic show. I was in Washington. The three of them were in their homelands. It was terrific. Why can't -- would you do that, if we had you and Abbas and we had the king of Jordan on? Could we do that now?

NETANYAHU: You're on, Larry. From my point of view, immediately, no problem.

KING: All right. So if we worked on that, we could set it up? Because it's -- it's frustrating -- go ahead.

NETANYAHU: Well, I'm just saying that you're hitting the nail right on the head. I mean, what is there to prevent a meeting between the prime minister of Israel, in Jerusalem, and the president of the Palestinian Authority, Mahmoud Abbas, who's 10 minutes away in Ramallah, that's when you have traffic. Without traffic, it's seven minutes.

I really like and respect Senator George Mitchell, President Obama's envoy to the Middle East. But I find it perplexing and unnecessary that president -- that Senator Mitchell has to travel halfway across the world to relay messages between President Abbas and myself. There's no need for that. We should sit down. We have very serious issues to discuss. Our security, the question of where the borders will end up, the question of settlements, the question of Palestinian refugees, the question of water. All these things are crucially important.

The only way that they're going to be resolved is if we actually sit down and negotiate a peace. I think leaders have to do exactly that. I think we have to break molds, break stereotypes, and cut right through to a solution. I'm prepared to do it. I'm prepared to lead. And I hope that President Abbas hears my call, responds to it. I think we'll have important and steady help from President Obama. But there is no substitute for the two leaders. The leader of Israel and the leader of the Palestinian Authority, to get down together, talk peace and make peace.

KING: And we can kick it off on this show. We'll be right back with Benjamin Netanyahu, the Israeli prime minister. Don't go away.

(COMMERCIAL BREAK)

[youtube]http://www.youtube.com/watch?v=vZ1yfuzD-lw&feature=related[/youtube]

KING: We're back with Prime Minister Netanyahu. He is in New York. We're in Los Angeles. What about the settlements issue? President Obama said yesterday he expected talks to begin before the moratorium on settlement construction expires which is late September. Will you extend the moratorium, by the way, if things aren't settled by late September?

NETANYAHU: Larry, the whole settlement issue was supposed to be discussed in the final peace -- what are called final status peace negotiations, which means how to achieve a final peace. This is one of the issues we have to resolve.



Seven months ago, I did something quite extraordinary, that is, no other prime minister in Israel's history did this. I put on a temporary freeze of 10 months of new construction in the settlements in order to encourage the Palestinians to get into the peace talks. Seven months have passed by. They don't come in. They say, oh, we need now, another extension. And the answer is, right now, listen, we don't need any pretext and preconditions. Let's just get into the talks.

And one of the things we'll discuss, right away, is issues of settlements. And that's what I propose doing. In any case, what is important is to get down and talk. That's the important thing.

KING: President Clinton once said to me that the difficulties in the Middle East are harder to solve than Ireland/England. That it's so deep rooted and so frustrating. Can you explain to a waiting world why you can't get together?

NETANYAHU: I can, and I'm offering to do exactly that. I think there's been a persistent refusal in many Arab quarters to recognize the state of Israel borders. I think the issue of borders is important. It's related to our security. But the issue of recognition, the basic recognition of the Jewish state that exists in the Middle East, that is the homeland of the Jewish people, that lives in peace and security with its neighbors, is something that is recognized by some.

We made peace with Egypt. We made peace with Jordan. I think it's important to make peace with the Palestinians. And I'm prepared to negotiate that peace right away. I think it requires courage on the Palestinian side for all those who don't really want a peace with Israel, to stand up and do what president -- the late president of Egypt, Anwar Sadat did, and to say, hey, it's over, no more war, no more bloodshed. We're going to make a genuine peace with Israel. I'm prepared to have a demilitarized Palestinian state live next to the Jewish state of Israel.

I think the Palestinians should not be either subject of Israel or citizens of Israel. They should have their own independent country. And we should be assured that this country is not used as a staging ground for Iranian-sponsored terrorist attacks on us. And I think this combination of state for the Palestinians and security for Israel is something that can be brought about in direct negotiations that I propose to start without any preconditions, without any pretext.

KING: Right.

NETANYAHU: Leaders don't need excuses. They just have to get on with it and I'm prepared to get on with it.

KING: Do you -- you absolutely favor a Palestinian state though, right?

NETANYAHU: I do. And I want to make sure that it -- that we don't have a repeat of what happened in the other two times that we vacated territory. You know, we left Lebanon, every last square inch of it. And Iran came in and used it as a staging ground to launch 6,000 rockets on Israel's cities, 6,000.

We left Gaza, last square inch, and Iran used it to arm its proxies and fired another 6,000 rockets. So we can't afford that happening a third time. Now, when I say that, Larry, you can now reach one of two conclusions. Either don't make any peace attempt or ensure that the peace you do make has the necessary security arrangements on the ground to prevent this from happening a third time. That's what I propose to do. And I think it's possible to fashion a secure peace for Israel and a dignified peace and a dignified life for the Palestinians. I discussed this at some length yesterday with President Obama. And I'm very happy with the progress of those talks.

KING: All right. But Abbas isn't the only leader we have to concern ourselves with. Would you sit down with Hamas?

NETANYAHU: I'll sit down with anyone who will recognize my existence. Somebody who calls for our destruction, my destruction, is unfortunately not a partner for peace.

