Prime Minister Benjamin Netanyahu said Sunday Israel would not negotiate with the Palestinians if Fatah and Hamas set up a unity government.

"If Hamas joins the Palestinian government we will not hold negotiations with the Palestinian Authority," said Netanyahu in a speech at a conference for Israeli ambassadors.

He added that he is ready to meet with Palestinian President Mahmoud Abbas anytime and anywhere to renew talks.

"The peace process can only advance while maintaining security arrangements, which is becoming more difficult in light of the current situation in the region," Netanyahu said.

Last week, Abbas met with Hamas leader Khaled Meshal in Cairo and set the ground for Hamas to join the Palestine Liberation Organization. During the discussions, Hamas and Fatah decided to form a unity government by the end of January, and that the Palestinian parliament, including both Fatah and Hamas legislators, will begin operating in February.

Foreign Minister Avigdor Lieberman said yesterday he does not believe that a peace deal between Israel and the Palestinians will be agreed on in the next decade.

Speaking at the ambassadors' conference, Lieberman said the Palestinians are not working toward peace but rather are trying to establish facts on the ground and internationalize the conflict. Therefore, Lieberman said, Israel must work to manage the conflict, not solve it.

"In the next decade, this will be the situation, and we need to know how to deal with it in the best way possible for both sides," Lieberman said. "No territorial concession will solve the real issues: refugees, security arrangements and Jerusalem."

According to Lieberman, "The only change that would happen here if we return to the 1967 borders would be that the Qassam and Grad rocket fire would not only come from the Gaza Strip into southern Israeli cities, but also from Qalqilyah into central Israel."

Diplomatic face-off

Lieberman also commented on the latest diplomatic face-off between Israel and European countries, which harshly criticized the recent violence by rightist extremists and Israel's settlement activity. In return, the Foreign Ministry called European countries "irrelevant."

Lieberman said Israel does not need to apologize to European countries for the comment. "On the contrary - Israeli democracy has nothing to be ashamed of, in contrast to the European democracies, and we do not need any advice from them," he said.

"The countries that criticized us need to understand that construction in the West Bank is not an obstacle to peace, and those who pose an obstacle to negotiations, and the opportunity for peace, are the Palestinians who refuse to negotiate with us."

Lieberman added that European countries should impose sanctions on Iran to stop it from becoming a nuclear power, rather than just talk about them to appease Israel.

"There is no need to appease us .... But it is necessary to take brave decisions immediately, and that is what we expect from the international community," he told the ambassadors.

Israel views Iran as its biggest existential threat, both because of its nuclear weapons program and because of President Mahmoud Ahmadinejad's repeated statements that the Jewish state should be wiped off the map.

Israeli leaders have consistently called for "harsh and biting" sanctions to be placed on Iran.