Prime Minister Benjamin Netanyahu on Thursday laid out the dilemma facing his administration when it comes to the Palestinian conflict — the imperative to avoid a binational state encompassing Israel and the Palestinians, but also to prevent a future Palestinian state from becoming an Iranian proxy. “Half of Palestinian society is dominated by Iran’s proxy,” he said in an apparent reference to the Hamas regime in the Gaza Strip.

Netanyahu made the statements during an address at the World Economic Forum’s annual meeting in Davos, Switzerland. He said Israel sought peace, but that it needed “three to tango” — Israel, a willing Palestinian partner, and the involvement of the US as the broker of a deal. Netanyahu is to meet US Secretary of State John Kerry, who oversaw the revival of the peace talks last July, on the sidelines of the Davos event.

During a question-and-answer session after his speech, the prime minister portrayed the Iranian nuclear program as a shared concern for both Israel and Arab states, along with the spread of Islamist movements.

“Central Arab governments are preoccupied with the Iranian nuclear weapons and the Muslim brotherhood,” he said. “The nations do not see Israel as an enemy but as a potential ally to combat these threats. They are not assured by the words spoke earlier by the president of Iran. They get it. We all wish there was a real change in Iran.”

Earlier in the day, Iranian President Hassan Rouhani appealed for improved relations with the world, telling the Davos forum that his country had never sought to develop a nuclear weapon.

But Netanyahu averred that only Iran’s words had changed, not its actions, and that the Islamic Republic remained aggressive and continued to develop materials for nuclear weapons, despite a deal with Western powers that curbs its enrichment activity.

Rouhani’s speech had “no connection to what’s going on on the ground,” he contended.

Netanyahu argued that peace with the Palestinians would be advanced if Iran truly changed its policies.

“There would be a great boom for peace…The removal of that threat [Iran] would help advance peace,” he said.

Hassan Rouhani speaking at Davos Thursday. (Screenshot: Davos World Economic Forum)

Hassan Rouhani speaking at Davos Thursday. (Screenshot: Davos World Economic Forum)

Netanyahu reiterated his long-held assertion that economic cooperation between Israel and the Palestinians would advance the peace process, and insisted he was ready for “real secure genuine peace.”

“I hope [Mahmoud] Abbas is too,” he added, referring to the Palestinian Authority president.

“Investment in economic peace assists the development of political peace — especially with the Palestinians,” Netanyahu said. “We’ve had some cooperation between Israeli entrepreneurs and Palestinian entrepreneurs.”

Netanyahu also pushed back against recent European moves to punish Israel for its presence in the West Bank.

“If Europe is seen as pressuring Israel,” he said, “it hardens the Palestinian position.”