Benjamin Netanyahu opens up about his history with America

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Netanyahu opens up about his history with America

Israeli Prime Minister Benjamin Netanyahu discusses his unique relationship with President Trump and his time learning and working in the United States on 'Life, Liberty & Levin.'

This is a rush transcript from "Life, Liberty & Levin," March 11, 2018. This copy may not be in its final form and may be updated.

MARK LEVIN, HOST: Welcome to "Life, Liberty & Levin." It's an honor to see you, Mr. Prime Minister.

ISRAELI PRIME MINISTER BENJAMIN NETANYAHU: Is that it? "Life, Liberty & Levin"?

LEVIN: That's it.

NETANYAHU: Glad to be here.

LEVIN: Emphasis on the Levin.

NETANYAHU: I got it.

LEVIN: Well, you know, I've noticed you've been here several days, your relationship with the President of the United States seems to be very unique, very personal. Is it unique and personal and how did it get that way?

NETANYAHU: It is and it began that way. That's the way it began. I can't explain it. You know, just like that.

LEVIN: You have shared value and beliefs and that sort of thing?

NETANYAHU: Yes, I think so, but there's also a certain chemistry. I mean, the President likes to cut through.

LEVIN: Noise?

NETANYAHU: I wouldn't call it noise. There are two initials in English, you know? He cuts right through it.

LEVIN: Yes.

NETANYAHU: And it's refreshing when we talk about serious things, he cuts right to the point, and I appreciate that.

I also remember him when I was Ambassador of Israel to the United Nations and he was a very prominent businessman in New York and we occasionally sort of bumped in the same circles, but we met years later, and it's been a direct and very positive relationship from the get-go.

LEVIN: As a matter of fact, when you served at the embassy here, you spent a little chunk of your life in America. In fact, you and I went to the same high school, not together, but the same high school, Cheltenham outside of Philadelphia.

NETANYAHU: Yes.

LEVIN: Tell the American people about your life in America? When did it start? And where did it go?

NETANYAHU: Well, I came here for the first time, I think when I was eight years old for about a year. I didn't know a word of English. My father came here to edit the -- he was a great professor, a great historian, but the way he made his living was that he edited encyclopedias.

So, he edited -- they wanted him to edit a great Jewish encyclopedia, which he did for a year and then he said, "It's not good enough. I don't want my name on it." But during that year, we lived in Manhattan, and I came here, god, I was -- I didn't know a word of English. It was bizarre and difficult for me.

There was a girl they put next to me, her name was Judy and I remember Judy, because she taught me English. She took out a book, it was a book of pictures that had a dog, his name was Spot. "See Spot run. Run Spot run." And Judy, believe it or not, and my dearly -- my dear mother, they're the ones who taught me English.

So, that was my first year, eight to nine, then I came back here -- from the age of 13 until the end of high school in Cheltenham actually, and that's it.

Then I went back to the Army and came back to study at MIT.

LEVIN: You studied at MIT. You studied -- what did you study?

NETANYAHU: First, I studied architecture and then I went to the business school and got basically an MBA.

LEVIN: And you took a job in America for a period of time?

NETANYAHU: Yes, I went to work for about a year at the Boston Consulting Group.

LEVIN: Is that where you met Romney?

NETANYAHU: Yes, he was ahead of me. He was a star manager, actually. You know the horrible thing about Mitt? He looks exactly the same. He hasn't changed at all.

LEVIN: Hair hasn't moved.

NETANYAHU: Nothing has moved. He looked the same, and it was a very good place where to be honest, I mean, I thought that year that I spent there, in the presence of the founder of the Boston Consulting Group, who was a real genius. He was a very eccentric genius. His name was Bruce Henderson, and I remember that I came in on the first day, never been to a business thing.

I spent five years in the Army. I was an officer. I was a soldier and a commander in the Special Forces Unit. Went to MIT, finished my undergraduate, finished my graduate studies. Got into this consulting firm, and the first day Bruce Henderson is this, you know, very imposing figure. He must have been in his early 70s, a Virginian, he tells me, "Come inside, shut the door. Sit down."

And he says, "You know, you're not going to be here very long, because you'll go back to your country. So, study everything can you here because one day it will help the State of Israel."

And I thought, "This guy is bonkers. What is he talking about?" You know, I'm 27 years old, and he tells me to pick up what I can because it will help the State of Israel. He was absolutely right because I learned something about how economies grow. They grow with the firms. The firms make the economy. You have to make it profitable for the firms to grow the economy.

