Israel and a future Palestinian state should agree to land swaps which would make settlement blocks part of Israel proper and in return make certain Arab towns part of Palestine, Deputy Foreign Minister Danny Ayalon said in an interview published Saturday. He also stated that the Palestinian demand to stop settlement construction as a precondition to negotiations was the same as an Israeli precondition that the Palestinians give up the right of return for Palestinian refugees - unrealistic.

In the interview with the London-based Arab newspaper Asharq-Alawsat, Ayalon said Israeli Arabs “would not lose anything” by joining the Palestinian state as part of a land swap. “If Israeli Arabs say that they are proud Palestinians, why should they not be proud in the Palestinian state?” he said. He added that this population could contribute to building the Palestinian state due to their high socioeconomic status.

The idea, Ayalon said, was that the majority of Jews live in Israel, and the majority of Arabs live in Palestine, while Arab and Jewish minorities could exist in both states respectively.

Ayalon said that settlements would not be a problem if a peace agreement is reached that recognizes the right of both states to exist securely, stably and in cooperation with each other.

“I think the claim that the settlements are an obstacle to peace is exaggerated,” he said. “We have proven in the past that settlements do not affect the end results, and examples of this are the evacuation of Sinai and dismantling of the Yamit settlement carried out by Ariel Sharon, as well as the disengagement from the Gaza Strip and the dismantling of the settlements there in 2005 by the Likud government led by Sharon.”