Because without recognition, 'peace' is guaranteed to become a mere truce. A Jewish state doesn't mean that other religions don't get equal rights, It just gives Israel a Jewish identity and gives Jews the 'right of return', something that doesn't disadvantage any non-Jewish citizens in any way. I like Bibi for this reason- for all his shortcomings he lives in the real world and knows what is best his people.
Sweden arrests 14 over plan to attack asylum center (AP)
from the article: Netanyahu: New settlement freeze unlikely - but compromise possible