LEVIN: Now, what do we mean by firms?

NETANYAHU: Companies.

LEVIN: Companies.

NETANYAHU: Entrepreneurs. Business people -- that's what makes the economy grow. The guys who produce the added-value of the private sectors. The guys who consume most of that is the public sector. In order to have the things that the public sector needs, like an Air Force or roads or things like that, or other things, okay, you need to have a robust private sector. I learned that more than anywhere else than the Boston Consulting Group.

LEVIN: And part of your career in the Israeli government has been in the financial side.

NETANYAHU: Yes.

LEVIN: When my family and I came to Israel, the 50th anniversary of the liberation of Jerusalem and the unification of Jerusalem, I saw all these cranes. I saw all these building going on. I saw these skyscrapers with the names of American technological companies on them and so forth, and you applied those policies as Prime Minister and so forth in Israel?

NETANYAHU: With a vengeance, I'd say. I am a great believer in free markets and one of my missions -- my two missions was to free up the Israeli market, Israeli economy, so it becomes a free market economy, to unleash the genius that is embedded in our people. The sparks fly out the minute you open up the marketplace.

You allow enterprise, innovation, risk, to fail or succeed, and I did do a lot of reforms. I did that as Prime Minister, and then subsequently as Finance Minister and then, subsequently as Prime Minister again and again and again. We're still doing it.

So, the Israeli economy has been growing under these reforms consistently at about between 4 percent to 5 percent per year and the GDP per capita will probably catch up with Japan in a couple of years, Israel.

LEVIN: That's a big deal.

NETANYAHU: That's a big deal.

LEVIN: But particularly in technology, there seems to be a huge growth in Israel. The amount of technology that has developed in your country, and it's a tiny little country, and you sell it to, you know, you work with countries -- massive countries like India and so forth. That's obviously part of your plan, right?

NETANYAHU: It's very much my plan. It says -- first of all, technology by itself doesn't do anything. You know, you want a country that had great scientists, great mathematicians, great physicists, great metallurgists -- it's the Soviet Union. Didn't do anything.

But if you take one of these guys, you know, smuggle them out. put him in Palo Alto, you know, within two weeks, he was producing a lot of added- value. He was producing wealth.

So, technology without free markets doesn't go anywhere. Israel had technology, but it didn't have free markets. It had it technology because the military, especially military intelligence, produced a lot of capabilities, but unless you open it up, so people can start their businesses, these incredibly gifted young men and women who come out of the Army or the Mossad, they want to start their start-ups. Well, they can't, if you have to pay 70 percent tax, it's not going to go anywhere. They're going to go elsewhere.

So, one of the things that I did the minute I became Prime Minister and then Finance Minister was to enact an enormous number of reforms like several dozen reforms that opened up the economy, reduced the tax rates, reduced spending and cut the bureaucracy.

I had to -- it was a big challenge, you know, how do you explain this to the people of Israel, you know? So, I took about two weeks to format an economic plan and then I had to explain it to the public, and I said this, "I described my first day in basic training in the paratroops, and the commander lines us up in a big field, the whole company, and he says "We're now going to take -- we're going to do a special race."

"You," he points at me, "Netanyahu, you pick up the guy next to you, put him on your shoulders. And the next guy to put the guy next to you on your shoulders and so on," and I got a fairly big guy on my shoulders, about my size, and I could barely take two steps forward when he blew the whistle.

The guy next to me was the smallest guy in the company and he got the biggest guy in his shoulders. He just collapsed on the spot. And the third guy, was a big guy and he had a relatively small guy on his shoulders, he took off like a rocket and won the race.

And I said in the international world, all national economies are pairs of a public sector sitting on the shoulders of a private sector. And in our case, the private sector was collapsing under a public sector that got too fat, so we have to put the fat man on a diet, and we have to give a lot of oxygen to the thin man below, that's called tax relief, and we have to cut all the barriers to the competition. All the regulations that prevent that guy from running forward.

This became known as the fat man-thin man, taxicab drivers couldn't recite this, they still couldn't recite it, and that's true. That's essentially what we ended up doing. What I ended up doing was to trim the public sector, help the private sector and remove the barriers to competition, which I still have to do. I fight regulation with machetes, all the time.

LEVIN: In addition to the economy, I watched these votes in the UN. I see the President of Guatemala. I see the leader of India, and what I noticed observing Israel over the last several decades is you obviously have a big push going on where you want to take Israel's case all over the world, including in our hemisphere in America, and Asia, India and so forth.

