Former Shin Bet Chief Yuval Diskin emerged last week as a possible future rival to Prime Minister Benjamin Netanyahu as he sternly criticised the government’s policy on Iran and the talks with the Palestinians.

Mr Diskin, who was the main speaker on Wednesday night at a conference marking 10 years since the pro-peace Geneva Initiative, said that the implications of the Israel-Palestine conflict “are much more existential for Israel than the Iranian nuclear issue”.

He warned that the situation in the West Bank and Israel could be “very dangerous” if the current impasse in the peace talks continues. He called for an immediate freeze on settlement building and for the formation of a “new coalition based on parties supporting two states for two nations”.

Sources close to the prime minister responded swiftly that “anyone who thinks the Palestinian threat is greater than a nuclear weapon in the hands of Iran which is committed to destroying Israel is disconnected from reality and has no strategic perspective”.

The sources said Mr Diskin was speaking out of “frustration at not being appointed Mossad chief”.

Mr Diskin retaliated scornfully, referring to the latest reports on Mr Netanyahu’s expenses, saying “soon they will explain why it’s OK to maintain three homes at the taxpayers’ expense, to spend NIS 10,000 on ice cream, 80,000 on water and 6,000 on scented candles. After all, the prime minister has to concentrate on the Iranian threat.”

It is unclear yet whether Mr Diskin has political plans. However, his name has been mentioned numerous times as a potential member or even leader of a new centre-left party that could be established before the next elections under the auspices of the by-then ex-President Shimon Peres.

Whether or not he will join politics, Mr Netanyahu clearly seems to be worried.