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Prime Minister Benjamin Netanyahu on Wednesday urged Arab countries to make immediate moves toward normalizing ties with Israel and said he would offer concrete steps toward peace with the Palestinians.

Netanyahu made the plea during a debate in Knesset that came as he tries to balance international pressure to make concessions to the Palestinians with internal calls from within his hardline coalition not to budge.

"We are prepared to make, and we will make, concrete steps for peace with the Palestinians," he said.

He said the Israeli government would abide by the terms of past agreements signed with the Palestinians though it wouldinsist on reciprocity in future peace talks with the Palestinian Authority.

"My peace policy will bring results faster than the government which was led by those sitting in the opposition today," Netanyahu said. "We will insist on reciprocity in talks with Palestinians," the premier said, "in both the demands raised as well as their implementation."

"We expect the Palestinians to make such concrete steps as well. And it would be good if Arab countries joined the peace effort and made concrete and symbolic steps toward normalization with Israel, not later, but now," Netanyahu added.

The prime minister also said that he was eager to advance economic initiatives in the agricultural field for the Palestinian territories. His government would seek to attract investments from the Gulf Arab states, Europe, and Asia in an effort to boost the Palestinian economy, Netanyahu said.

Netanyahu said that U.S. President Barack Obama backed his idea for normalization, and called it a "new and refreshing approach that totally matches our views."

Netanyahu said the Obama administration would also seek to advance "normalization" of ties between Israel and Arab government.

The prime minister, who was at the White House last week, also said that he and Obama agree the Iranian threat could create an opportunity to bring Arab countries together in a coalition of moderates, Netanyahu said.

The premier told lawmakers and ministers that he had Obama had reached understandings on key defense issues and that the U.S. administration accepted Israel's position on Iran, the prime minister told the plenum.

In reference to Iran, Netanyahu reiterated the importance of "spotting dangers in advance.... Our nation paid a huge price for failing to spot threats in advance," the premier said. "My job as premier is to protect the country's existential interests."

Netanyahu added that he was eager to "bring Arab states into the circle of peace," a goal he says is shared by the Obama administration.

"Bringing Arab states into circle of peace will strengthen Israel and bring security to the Palestinians as well," Netanyahu said.

The premier responded to catcalls from Kadima lawmakers by accusing his predecessors in the previous government of failing to bring results in its talks with the Palestinians.

In response to criticism of his economic policies, Netanyahu said these were extraordinary times, and that Israel is "functioning better than most countries" under the harsh circumstances of the global financial crisis.

Following Netanyahu to the podium, opposition leader and Kadima Chairwoman Tzipi Livni blasted Netanyahu for "a basic misunderstanding of Israel's interests."

Netanyahu "missed a golden opportunity" by failing to declare his support for a two-state solution during his meeting with Obama in Washington last week, Livni said.