Has that borne fruit? It appears to with the UN and some other places.

NETANYAHU: Well, it's certainly borne through the international relations, because having reformed the Israeli economy, we got the prowess of technological advance, because technology with free market definitely works.

And with the -- you know, this amalgamation of big data, artificial intelligence and connectivity, Israel is creating industries out of thin air, literally out of thin air. We have a car industry that is autonomous vehicles, world leader literally driving the world economy, cyber. You know, we're a tiny fraction of 1 percent and we get 20 percent -- 20 percent of the world investment in private cybersecurity, huge.

On the other side, we have security. We have superb intelligence. We've foiled dozens of terrorist attacks of ISIS, major terrorist attacks including the downing of an airliner. You can imagine what that would do.

LEVIN: And for all countries, you share that information?

NETANYAHU: We share it -- we not only do it for us, we share it with dozens of countries. We have prevented dozens of terrorist attacks, major terrorist attacks.

So, when you take the security interests and intelligence that countries have to protect themselves against terrorism, and that's pretty much all countries and you take the needs for technological innovation, that is driving the world right now, both of them are present in Israel, and so everybody wants them, that gives me the third thing, which is this massive flourishing of Israel's diplomatic relations with just about every country in the world.

Not all, we're not big on North Korea, you know, not too big on Iran, but just about everyone else.

And so, this is the triangle. It's economic power, security power gives you diplomatic power. That will take a few years to translate itself into the votes of this archaic body called the General Assembly of the United Nations, or some of the other bodies.

That will take a while until they get the news, but it's happening all over the world, so Israel has never been stronger militarily, economically, diplomatically, and it's a very deliberate policy, and actually, it begins with economics.

LEVIN: Just a reminder, don't forget to watch us every week night on LevinTV. Go to crtv.com or call 844-LEVIN-TV.

LEVIN: We're back with the Prime Minister of Israel, Benjamin Netanyahu. Let me ask you a question, you just returned to Boston, you went full circle. What is it about America that you find so profound and so compelling? You spend a lot of time here.

NETANYAHU: Well, I think, in one word, freedom. Freedom. Because I think that America has been the vanguard of freedom, and without the United States of America, you wouldn't have freedom in the world, and freedom is what makes life worth living. Freedom, innovation, informality.

The fact that America is a meritocracy, okay? It's not a class society. If you're good, if you have the smarts and the ambition, you can do it, and this is a message for everybody. At least it should be. That's the way I see America, that's what I encountered in America and I thought should be brought to Israel and in many ways, it influenced my thinking certainly on the questions of the economy and innovation, because I saw here great things, but there's something else, I mean that anybody could tell if you they're objective about it, but I saw in America something else.

I'm a leader of the Jewish State. The Jewish people underwent horrific tragedies, and the greatest tragedy be fell us in the 20th Century, the holocaust.

During the first half of the 20th Century when the holocaust occurred, America was not the world leader, and we paid a horrible price for that. Then the State of Israel was established, and what a difference that made and the fact that America did become the leader of the world. It's made all the difference.

So, when I look at America, I don't think of the principles of freedom. I think of America's defense of freedom in the world and its alliance with Israel and support for Israel. I have the deepest feelings about the United States of America for both reasons.

LEVIN: When you come to this country, do you notice the deepest feelings Americans have for the State of Israel? How does that make you feel?

NETANYAHU: It makes me feel great. You know, I'll tell you, I walk out you know, going from here to New York City, they let me walk out a bit from my cage. I go out. And so, I go with my wife to Central Park and you know, Americans come and they clap, and I did go to Mount Vernon here.

LEVIN: Beautiful.

NETANYAHU: Yes, I wanted to pay my respects to George Washington, who was incredible. Incredible figure, people don't know, don't appreciate Washington for so many things. They appreciate it, but I learned a lot of things about him.

I went there. There were people from all over the United States, and they applauded. But it's -- I think it's an identity that most Americans feel about Israel, that we're part of the same civilization and in many ways, you know, what the Islamist radicals say about us, they say "You are you, you are them and they are you."

"You are the small Satan, and they're the big Satan." No, we're not satanic; on the contrary, the very contrary, but we are exactly that. We're the same civilization, and Americans overwhelmingly understand that.

LEVIN: Small Satan, large Satan. In Israel, how are Muslims treated? How are Arabs treated? How are Christians treated? How are people of face treated?