KING: So you would not sit down --

NETANYAHU: -- Hamas that calls -- well, you know, would you sit down with somebody who said we want to destroy the United States? Now come and talk to us?

KING: Do you think they can -- that can change at all? Do you think there's some way -- Secretary Mitchell, Senator Mitchell maybe somewhat in between can get a little tempering of the language? I mean, we're trying for the same result here. Nobody gets killed hopefully.

NETANYAHU: I think in the case of Hamas, it's basically a proxy, a terror proxy of Iran. Iran openly calls for our destruction. It denies the Holocaust. It sponsors terrorism everywhere. It brutalizes its own people. Hamas, by the way, does the same thing to the Palestinians in Gaza. They don't really have a choice. They can't really vote the Hamas out. They can't decide their own fate.

But look at what is happening in the West Bank with our cooperation. You know, we removed -- I removed hundreds of check points, hundreds of road blocks. And the Palestinian economy on the West Bank is just booming. I mean, there's coffee shops, there's shopping malls, there's e-businesses, you name it. It's growing at about 8 percent or 9 percent a year which isn't bad these days.

And I'm very happy for that. And I want to add on to that a formal peace -- peace with security and prosperity. Hamas is totally the other way around. They are -- you know, they're subjecting their own people to terrible things. And they're using the territory to just stockpile weapons. I wish they -- I wish they'd change, and I wish they'd accept the state of Israel. But as long as they call for our destruction, there's not much we can do.

KING: We'll be right back with the prime minister of Israel after this.

(COMMERCIAL BREAK)

[youtube]http://www.youtube.com/watch?v=CmFXiSywswI&feature=related[/youtube]

KING: We're back with Prime Minister Benjamin Netanyahu of the state of Israel. Your coalition, we know this, has some right wingers who don't agree with the notion of a Palestinian state. You have some difficulties. There are always inner politics going on. Is there any way, a pragmatic way, to bring you and the Kadima together?

NETANYAHU: Well, I've called for a national unity I've formed one. I've formed Likud labor alliance. And I'm always happy to broaden it to people who want to serve the nation. You know, getting into the intricacies of Israeli politics would take a lot more of -- even a long program of "Larry King." It's a subject of encyclopedic advantage.



KING: Back to the difficulties. In May, Israeli forces stormed a ship on a humanitarian mission to Gaza. Several Turkish activists were killed. I don't know if you've -- have you ever publicly said that you were wrong to do this?

NETANYAHU: Well, we were definitely sorry about the loss of life. But I'll tell you what happened. First of all, why do we check ships that go to Gaza? Because we are concerned with the flow of -- the possible flow of weaponry into Gaza. We've had, as I said, thousands of rockets fired on us.

I think that what people fail to recognize is that there were six ships. Five of them were totally peaceful and nothing of substance happened. Our navy checked these ships. And we didn't have any incident. The sixth ship was very different. It had about 500 people on it, of which about 450 were peaceful people.

But several dozen were activists of a very radical group that had apparently amassed steel rods, knives, communication equipment. They boarded differently than the other passengers, the other 450 passengers, boarded in one port in Turkey. They went through security checks. These people boarded in another port in Istanbul. They didn't go through any security checks. They had their own communication equipment. They had their own -- their own steel pipes and things that they brought on board.

And when our Coast Guard effectively wanted to check this ship and make sure that it behaved the way the other five did, they were brutally attacked. You can see that in the films that were released. Our soldiers, our navy people were fighting for their lives.

What would you do if the Coast Guard boarded a ship and the Coast Guard was brutally attacked by people who were, you know, clubbing them, knifing them, taking weapons from them, shooting at them? What do you think would happen? How do you think the American people would respond?

KING: OK. But how do you repair the damage with a state you need to be friendly, Turkey?

NETANYAHU: Well, you're quite right, that Turkey and Israel had an important relationship. Turkey's a very important country in the Middle East. I think that the relationship began to deteriorate with the Turkish policy, a new policy, that basically veers away from the West and I think Israel -- what has happened with Israel as a result of that policy and not its cause.

But nevertheless, I look for every opportunity to see if we can stop this deterioration and somehow get things back to normal or relatively normal. Last week, I authorized a meeting with one of my senior ministers and the Turkish foreign minister. They met in Zurich, in the airport.

I can't tell you that something positive came out of it. But I want to feel, as prime minister of Israel, that I leave no stone unturned in the quest for -- the quest for a broader peace, and the quest of good relations with our neighbors. And even though it may not succeed right now, we'll keep trying.

KING: Will you meet with Turkish leaders?

NETANYAHU: Sure.

KING: We'll take a break. We'll be right back with more of the Israeli prime minister. Don't go away.

(COMMERCIAL BREAK)

KING: We're very interested in your comments, Mr. Prime Minister, on the statements made by former American President Jimmy Carter. He called the incident with the ship, the attack on the ship, unprovoked and an illegal Israeli assault. He also says, there's no way to realize a two-state solution, while, quote, "the people of Gaza remain isolated and deprived of basic human rights." How do you respond to President Carter? NETANYAHU: Well, first of all, I think he's wrong on the incident. I described to you what happened.

KING: All right.

NETANYAHU: We regret the loss of life, but we don't apologize for our soldiers defending themselves. And I think that's obvious. Secondly, I think the people of Gaza are, indeed, incarcerated by Hamas. Third, I removed all the civilian -- civilian closure that we had. That is, the prevention of free flow of civilian goods, food, medicine, anything, toys. I actually changed a policy that I inherited from the previous government. And it put both civilian closure on Gaza and a security closure.

