Israel's Vice Premier Shimon Peres said Thursday his country and Croatia were keen to nurture mutual relations, after years of Israel shunning the Balkan country because of past nationalism reminiscent of its World War II regime.

Peres said ties between the two nations are in very good shape. "I think both governments are very interested in having (the relations) developed into something serious and important for the future", he told reporters before meeting Croatian Prime Minister Ivo Sanader and President Stipe Mesic.

Israel recognized Croatia's independence from the former Yugoslavia in 1992, but established diplomatic ties only five years later - after the late President Franjo Tudjman deleted sections from his book that questioned the number of Holocaust victims.

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Israel maintained cold relations until the 1999 death of Tudjman, whose nationalist government often diminished atrocities committed by the country's WWII pro-Nazi state. About 30,000 Croatian Jews perished in concentration camps at the time.

Since 2000, Croatia's elected pro-Western governments have condemned fascism and Nazism.

In 2001 President Stipe Mesic visited Israel and apologized for the suffering of Jews in Croatia during World War II. Moshe Katsav - currently suspended as Israeli president -visited Croatia in 2003, and Israel named its first resident ambassador to Croatia in 2005.

Speaking of Palestinians, Peres said "Israel won't give up, we shall continue to try to reach peace with them. The problem with the Palestinians is (that) they have a united parliament on the administrative level, but not on the political level."

He said Israel had managed to achieve peace with Egypt and Jordan because they had a united political front. Unfortunately, the Palestinians and the Lebanese have many governments, or no government, many armies, or no army, he said. And that is why it is so difficult to make peace.

Asked whether any Israeli prime minister could reach permanent peace with the Palestinians without losing popular support at home, Peres said: "Winning peace is more important than winning elections".

Peres - a Nobel Peace laureate - is also expected to hold a lecture at Croatian Academy of Science and Arts.