Hezbollah leader Hassan Nasrallah "has revealed himself to be a political fool of the first order," says Vice Premier Shimon Peres.

Speaking to Haaretz about the current crisis in Lebanon, Peres said: "Nobody has managed to isolate the Arab issue and destroy Lebanon like he has. He will continue, and there is no one to stop him."

Nasrallah has "made skeletons of the Arab world, and made it a laughing stock," Peres added.

Peres ventured that Iran was behind the Hezbollah attack last Wednesday that instigated the crisis. He pointed to the timing of the attack on an Israel Defense Forces patrol in which two soldiers were kidnapped, noting that it came just a day after Tehran's reply to the demands made of it regarding its nuclear program.

According to Peres, the crisis has escalated because under the current international circumstances, nobody has influence over Iran, Hezbollah and Hamas - not the United States, not Russia, not the United Nations, not the Europeans and not the Arab League, "and the only country with guts is Israel."

Peres said such a political situation was new, and that question now was how to make use of it. He believes that the fighting should continue while simultaneously conducting a diplomatic process.

"Bomb and talk, don't stop either of these," he said. "I do not know whether there is someone to talk to, but that is not a reason not to tell the prime minister of Lebanon, Fuad Siniora: If you want a cease-fire, either turn to Hezbollah or to us. We are prepared to talk with you and are interested in an independent and flourishing Lebanon, but prove that you represent something and can control the missile arsenal and guarantee quiet along the border."

Such a proposal, Peres believes, would strengthen Israel's position internationally.