I said we really have to be clear about our policy. Our policy is that weapons and war-supporting material don't go in. And everything else should go in. Food and everything else should go in. So I changed that policy. And I'm glad I did it, because I think there's clarity and there's common sense in it. I'm sorry that not everyone can see that. But I think fair minded people can see it and, in fact, do.

KING: Does it pain you personally to have a former president of the United States be so critical of your country?

NETANYAHU: Well, I'm sorry he thinks that. I think the majority -- the overwhelming majority of Americans see things differently. I think -- I think successful presidents, including this one, see things differently. And the important thing is to -- is to be true to the facts.

The facts are that Israel was attacked from Gaza. The fact is that we had -- that Iran sends weapons into Gaza so they'd be fired on us. The fact is that this regime, Hamas, is holding an Israeli soldier that they kidnapped for four years. Four years this soldier, Gilad Shalit, has not been allowed to see anyone. They don't allow the Red Cross to visit him. This is a complete violation of international norms. I think if anything bears condemnation, it is this -- this inhumane terrorist regime.

And I would hope that international condemnation is directed there. That's where it belongs, and not against Israel, a struggling democracy, striving to live and to make peace with its neighbors. It should not be condemned. It should be encouraged to --

(CROSS TALK)

KING: Does it concern you, Mr. Prime Minister, that Israel's image around the world is poor? You're not in high regard at the U.N. You seem to be, from a public relations standpoint, pr standpoint, in trouble.

NETANYAHU: Well, that's one of the reasons I'm appearing on "THE LARRY KING show." There's a difference between perception and reality. The reality is the people of Israel yearn for peace, pray for peace. We've not had a day's peace, a day of complete peace, since the founding of the state in 1948. We know the cost of wars. There's -- many Israelis have suffered it. I've suffered it personally. I've lost a brother in the war between the wars known as terror. Many of my friends have lost direct relatives.

We know the loss of war. We know the sorrows of war. We know the blessings of peace. Yet, at the same time, we forged a peace agreement with Egypt. We forged a peace agreement with Jordan. And throughout these years, we built a robust economy. Israel is a beehive of creativity and innovation. The economy is growing. It's one of the best performing economies in the developed world.

There's a story there that doesn't get told, both of our desire for peace, our sacrifices for peace, and our building of a better reality. And I can envision, if we had the kind of peace I envisioned with the Palestinians, we could see what we're seeing now in the West Bank, this great prosperity envelop the entire region.

I think Israel could make a tremendous contribution to the well- being of its Arab neighbors. I think peace could bring for our children, my children and their children, something beyond their imagination. It could be a different life, a different reality. And I'm prepared to do it. I'm prepared to move and lead my people to that peace. I need a partner on the other side.

KING: When we come back, we'll talk about Iran with the president -- with the prime minister of Israel, right after this.

(COMMERCIAL BREAK)

[youtube]http://www.youtube.com/watch?v=Q8jp5BgalLM&feature=related[/youtube]

KING: Mr. prime minister, Iran, how much -- the word fear apply -- how much do you fear their intentions? Do you -- do you -- what's the worst-case scenario to you?

NETANYAHU: Well, we've learned in history and in Jewish history to take seriously those who call for our extermination. A lot of people in the past century, the 20th century, didn't take such calls seriously. And we know the awful price that was paid by the Jewish people and later by rest of humanity for not taking seriously these kinds of statements. The fact that after the Holocaust, a sovereign government at once denies the Holocaust and calls for the destruction of the Jewish state is just outrageous.

Do we take it seriously? Absolutely, we take it seriously. We also know that Israel was founded to defend the Jewish people. So we reserve always the right to defend ourselves.



KING: If you determined that they had nuclear capability, would you attack Iran?

NETANYAHU: You know, I've taken note of President Obama's statement that he's determined to prevent Iran from acquiring nuclear weapons. I see that sanctions have been adopted, modest sanctions at the U.N. But more robust sanctions recently by the Congress was signed by the president the other day. I hope the other nations follow America's lead in this. Will it be enough to stop the Iranian nuclear program? I can't tell you, Larry. I do tell you that the president has said that all options are on the table. And I do tell you that Israel always reserves the right to defend itself. That's the purpose for which it was founded, to defend Jewish lives.

KING: Assuming -- Israel has never said it has nuclear weapons, but the world thinks it does. Why is it OK for Israel to have nuclear weapons and Iran not to have nuclear weapons? Hypothetically, if Israel has them, why is it OK for them to have them and the other not?

NETANYAHU: Well, we said we wouldn't be the first to introduce these weapons into the Middle East. But equally, we're not threatening to destroy any country. We don't seek the destruction of any country or any people. We don't say that an entire people has to be wiped off the map of the Earth. We don't have such intentions.

And I think all nuclear proliferation is bad. But some of it is a lot worse. It does make a difference whether Holland has nuclear weapons, or the Ayatollah regime that sponsored terrorism and calls for Israel's destruction, whether it is nuclear weapons. And I think there's a common understanding right now, something that I spoke about 16 years ago, 14 years -- to be precise, 1996, when I was elected, 14 years ago. I spoke before the joint session of the U.S. Congress. I was just elected prime minister. And I said that the greatest threat facing humanity is that Iran would acquire nuclear weapons.

Some eyebrows were raised at the time. I can tell you, 14 years later, that most of the world's leaders today agree with this. There is a question of the distance between understanding and effective action, and that is the ultimate test of leadership and history.

