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Likud chairman Benjamin Netanyahu told the closing plenary of the United Jewish Communities General Assembly Wednesday that the peace process needs to focus on economic issues and not political disagreements.

Instead of talking about contentious issues such as the status of Jerusalem, the first step to a lasting peace needs to be the fostering of the Palestinians' economic situation, he said.

"Right now, the peace talks are based only one thing, only on peace talks," he said. "It makes no sense at this point to talk about the most contractible issue. It's Jerusalem or bust, or right of return or bust. That has led to failure and is likely to lead to failure again."

Netanyahu used much of his 40-minute speech to delineate his own plan for the future of the peace process, which he said will be based on areas that are already agreed on.

"We must weave an economic peace alongside a political process," Netanyahu said. "That means that we have to strengthen the moderate parts of the Palestinian economy by handing rapid growth in those area, rapid economic growth that gives a stake for peace for the ordinary Palestinians."

Development mitigates

Netanyahu said he has discussed his plan with former British Prime Minister and current Mideast Quartet representative Tony Blair and with the American president-elect, Barack Obama. "Economic development does not solves problems, it mitigates them and makes them more accessible for solutions," he said.

"Right now, if you look at the division of labor, maybe 99 of our efforts are going to into political negotiations, and less than one percent are going to economic development. I propose we change the proportions, not reverse it, but change the proportion, because economic peace will support and bolster the achievement of political settlements down the line."

Livni: Judaism is our raison d'etre

Foreign Minister Tzipi Livni also addressed the crowd, saying that Hamas must accept Israel's right to exist as a Jewish and democratic state.

"The world is willing to defend the right of the state of Israel to exist, this is the part of the requirement that the [Mideast] Quartet demands [of] Hamas," Livni told delegates at the closing ceremony of the United Jewish Communities General Assembly. "But I would like to add two more words to this demand of the quartet: They need to accept the right of Israel to exist as a Jewish state." Livni, who heads Kadima, said that Israel's survival was dependent first and foremost on it remaining a Jewish state.

"A Jewish state is a matter of values. It is not a matter of religion, it is more a matter of nationality. And a Jewish state is not a monopoly of rabbis, it's what each and everyone feels inside, it's about the nature of the state of Israel," she said.

"Its about the Jewish tradition, it's about Jewish history. But we need to keep the nature, the character of the state of Israel as a Jewish state because this is - excuse me for using French - the raison d'etre of the state of Israel."