Defense Minister Ehud Barak said on Sunday that multilateral regional talks would be better for Israel than bilateral negotiations with the Palestinians toward a peace accord.
Barak told reporters in Cairo after meeting Egyptian president Hosni Mubarak that in negotiations with the Palestinians, Israel is the "only one that can give, the Palestinians are the underdog and the talks are asymmetrical."
But in regional talks, Barak said, it becomes clear that Israel is the isolated party. He said topics could include the struggle against radical Islamic terrorism and economic projects.
"The Arab side has much to give in the form of confidence building measures and steps toward normalization," he said.
Barak also said that a recent policy speech by Prime Minister Benjamin Netanyahu, dismissed by Egypt as flawed, was a major step forward.
In his first official policy address last week, Netanyahu endorsed - with tough conditions - the establishment of a demilitarized Palestinian state. Cairo, however, has said the proposal falls short of the Palestinian state Arabs seek.
"[Netanyahu] made it clear that the end result, the goal of the whole process is to have a situation where the two peoples, Palestinian and Israeli, are living side by side in two states in good neighborliness, peace and security," Barak told reporters.
"It is a really unique opportunity for the peace process because the common interest is so apparent regarding the struggle against hegemonic Iran, against radical terrorism, against proliferation of nuclear weapons," he said.
Barak described Netanyahu's comments on a Palestinian state as a "major step forward" by Israel in helping advance peace.
Netanyahu, speaking on June 14, said Palestinians must recognize Israel as a Jewish state and forego the right of return for refugees but did not promise a halt to settlement expansion in the West Bank.
Mubarak has said Israel's call to recognize Israel as a state for the Jewish people undermined efforts to achieve peace and has said he told Netanyahu, who visited Egypt last month, that peace talks should resume where they left off.
Palestinian leaders have refused to recognize Israel as a Jewish state because they believe it weakens the position of the 20 percent of Israel's citizens who are Arabs.
They also say it undermines a key demand for a right for Palestinians to return to areas in Israel from which they fled or were forced out in the 1948 Independence Day War ahead of Israel's creation.
An Israeli official said Barak's visit aimed to look at ways to move ahead in peace talks after Netanyahu's speech and an address by U.S. President Barack Obama from Cairo on June 4 that covered Middle East peace and other topics.
Obama, who has promised a deep U.S. role in Middle East peace efforts, has called for a full Israeli settlement freeze but said he saw "positive movement" in Netanyahu's speech.
"The fact that it [Netanyahu's speech] was well accepted by the White House ... means that the Americans are reading it the same way," Barak said. "It is still clear that there are certain differences in how to implement certain practical aspects of it but I think that in the coming weeks we will try to iron it out and pave the way for moving forward."
Like Egypt, Palestinian officials have voiced opposition to many aspects of Netanyahu's proposal.
Arab foreign ministers will meet in Cairo on Wednesday to discuss Obama's address and Netanyahu's proposal, Palestinian state news agency MENA reported.
Labor and Likud MKs clash over Palestinian statehood
Meanwhile, an argument broke out during a cabinet meeting Sunday between Labor parliamentarians and a number of Likud ministers, after Netanyahu outlined his diplomatic forays planned for the coming months.
Several Labor MKs called on Netanyahu to advance the peace process with greater urgency, with Transportation Minister Benjamin Ben-Eliezer calling for the prime minister to head to Egypt to advance peace talks by way of Mubarak.
Minority Affairs Minister Avishai Braverman added that "We must advance the diplomatic process so there will not be one state for two peoples here".
The remarks by Labor MKs were met with disapproval by Likud ministers, indcluding Benny Begin, who said "it is our right to be a Jewish state and to continue living in Judea and Samaria".
Begin also echoed Netanyahu's statement from his Bar-Ilan speech, in which he said a future Palestinian state must be demilitarized, saying "there is no such thing as a state without missiles, the missile will come after there is a country."
Minister of Strategic Affairs Moshe Ya'alon, a former IDF chief of staff, said "there is no partner on the Palestinian side, we just give, and we get nothing."
Bayit Chairman MK Daniel Hershkovitz, said "the Palestinians need to accept Israel as a Jewish state and show if they want peace or continued conflict".
Shas Chairman Eli Yishai called on the Palestinians to show they are serious about a two-state solution with Israel, saying "if by two-states they mean a state for Fatah and a state for Hamas, this is something we can't agree to."
The meeting was delayed shortly because Netanyahu had to be taken to see a doctor after a foreign object became lodged in his eye.