KING: Would you ban all nuclear weapons throughout the -- the world -- would you ban nuclear weaponry entirely?

NETANYAHU: Well, that's beyond my scope. I mean, this is -- this is a worthy cause, but it's -- it's a very complicated issue. And I'm sure you realize that the most important thing is preventing the most dangerous weapons in the world from falling into the hands of the most dangerous regimes. And this is what we really are facing today. We're facing the prospect that people who talk about destruction, who deny the Holocaust, who sponsor terrorism everywhere, who shoot their own citizens on the sidewalk -- you know, they lie there.

Remember that young woman lying there, choking in her own blood. These people who have absolutely no inhibitions about the use of violence and brutality would acquire the weapons of mass terror, the ultimate mass terror weapons, which is atomic bombs. That's a very, very dangerous development for all of us.

KING: Would there be any point -- may sound ridiculous, but speaking is better than killing. Would there be any point for you to sit down with Ahmadinejad?

NETANYAHU: Well, if he wanted to change the policies of Iran. We used to have friendly relations with Iran. It actually recognized Israel. We had exchanges all the time. But, you know, tell me -- when Ahmadinejad decides to recognize the state of Israel and seek peace with it, believe me, I'll be there eagerly waiting. But I'm afraid I don't see that. I see the very opposite.

KING: Some more moments. We have a couple segments left with the prime minister of Israel, Benjamin Netanyahu. Don't go away.

(COMMERCIAL BREAK)

(NEWS BREAK)

KING: We're back with Benjamin Netanyahu, prime minister of Israel. So thankful to give us this hour tonight on "LARRY KING LIVE." As we say, we go back a long way. What do you make of Iraq -- no, no, well, I'm leaving "LARRY KING LIVE" in November. But I'm going to be around. We're going to do specials. We're going to come to the Middle East.

NETANYAHU: Oh, good. Good, I'll -- then I'll entertain you again in Israel. It will be a good refresher.

KING: It will be my pleasure. Don't forget, you committed, if we can get all three leaders on together, we're going to do that show.

NETANYAHU: You can do it anytime. You have one.

KING: OK. Are you -- well, I think we can get Jordan. If we get -- we're fine if we get Abbas. What do you make of what's going to happen in Iraq? Will that hold together?

NETANYAHU: I hope so. I mean, we are -- we are rooting for the success of the American effort and of the Iraqi effort to stabilize Iraq. It went through a very difficult period. We want to see a peaceful Middle East. We want to see a moderate Middle East. I think there's a larger battle taking place between the forces of modernity and the forces of Medievalism. There's no other word that I could use to describe this militancy that tries not merely to eradicate Israel, but to bring down any moderate government in the Arab world and in the Middle East.

In a way, there's a -- this is the first time in my lifetime that the -- many of the Arab governments and Israel understand that there's a great -- a great foe that threatens all of us. And that is the basis of a broader understanding. I don't think peace should be merely forged by common dangers. It should be forged also by the benefits, the blessings of peace, economic blessings, the human blessings of every sort. But today the context of the peace is made perhaps more likely and more possible because of this common enemy that threatens Israel and Arab countries alike.

KING: What's -- what about Hezbollah, Lebanon, that -- four years since the war with Hezbollah and Lebanon. Are you still concerned about them?

NETANYAHU: Unfortunately, yes, because it is basically an Iranian terror proxy. Look, Lebanon was the Switzerland of the Middle East. It had -- it's a very beautiful country. It had robust economy. And Iran has moved its surrogates, Hezbollah, into Lebanon. It has piled weapons there. They fire those weapons on Israel. They undermine any attempt at moderation, any movement towards peace.

We always hoped that Lebanon -- we always said, we don't know who the first country to make peace with Israel, which country that would be, but certainly Lebanon would be the second country. And, you know, it hasn't happened, not because many Lebanese don't want it, but because radical forces, pro-Iranian forces, like Hezbollah, are preventing it.

And so you have these two enclaves next to Israel, one in the south, Gaza, controlled by one proxy of Hezbollah, preventing the people there from making peace with Israel. And then another enclave in the north, in Lebanon, controlled by another Iranian proxy, Hezbollah, preventing the Lebanese from making peace with Israel, and threatening to throw the entire region into a maelstrom of violence and terror. That's happened before. I hope it doesn't happen again.

But Hezbollah and Hamas are basically Iranian surrogates. As long as Iran doesn't want peace, they don't want peace.

KING: Touch some other bases before you leave, as we have one segment to go. You've invited President Obama to to visit Israel. What has he said?

NETANYAHU: Well, you know, he'll decide the appropriate time. But I have to tell you that we had a very, very, very productive conversation. And I think that when we have a chance to sit, as we do, one on one, I think it's very, very productive for Israel, for the United States and for the quest for peace.

KING: We'll be back with our remaining moments with the prime minister after this.

(COMMERCIAL BREAK)

[youtube]http://www.youtube.com/watch?v=kTAVbmRPa8E&feature=related[/youtube]

KING: Couple of other things, Mr. prime minister. How would you describe the relationship of your country with Secretary of State Clinton? And how do you measure her work in the peace process?

NETANYAHU: I greatly respect Secretary Clinton. You know, I worked with her husband, Bill. I got to know Hillary on her visits to Israel. She's always a welcomed guest. I think she's knowledgeable. I think Secretary Clinton was a very wise choice on the part of President Obama. And we'll be happy to work with her if the president so designates, and he often does.



