JERUSALEM -- Prime Minister Benjamin Netanyahu's senior coalition partner says that reaching a final peace agreement with the Palestinians is unrealistic at the current time and the sides should instead pursue an interim arrangement.
Finance Minister Yair Lapid's assessment, delivered in a published interview Sunday just days before the arrival of U.S. Secretary of State John Kerry, throws a contentious idea into the mix as the U.S. searches for ways to restart peace talks.
It remains unclear whether the idea of a temporary arrangement will be raised during Kerry's visit later this week. In March, American officials confirmed that an interim arrangement, while not their preference, was one of the ideas being explored.
With the gaps between Israel and the Palestinians on many key issues seemingly unbridgeable, pursuing a Palestinian state with temporary borders has emerged as an option in recent months, particularly among Israelis searching for a way out of the status quo. The Palestinians have repeatedly rejected this option, fearing an interim deal that falls short of their hopes will become permanent.
In order to allay Palestinian concerns, Lapid told the Yediot Ahronot daily that President Barack Obama should set a three-year timeline for determining the final borders of a Palestinian state. As a gesture to the Israelis, he also called on Obama to endorse the position laid out by President George W. Bush in 2004, allowing Israel to keep some of the Jewish settlements it has built on occupied lands.
The issue of Jewish settlements has been at the heart of the current 4 ½-year impasse in peace talks. The Palestinians have refused to negotiate, saying that continued Israeli construction in the West Bank and east Jerusalem is a sign of bad faith. The Palestinians claim both areas and the Gaza Strip, all captured by Israel in the 1967 Mideast war, for their future state.
Most Israelis, including Netanyahu, think that the continued control over millions of Palestinians would spell demographic suicide for Israel, and that creation of an independent Palestinian state is essential to preserving Israel's identity as a democracy with a Jewish majority.
"I believe in the two-state solution," Lapid told Yediot. "In my opinion, there is nothing more dangerous than the idea of a bi-national state."
At the same time, though, Lapid, like Netanyahu, rejects a full withdrawal to Israel's 1967 lines.
Lapid favors a broad pullout from the West Bank, including the dismantling of many settlements, but believes Israel should hold on to major "blocs" along the Israeli frontier where the majority of settlers live.
Lapid also believes that Israel should keep control of east Jerusalem, home to sensitive Jewish, Muslim and Christian religious sites. The Palestinians claim east Jerusalem as their capital.
Nimr Hamad, an adviser to Palestinian President Mahmoud Abbas, gave Lapid's proposal a cool reception.
"We have heard this idea before and rejected it simply because we know the intention of Israel is to continue building on Jerusalem and other parts of the West Bank," he said. "The most important thing for us" is to agree on the final borders between Israel and a future Palestine, he added.
The issues of Jerusalem and final borders are just some of the explosive core issues that must be resolved. The Palestinians demand the "right of return" of millions of Palestinian refugees and their descendants, whose families lost property in what is now Israel. Israel rejects this out of hand, saying a mass influx would spell the end of the country.
Lapid said the disputes over Jerusalem and Palestinian refugees would "torpedo any Israeli-Palestinian dialogue" and it is preferable to set them aside and pursue an interim arrangement.
Further clouding the picture is the status of Gaza. Israel withdrew from the area in 2005, but two years later, the Islamic militant group Hamas, which opposes peace with Israel, seized control from Abbas' forces. The internal Palestinian division, with Hamas in Gaza and Abbas governing in the West Bank, is a major obstacle to implementing any peace deal.
Lapid burst onto the Israeli political scene in January's parliamentary election, turning his new Yesh Atid party into the second-largest faction in parliament. While focused largely on domestic and economic matters, he criticized Netanyahu's hard line toward the Palestinians and said he would not sit in a government that is not serious about pursuing peace.
In the Israeli coalition system, Lapid is both a key ally and potent rival of Netanyahu, capable of robbing the prime minister of his parliamentary majority at any time.
Netanyahu has never clearly spelled out his vision for Israel's final borders, but appears to be far more reluctant than Lapid to pull out from large parts of the West Bank.
Lapid told Yediot that he believes that Netanyahu, concerned about his political legacy, is serious about pursuing a peace agreement. He also believes there is enough support in the government, despite the presence of many pro-settler hard-liners, to approve a withdrawal from much of the West Bank.
Netanyahu's office declined comment.
Lapid also tossed criticism at the Palestinians, saying Abbas "is still not psychologically ready for an agreement with Israel, either partial or full." He accused the Palestinian leader of focusing too heavily on Palestinian victimhood, which he called "the main obstacle to reconciliation."
Kerry has been shuttling between the Israelis and Palestinians in recent months in search of a formula for restarting negotiations.
For now, he is focused on setting up a framework for a final peace deal. Recently, he won support from Arab leaders for a comprehensive peace with Israel in exchange for the establishment of a Palestinian state along the 1967 lines. To entice Israel, the Arab leaders said the final borders could be modified as part of an agreement between Israel and the Palestinians.
At Kerry's urging, both sides have said very little in public about his discussions with them.
Netanyahu's chief negotiator, Tzipi Livni, indicated in March that she does not oppose an interim agreement, saying Israel should think about "other possibilities" if a permanent deal couldn't be reached. Livni's office did not immediately return messages seeking comment. Lapid also did not return messages.
Dov Lipman, a lawmaker in Yesh Atid, said the party has not yet formally accepted the goal of an interim agreement, but that it was "in line" with its platform of seeking peace while retaining settlement blocs and protecting Israeli security.
"We are very pragmatic and know that this will be a process which requires trust building. Because we are sincere in our desire to make peace, we believe we will demonstrate that sincerity and trust can be developed as we move through the various stages," he said.