Labor Party leader Isaac Herzog on Saturday said the Palestinians will have to recognize Israel as a Jewish state as part of a final peace agreement.

Herzog, who also serves as Knesset opposition chief, didn’t go as far as Prime Minister Benjamin Netanyahu in demanding that the Palestinian Authority recognize Israel’s Jewish character as a central condition.

In recent months Netanyahu has insisted that Palestinian Authority President Mahmoud Abbas recognize Israel as “a Jewish state” — something Palestinians are refusing to do, believing it would irrevocably torpedo chances for the return of refugees living in exile. Israel rejects any mass “return” of refugees and their descendants to Israel, since this could drastically alter the Jewish state’s demographic balance, and says Palestinian refugees should become citizens of a Palestinian state.

As for the issue of Jerusalem’s status in a final deal, Herzog said that the city should remain united but could still serve as both an Israeli and Palestinian capital.

“Jerusalem needs to be united but it can be the capital of two nations,” Israel Radio quoted Herzog saying, “and obviously there will be a need for the evacuation of settlements.”

The Labor head has said before that he is uncertain the prime minister has what it takes to make concessions with the Palestinians that would lead to a final agreement.

Earlier this week US Secretary of State John Kerry said Israel’s insistence that the Palestinians officially recognize Israel as a Jewish state is a mistake, adding that the issue should not be a critical factor in whether the current round of Israel-Palestinian peace negotiations succeed or fail.

Speaking to the House Committee on Foreign Affairs, Kerry put the kibosh on the demand, which Netanyahu has made central to peace negotiations with the Palestinians.

AFP contributed to this report.