KING: There's some video getting a lot of attention on the web, supposedly of Israeli soldiers dancing while on patrol in Hebron. What do you know of that?

NETANYAHU: I don't know. I hear it for the first time.

KING: So do I. They gave me a note here and said it's on the web.

NETANYAHU: I don't know. If you talk to me -- if you want to invite me again, I will be able to respond to it.

KING: We'll invite you any time. Are you ever able -- you're prime minister of Israel. A previous prime minister was assassinated. You live in the center of a hostile world. Are you ever able to really relax?

NETANYAHU: Yeah. You know, yes. And I'll tell you when. Every Saturday, our Sabbath, we have a day off. It's a very good idea that this institution was brought into the world. So I have a day off. And every Saturday, I take an hour and a half, and I read from the Bible with my younger boy. He has just won the National Bible Championship in Israel and he came third in the international. It's like the big spelling bee, you know, huge.

I relax then. I draw a lot of spiritual strength. You know, I used to teach him. He is now 15. But in the last couple of years, he teaches me. So, yes, I draw enormous reservoirs of strength and I think that is needed for all leaders, but especially for the leaders of Israel.

KING: Four years ago, the former prime minister, Ariel Sharon, suffered a stroke. He is still alive. Do you ever go to see him? What is that story?

NETANYAHU: It's a tragedy. Ariel Sharon was one of the great leaders of Israel. He's, in my judgment, the greatest general that Israel has had in modern times. He has contributed a lot to the country. And, unfortunately, he suffered, as you say, the stroke. We can all pray that somehow he miraculously recovers. But that has not happened yet. But I think the people of Israel value his contributions. I certainly do.

KING: Earlier in the program, you mentioned that Hamas is still holding Gilad Shalit -- I believe that's the way you pronounce his name -- the Israeli soldier they captured four years ago.

NETANYAHU: Yes.

KING: Any late word on any efforts?

NETANYAHU: Well, we've had a German mediator, very able man, trying to broker the release. I'm prepared to release 1,000 Palestinian prisoners for Gilad. But so far there's not been an official response of Hamas to this offer that the mediator has made. I have accepted it. They have not. I can only hope that they change their mind.

KING: In our remaining moments, Mr. prime minister, do you think -- how old are you now?

NETANYAHU: I'm 60 years old, Larry. And showing it.

KING: Do you think that in your lifetime, you will really see peace in your region?

NETANYAHU: I think it's possible to achieve it, yes. Will we achieve it with the entire Middle East? That, I cannot say. Can we achieve it with the Palestinians? I say absolutely. I say that with conviction, because I think it's a question of a rightness for our people's perspective. There is already time. It's now. I think for many Palestinians, the time is now. And I'm prepared to make that effort.

It requires a lot of courage. Maybe that's the quality that supersedes all others. Because if you don't have courage, everything else fails. But if you have it, then everything else is possible. We have the courage to make peace. And I hope -- I fervently hope that our Palestinian neighbors have similar courage. With the help of the United States, I think it can be done, yeah. Absolutely.

KING: Thank you, Mr. prime minister. Have a safe trip home. We hope to see you again very soon.

NETANYAHU: Thank you. Come and visit us, Larry. Thank you.

KING: Prime Minister of Israel Benjamin Netanyahu.

Israel Video & Transcript: The Netanyahu-Obama Meeting (6 July)

Israel-Palestine Analysis: The Weight of the West Bank Settlements (Yenidunya)

PRESIDENT OBAMA:  Well, I just completed an excellent one-on-one discussion with Prime Minister Netanyahu, and I want to welcome him back to the White House.

I want to, first of all, thank him for the wonderful statement that he made in honor of the Fourth of July, our Independence Day, when he was still in Israel.  And it marked just one more chapter in the extraordinary friendship between our two countries.



As Prime Minister Netanyahu indicated in his speech, the bond between the United States and Israel is unbreakable.  It encompasses our national security interests, our strategic interests, but most importantly, the bond of two democracies who share a common set of values and whose people have grown closer and closer as time goes on.

During our discussions in our private meeting we covered a wide range of issues.  We discussed the issue of Gaza, and I commended Prime Minister Netanyahu on the progress that's been made in allowing more goods into Gaza.  We've seen real progress on the ground.  I think it’s been acknowledged that it has moved more quickly and more effectively than many people anticipated.

Obviously there’s still tensions and issues there that have to be resolved, but our two countries are working cooperatively together to deal with these issues.  The Quartet has been, I think, very helpful as well.  And we believe that there is a way to make sure that the people of Gaza are able to prosper economically, while Israel is able to maintain its legitimate security needs in not allowing missiles and weapons to get to Hamas.

We discussed the issue of Iran, and we pointed out that as a consequence of some hard work internationally, we have instituted through the U.N. Security Council the toughest sanctions ever directed at an Iranian government.  In addition, last week I signed our own set of sanctions, coming out of the United States Congress, as robust as any that we've ever seen.  Other countries are following suit.  And so we intend to continue to put pressure on Iran to meet its international obligations and to cease the kinds of provocative behavior that has made it a threat to its neighbors and the international community.

We had a extensive discussion about the prospects for Middle East peace.  I believe that Prime Minister Netanyahu wants peace. I think he’s willing to take risks for peace.  And during our conversation, he once again reaffirmed his willingness to engage in serious negotiations with the Palestinians around what I think should be the goal not just of the two principals involved, but the entire world, and that is two states living side by side in peace and security.

