Israel is not bound to agree to all points of an imminent US proposal for a peace agreement with the Palestinians, Prime Minister Benjamin Netanyahu said in a speech Tuesday night.

“The Americans are working to solidify American positions,” he said at the Institute for National Security Studies conference. “Israel does not have to accept every American position.” He said the American proposal would be presented soon.

Netanyahu also reiterated his position that he does not “want a bi-national state and… this reflects the desires of most Israelis.” However, he qualified, neither does he want another “state sponsored by Iran” next door to Israel — a reference to the Hamas-ruled Gaza Strip and Lebanon — so “the Palestinian state must be demilitarized, and therefore some symbols of [its] sovereignty must be limited.”

Netanyahu also expressed some doubt as to “whether the Palestinians are really ready to grapple with the concessions they will have to make” in order to reach a peace agreement. He did give some grudging praise to the Palestinian Authority, however, saying it does not use terrorism in pursuit of its goals, unlike Hamas.

“We stand on two basic principles [that we require of the Palestinians],” he said. “The first is recognition of the State of Israel as the national state of the Jewish people. This is the root of the conflict. The conflict is not about the settlements, its not about the settlers, and it’s not about a Palestinian state. The Zionist movement agreed to recognize a Palestinian state.

“The conflict is over the Jewish state… We are asked to recognize a national Palestinian state, so can we not also demand [that they] recognize a national Jewish state?” he said.

The second principle, Netanyahu said, was demilitarization. Elaborating, he said, constant incitement against Israel among the Palestinians had created a climate in which Israel required a substantial “security presence” in order to protect itself. That included a “long-term” presence in the Jordan Valley and other areas. (In a filmed address to the conference broadcast earlier Tuesday, Palestinian Authority President Mahmoud Abbas said all Israeli troops would have to leave Palestinian territory within years after a permanent accord was signed.)

The best formulation to summarize Israel’s vision for a viable two-state solution, said the prime minister, was that the Palestinians establish “a demilitarized Palestinian state that recognizes the Jewish state.”

Despite speaking about two states for two peoples, the prime minister refrained from directly broaching the hot topic of allowing West Bank settlers to choose whether they want to relocate to sovereign Israeli territory or remain under Palestinian rule under a future peace agreement. Economy and Trade Minister Naftali Bennett had continued his campaign against the proposal in an earlier speech he made at the same conference.

“Do you know why? Why Jews cannot live under Palestinian rule? Do you know why? Why Palestinians can’t rule over Jews?” Bennett said, reiterating a point he’d made on Facebook earlier in the day. “Because they will kill them. And do you know how I know this? Because it has already happened.”

Netanyahu did say that Israel did not want to make the Palestinians citizens of Israel — as Bennett suggests for 70,000 Palestinians in West Bank areas he would annex — and that Israel does not want “to rule over” the Palestinians.

Bennett has been caught up in a war of words with the Prime Minister’s Office since a PMO official, elaborating on a statement Netanyahu made in Switzerland Friday, told The Times of Israel on Sunday that the prime minister does not intend to uproot Jewish settlements anywhere in the West Bank as part of a permanent peace deal with the Palestinians, and wants to allow settlers the choice of remaining under Palestinian rule.

That comment elicited a flurry of criticism from right-wing politicians, including Bennett and many members of the prime minister’s own Likud party.

An unnamed PMO official told Israel Radio on Monday that Likud MKs who spoke out against Netanyahu’s proposal were welcome to relinquish their posts. Another official took Bennett to task for behaving in a “nationally irresponsible” manner for the sake of making headlines, and hindering the prime minister’s effort “to reveal the true face of the Palestinian Authority” as an unwilling peace partner.

The proposal was roundly dismissed by the Palestinian Authority, prompting a sharp condemnation from the PMO.

“Nothing shows the Palestinian Authority’s unwillingness to reach an accord with Israel more than their extreme and reckless reaction to an unofficial report,” Netanyahu’s office said late Sunday. “An accord will only be reached when the Palestinians recognize the Jewish state and when the essential interests to the security of Israeli citizens are guaranteed.”

In the wake of that exchange, Israel’s chief negotiator, Justice Minister Tzipi Livni, implied that, rather than pursue a peace agreement in earnest, some Israeli officials have been baiting the Palestinians so as to elicit responses that could be construed as rejectionist.

Times of Israel staff contributed to this report.