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SPIEGEL: Israeli Prime Minister Benjamin Netanyahu is meeting George Mitchell, the United States' special envoy to the Middle East, this Monday in London before coming to Berlin on Wednesday. Will we see a very confident and relaxed Benjamin Netanyahu or a politician whose hardline policies have put him under a lot of pressure?

Dan Meridor: I don't think we are hardline. But if you'd like to characterize our government in this way, you are entitled to do so. But please take into account the fact that the position of Israeli's prime minister is unique. The Israeli prime minister is confronted with problems you don't see as head of the government in Switzerland, Norway or even Germany. These are questions of a different scale and magnitude: a dramatically changing society, the absorption of immigrants and borders that are not yet defined and are challenged all the time. These are questions of the legitimacy of the state -- and its very survival.

SPIEGEL: And because of that ...

Meridor: ... you need to be relaxed and very stable as an Israeli politician. You can't try to meet all the expectations of the Israeli opposition, foreign powers or journalists. If I may say so, the issues are too serious to be taken at the press level.

SPIEGEL: What does this mean for the peace process and your government's decisions?

Meridor: We face many challenges that we did not create. Our government came in after a very serious attempt by (former Prime Minister Ehud) Olmert to reach an agreement with the Palestinians that offered more than anybody in Israel had ever done. He did not get a positive response. Perhaps Abu Mazen (ed's note: Abu Mazen is the name most commonly used in the Palestinian Authority for Palestinian President Mahmoud Abbas) reacted the way he did because he doesn't control Gaza, where 40 percent of the territories' population lives and into which he cannot even travel. Perhaps Abu Mazen wants even more than just the Palestinian state; but there is nothing more to give. It was Olmert's -- and not our government's -- offer. Surely, nobody expects Netanyahu to offer more than what Olmert offered.

SPIEGEL: Are you not happy with the Palestinian leadership?

Meridor: I don't know. The question is whether Abu Mazen can deliver. Is there a real leadership in the Palestinian camp now? Do we have a partner for a peace process?

SPIEGEL: You blame Palestinian intransigence. Western leaders are, of course, demanding that the Arab side compromise on some issues. But they are also putting pressure on Israel to make concessions, as well, especially when it comes to its aggressive settlement policy in the West Bank.

Meridor: There is no such policy.

SPIEGEL: You don't regard new settlements in the occupied territories as being a major stumbling block in the peace process?

Meridor: That's exactly why we aren't building new settlements. We haven't approved any.

SPIEGEL: You are sidestepping the issue. US President Barack Obama wouldn't urge Israel to stop its settlement policies if he didn't have a reason to do so. He has demanded an immediate freeze to any expansion, but your government has chosen not to comply. Some of your colleagues in Israel's cabinet are even encouraging the most radical settlers to build new, completely illegal outposts. Just recently, several ministers visited these places and delivered provocative speeches.

Meridor: Ours is a big coalition government with diverging views. What you describe is neither the official policy of Prime Minister Netanyahu nor the official policy of the government.

SPIEGEL: But there is no question that your government is providing financial assistance to the ongoing, provocative expansion of existing settlements. This makes it impossible for the Palestinian leadership to negotiate with you.

Meridor: That's one of your misperceptions. Olmert made an agreement with the administration of former President George W. Bush according to which the Americans accepted that there would be construction within existing settlements. This has been admitted by the deputy national security adviser of the US, and it was recently published in the Wall Street Journal. That did not stop the Palestinians from negotiating with us over three years.

SPIEGEL: Well, the fact is that there is now a new American president who is urging Israel to make this concession. Why is it so difficult for your government to show some restraint and agree to the building freeze, when this is something that the US, the European Union and the United Nations are demanding?

Meridor: We don't feel pressured by Obama. We haven't built any new settlements, so we are fulfilling the understanding. Now there are some ongoing discussions about a compromise.

SPIEGEL: A freeze for the next 12 months?

Meridor: I can't comment on details at the moment because I'm very involved in these things. But, concerning the Palestinians, we are ready to negotiate. We don't want to wait. We said that from day one of our government. But the problem with the Palestinians is a serious one. You can't resolve it unless there is a readiness on their side to accept that, along with a Palestinian state, there is a Jewish state, too.

SPIEGEL: Fatah and its leadership have done it.

Meridor: No, they haven't -- at least not yet. I hope they will. They will only deserve their own state -- something which has never been offered to them in history -- if they do it......

'People Can Compromise, But Gods Never Compromise'

SPIEGEL: How much of the occupied land would you be willing to give back? By allowing the settlements to grow, aren't you more or less making a viable Palestinian state impossible?

Meridor: The final borders are open for discussion. But we will not return to the line of 1967 -- that's for sure. It was agreed in both President Bush's letter to Olmert and in the Geneva understandings that the settlement blocks would be part of the State of Israel in the final agreement.

SPIEGEL: Put yourself in the shoes of a Palestinian leader: Would you be satisfied with the fractured state that Netanyahu is offering -- which doesn't include an army, control of your air space and East Jerusalem as your capital?

Meridor: I'd accept it. You know, I would like the whole land to be my land -- because I think it's mine and they think it should all be theirs. But I changed my mind over 15 years ago: We need to divide it, and both sides have to accept this. For a long time already, we had a difficult, but very positive process.

SPIEGEL: Are you saying that there is no longer any peace process?

Meridor: We hope it will resume, and we have some hopeful signs. But, all in all, it has become more difficult over the years because of the introduction of religion into this conflict. Arab rulers hated us in the past, but they did it because of nationalistic ideas. Since the (1979) revolution in Teheran, we hear a different tune: The Iranians, Hezbollah and Hamas fight us in the name of religion. This is very bad because people can compromise, but gods never compromise....