Israel’s security needs met, the Palestinians having a sovereign state that they call their own -- those are goals that have obviously escaped our grasp for decades now.  But now more than ever I think is the time for us to seize on that vision.  And I think that Prime Minister Netanyahu is prepared to do so.  It’s going to be difficult; it’s going to be hard work.  But we've seen already proximity talks taking place.  My envoy, George Mitchell, has helped to organize five of them so far.  We expect those proximity talks to lead to direct talks, and I believe that the government of Israel is prepared to engage in such direct talks, and I commend the Prime Minister for that.

There are going to need to be a whole set of confidence-building measures to make sure that people are serious and that we're sending a signal to the region that this isn’t just more talk and more process without action.  I think it is also important to recognize that the Arab states have to be supportive of peace, because, although ultimately this is going to be determined by the Israeli and Palestinian peoples, they can't succeed unless you have the surrounding states having as -- a greater investment in the process than we've seen so far.

Finally, we discussed issues that arose out of the Nuclear Nonproliferation Conference.  And I reiterated to the Prime Minister that there is no change in U.S. policy when it comes to these issues.  We strongly believe that, given its size, its history, the region that it’s in, and the threats that are leveled against us -- against it, that Israel has unique security requirements.  It’s got to be able to respond to threats or any combination of threats in the region.  And that's why we remain unwavering in our commitment to Israel’s security.  And the United States will never ask Israel to take any steps that would undermine their security interests.

So I just want to say once again that I thought the discussion that we had was excellent.  We’ve seen over the last year how our relationship has broadened.  Sometimes it doesn’t get publicized, but on a whole range of issues -- economic, military-to-military, issues related to Israel maintaining its qualitative military edge, intelligence-sharing, how we are able to work together effectively on the international front -- that in fact our relationship is continuing to improve.  And I think a lot of that has to do with the excellent work that the Prime Minister has done.  So I’m grateful.

And welcome, once again, to the White House.

PRIME MINISTER NETANYAHU:  Thank you, Mr. President.

The President and I had an extensive, excellent discussion in which we discussed a broad range of issues.  These include of course our own cooperation in the fields of intelligence and security.  And exactly as the President said, it is extensive.  Not everything is seen by the public, but it is seen and appreciated by us.

We understand fully that we will work together in the coming months and years to protect our common interests, our countries, our peoples, against new threats.  And at the same time, we want to explore the possibility of peace.

The greatest new threat on the horizon, the single most dominant issue for many of us, is the prospect that Iran would acquire nuclear weapons.  Iran is brutally terrorizing its people, spreading terrorism far and wide.  And I very much appreciate the President’s statement that he is determined to prevent Iran from acquiring nuclear weapons.

That has been translated by the President through his leadership at the Security Council, which passed sanctions against Iran; by the U.S. bill that the President signed just a few days ago.  And I urge other leaders to follow the President’s lead, and other countries to follow the U.S. lead, to adopt much tougher sanctions against Iran, primarily those directed against its energy sector.

As the President said, we discussed a great deal about activating, moving forward the quest for peace between Israel and the Palestinians.  We’re committed to that peace.  I’m committed to that peace.  And this peace I think will better the lives of Israelis, of Palestinians, and it certainly would change our region.

Israelis are prepared to do a lot to get that peace in place, but they want to make sure that after all the steps they take, that what we get is a secure peace.  We don’t want a repeat of the situation where we vacate territories and those are overtaken by Iran’s proxies and used as a launching ground for terrorist attacks or rocket attacks.

I think there are solutions that we can adopt.  But in order to proceed to the solutions, we need to begin negotiations in order to end them.  We’ve begun proximity talks.  I think it’s high time to begin direct talks.  I think with the help of President Obama, President Abbas and myself should engage in direct talks to reach a political settlement of peace, coupled with security and prosperity.

This requires that the Palestinian Authority prepare its people for peace -- schools, textbooks, and so on.  But I think at the end of the day, peace is the best option for all of us, and I think we have a unique opportunity and a unique time to do it.

The President says that he has a habit of confounding all the cynics and all the naysayers and all those who preclude possibility, and he’s shown it time and time again.  I think I've had my opportunity to confound some cynics myself, and I think if we work together, with President Abbas, then we can bring a great message of hope to our peoples, to the region, and to the world.

One final point, Mr. President -- I want to thank you for reaffirming to me in private and now in public as you did the longstanding U.S. commitments to Israel on matters of vital strategic importance.  I want to thank you, too, for the great hospitality you and the First Lady have shown Sara and me and our entire delegation.  And I think we have to redress the balance -- you know, I’ve been coming here a lot.  It’s about time --

PRESIDENT OBAMA:  I'm ready.

PRIME MINISTER NETANYAHU:  -- you and the First Lady came to Israel, sir.

PRESIDENT OBAMA:  We look forward to it.  Thank you.

PRIME MINISTER NETANYAHU:  Any time.

PRESIDENT OBAMA:  Thank you very much.  Thank you.

All right, we’ve got time for one question each.  I’m going to call on Stephen Collinson, AFP.

Q    Thank you, Mr. President.  As part of the steps which need to be taken to move proximity talks on to direct talks, do you think it would be helpful for Israel to extend the partial settlement moratorium, which is set to expire in September?

And if I could just briefly ask the Prime Minister, with regards to the sanctions you mentioned, do you think that these measures will contain or halt Iran’s nuclear program where others have failed?

PRESIDENT OBAMA:  Let me -- let me, first of all, say that I think the Israeli government, working through layers of various governmental entities and jurisdictions, has shown restraint over the last several months that I think has been conducive to the prospects of us getting into direct talks.

And my hope is, is that once direct talks have begun, well before the moratorium has expired, that that will create a climate in which everybody feels a greater investment in success. Not every action by one party or the other is taken as a reason for not engaging in talks.  So there ends up being more room created by more trust.  And so I want to just make sure that we sustain that over the next -- over the next several weeks.

I do think that there are a range of confidence-building measures that can be taken by all sides that improve the prospects of a successful negotiation.  And I’ve discussed some of those privately with the Prime Minister.  When President Abbas was here, I discussed some of those same issues with him.

I think it’s very important that the Palestinians not look for excuses for incitement, that they are not engaging in provocative language; that at the international level, they are maintaining a constructive tone, as opposed to looking for opportunities to embarrass Israel.

At the same time, I’ve said to Prime Minister Netanyahu -- I don't think he minds me sharing it publicly -- that Abu Mazen working with Fayyad have done some very significant things when it comes to the security front.  And so us being able to widen the scope of their responsibilities in the West Bank is something that I think would be very meaningful to the Palestinian people.  I think that some of the steps that have already been taken in Gaza help to build confidence.  And if we continue to make progress on that front, then Palestinians can see in very concrete terms what peace can bring that rhetoric and violence cannot bring -- and that is people actually having an opportunity to raise their children, and make a living, and buy and sell goods, and build a life for themselves, which is ultimately what people in both Israel and the Palestinian Territories want.

PRIME MINISTER NETANYAHU:  I think the latest sanctions adopted by the U.N. create illegitimacy or create de-legitimization for Iran’s nuclear program, and that is important.  I think the sanctions the President signed the other day actually have teeth.  They bite.

The question is -- how much do you need to bite is something I cannot answer now.  But if other nations adopted similar sanctions, that would increase the effect.  The more like-minded countries join in the American-led effort that President Obama has signed into act, into law, I think the better we’ll be able to give you an answer to your question.

PRESIDENT OBAMA:  Is there somebody you want to ask here?

Q    Mr. President, in the past year, you distanced yourself from Israel and gave a cold shoulder to the Prime Minister.  Do you think this policy was a mistake?  Do you think it contributes to the bashing of Israel by others?  And is that -- you change it now, and do you trust now Prime Minister Netanyahu?

And if I may, Mr. Prime Minister, specifically, did you discuss with the President the continuing of the freezing of settlements after September?  And did you tell him that you’re going to keep on building after this period is over?

PRESIDENT OBAMA:  Well, let me, first of all, say that the premise of your question was wrong and I entirely disagree with it.  If you look at every public statement that I’ve made over the last year and a half, it has been a constant reaffirmation of the special relationship between the United States and Israel, that our commitment to Israel’s security has been unwavering.  And, in fact, there aren’t any concrete policies that you could point to that would contradict that.

And in terms of my relationship with Prime Minister Netanyahu, I know the press, both in Israel and stateside, enjoys seeing if there’s news there.  But the fact of the matter is that I’ve trusted Prime Minister Netanyahu since I met him before I was elected President, and have said so both publicly and privately.

I think that he is dealing with a very complex situation in a very tough neighborhood.  And what I have consistently shared with him is my interest in working with him -- not at cross-purposes -- so that we can achieve the kind of peace that will ensure Israel’s security for decades to come.

And that's going to mean some tough choices.  And there are going to be times where he and I are having robust discussions about what kind of choices need to be made.  But the underlying approach never changes, and that is the United States is committed to Israel’s security; we are committed to that special bond; and we are going to do what’s required to back that up, not just with words but with actions.

We are going to continually work with the Prime Minister and the entire Israeli government, as well as the Israeli people, so that we can achieve what I think has to be everybody’s goal, which is that people feel secure.  They don't feel like a rocket is going to be landing on their head sometime.  They don't feel as if there’s a growing population that wants to direct violence against Israel.

That requires work and that requires some difficult choices -- both at the strategic level and the tactical level.  And this is something that the Prime Minister understands, and why I think that we’re going to be able to work together not just over the next few months but hopefully over the next several years.

PRIME MINISTER NETANYAHU:  The President and I discussed concrete steps that could be done now, in the coming days and the coming weeks, to move the peace process further along in a very robust way.  This is what we focused our conversation on.  And when I say the next few weeks, that's what I mean.  The President means that, too.

Let me make a general observation about the question you posed to the President.  And here I’ll have to paraphrase Mark Twain, that the reports about the demise of the special U.S.-Israel relations -- relationship aren’t just premature, they're just flat wrong.  There’s a depth and richness of this relationship that is expressed every day.  Our teams talk.  We don't make it public.  The only thing that's public is that you can have differences on occasion in the best of families and the closest of families; that comes out public -- and sometimes in a twisted way, too.

What is not told is the fact that we have an enduring bond of values, interests, beginning with security and the way that we share both information and other things to help the common defense of our common interests -- and many others in the region who don't often admit to the beneficial effect of this cooperation.

So I think there’s -- the President said it best in his speech in Cairo.  He said in front of the entire Islamic world, he said, the bond between Israel and the United States is unbreakable.  And I can affirm that to you today.

PRESIDENT OBAMA:  Thank you very much, everybody.

Egypt Analysis: A Practical Government's Moves on Gaza (Yenidunya)

On Saturday, Egyptian Foreign Minister Ahmed Aboul Gheit criticized the US for failing to advance the Middle East peace process. Gheit said that the conduct of Washington's envoy to the region, George Mitchell, would not bring about a settlement even 10 years from now. Later, he told the Egyptian daily al-Masry al-Youm that the Arab League will turn to the United Nations Security Council to declare an independent Palestinian state if talks between Israel and the Palestinians do not bear fruit by September.

Meanwhile, the Ma'an News Agency reports that more than 20,000 residents have traveled through the Rafah crossing between Gaza and Egypt since Cairo announced its indefinite opening on 1 June. According to the Gaza crossings authority, 10,531 residents left Gaza while 10,172 have returned so far. Only 1,865 of those who left Gaza have permission to reside in Egypt; the rest must go back.

Meanwhile, Cairo is continuing its leading role in indirect negotiations between Hamas and the Israeli government on a prisoner swap in for Gilad Shalit, the Israeli soldier held by Hamas for four years.

Amidst all these purported moves for resolution, Cairo banned an Arab delegation including 15 members of the Arab countries, headed by Assistant Secretary-General of the Union of Arab Lawyers, Abdel-Azim Al Maghribi, from entering Gaza on Saturday. Hamas responded with a call for the delegation to enter Gaza and to assist their humanitarian mission.

Hamas spokesman Sami Abu Zuhri also told the Palestinian Information Center that the measures taken at the Rafah crossing do not reflect any change in Egyptian intentions to move goods and people from and into Gaza.

Israel-Turkey Analysis: Netanyahu Saves Face with Foreign Minister by Snubbing Ankara and Washington (Yenidunya)

The most prominent fallout over the clandestine talks between Israeli Minister of Industry Benjamin Ben-Eliezer and Turkish Foreign Minister Ahmet Davutoglu in Switzerland? It was probably between Israeli Prime Minister Benjamin Netanyahu and his Foreign Minister, Avigdor Lieberman.

Lieberman was furious not only that he had not been informed of the mission but that Netanyahu would even consider sending a senior cabinet minister to hold covert talks with Turks. His argument was that if Israel agreed to compensate the families of those killed in the Israel Navy's raid on a Gaza-bound flotilla, the country would suffer a serious blow to its standing in the region.

Turkey-Israel Mystery: A Secret Meeting with Ankara (Followed by an Israeli Apology?)

Lieberman's problem not only Israel's "national interests". Pressure has been increasing day-by-day on his shoulders since the majority of the international community, including Washington, is unhappy with the Foreign Minister's position.

And it is not external powers who are displeased. Netanyahu and Defense Minister Ehud Barak see their supposed colleague as a hindrance to manoeuvres with Palestinians and confrontation of the Hamas issue, adding to Israel's isolation from the international community.

Of course, Lieberman knows what is on Netanyahu's mind. "The foreign minister takes a very serious view of the fact that this occurred without informing the Ministry of Foreign Affairs," Lieberman's office said in a statement immediately following the revelation of the Ben Eliezer-Davutoglu talks. "This is an insult to the norms of accepted behavior and a heavy blow to the confidence between the foreign minister and the prime minister."

Haaretz reports, from a source close to Lieberman who has spoken with him in recent days, that the Foreign Minister has been disturbed by Netanyahu's behavior for quite some time. According to the source, Lieberman is angry over what he sees as the Premier's legitimization of the global boycott. Indeed, in an interview with Israel Radio on Thursday morning, Lieberman criticized the premier for coordinating the Turkish-Israeli meeting with both Defense Minister Barak and the White House.

When the meeting came to light, Netanyahu had to step back. He apologised to Lieberman, and they met on Friday. Offices of the two men said that they had agreed to work with complete coordination in the future.

Yet this supposed reconcilation still sat alongside the report from Turkish media that Ben-Eliezer had indicated to Davutoglu that Israel was rethinking its refusal to compensate and apologize to the families of those killed in the 31 May 31 on the Freedom Flotilla.

That report had to be pulled back. Ben-Eliezer's bureau said, "We have no plans to do that, and the minister did not promise anything to that regard during his meeting with the Turkish Foreign Minister two days ago." Netanyahu spoke even more sharply, telling Israeli television that the covert meeting was a Turkish "provocation" and insisting that there would be no apology or compensation for the Flotilla confrontation.

But if Netanyahu had repaired relations with Lieberman, he may have done so at the cost of his relations with the US. Haaretz reports, from Israeli sources, that Washington was the organizer. The US had already warned both allies not to compete in the region and sent the signal that former Congressman Robert Wexler, one of the founders of the Turkish-American Friendship Group in the Congress, could be the new ambassador to Israel.

After the Ben-Eliezer meeting with Davutoglu, Washington emphasised the necessity of discussion between its two allies. State Department spokesman Philip Crowley said:

We certainly support this kind of dialogue that hopefully can help repair the fractures that have existed in recent weeks and months between the two countries.

We have had conversations with both countries individually. In those conversations, we have reinforced that a relationship between Turkey and Israel is not only in the best interest of the region, it is in the interest of -- and supports our interests in the region as well.

So, having effectively withdrawn his secret initative, having snubbed Turkey and possibly the US to save face with Lieberman, what next for Netanyahu?