NETANYAHU: With genuine equality. Israel is the only place in a very, very broad circle in the Middle East and beyond where the Arab citizens of Israel are fully endowed with rights. They serve in the Knesset, our Parliament. They serve in my government.

I appointed a Jews minister, just now recently. They serve in the Supreme Court. I mean -- and they have real freedom and real equality under the law. If you want to make a comparison to other countries, I think you could make that yourself.

There's complete religious freedom in Israel, and in Israel it's not only the Jews and the Muslims who enjoy complete freedom, it's the Christians and in the Middle East, the Christians are being squashed. They're being decimated or destroyed outright.

And the only place where the Christian community is thriving, flourishing, growing is in Israel, because over our democracy, because of our shared values, and I think most people know that, and even if they don't know it, they have a glint of it, they appreciate the fact that Israel is a genuine democracy with all the trimmings and with all the faults, you know?

It's not easy to govern democracies, I can tell you that, having done it four times.

LEVIN: East Jerusalem, many of the holiest Jewish sites, with also holy Christian sites. Before it was liberated and unified, what happened to these holy sites for Jews and Christians and so forth?

NETANYAHU: Well, for most of many centuries, you know, the three basic faiths, monotheistic faiths that have important shrines in Jerusalem. There's the Church of the Holy Sepulcher, there is the Al-Aqsa Mosque, most importantly for us, there's the Western Wall that is the ramp part of the Great Temple that was refurbished by Herod the Great 2,000 years ago but it stands on the temple mount of the temple that was built by King Solomon 3,000 years ago.

So, this is the most sacred spot for the Jewish people, and of these sacred shrines usually, over the centuries, someone deprived it. When the Muslims ruled it, they kicked out the Crusaders -- the Jews and the Christians. When the Christians controlled it, they kicked out either the Jews or the Muslims, but it's only under Israel after we liberated the city and reunited it in 1967, after the Six-Day War, that we made it accessible to everyone -- Jews, Muslims and Christians alike.

And it's only because we're there that this potentially explosive square kilometer, maybe the most explosive in the world has been at peace because you see what is happening elsewhere in the Middle East. I mean, how churches are destroyed, mosques are blown up -- I am not talking about synagogues, they don't even exist, okay?

And that would be the fate of the holy sites in Jerusalem if Israel weren't sovereign there. So, obviously, we cherish the city. We cherish the temple mount, but we also cherish the freedom and the sanctity of the holy sites of others. We guarantee religious freedom for all.

KELLY WRIGHT, ANCHOR, FOX: Live from America's news headquarters, I'm Kelly Wright in New York. A deadly helicopter crash here today at the East River earlier this evening.

This video from Twitter shows it hitting the river before tipping over. The rotors smashing into the surface of the water. Six people were in the helicopter. Two passengers were killed, three others were removed by rescue divers, and are currently in critical condition.

The pilot was able to free himself from his restraints and was rescued by a nearby tugboat.

Education Secretary Betsy DeVos will chair a school safety commission, the White House announced Sunday. It will focus on ways to prevent and identify threats, propose measures, include raising the age to purchase a rifle-type long gun from 18 to 21 and calling on states to allow courts to issue orders that would take guns away from mentally unstable people.

That's a look at news, I'm Kelly Wright. Now back to "Life, Liberty & Levin."

LEVIN: My guest this week, Prime Minister Benjamin Netanyahu of Israel. How important was it to you, to the people of Israel, when President Trump recognized Jerusalem as the capital and we're moving our embassy there in May?

NETANYAHU: I think all Israelis applauded, just about all of them applauded. That's an understatement. There's a sense of history here. I said this to the President when I spoke to him in the Oval Office the other day. I said, "We have a long memory, and we remember how 2,500 years ago, the great Persian King, Cyrus allowed the proclamation that allowed the Jewish exiles in Babylon to come back to Jerusalem and build our temple there."

We remember how 100 years ago, the British Foreign Minister, Lord Balfour issued the Balfour Declaration that recognized the rights of the Jewish people in our ancestral homeland. We remember 70 years ago how President Harry S. Truman recognized -- I think he was the first leader to recognize the Jewish state.

And we remember how President Donald J. Trump recognized Israel or recognized Jerusalem as Israel's capital and decided to move the American Embassy there. These are historic deeds. They will be remembered by our people that way for the ages.

LEVIN: What's the greatest threat right now that Israel faces? Foreign threat?

NETANYAHU: Iran. You want the three threats?

LEVIN: Give me the three threats.

NETANYAHU: Iran, Iran, Iran.

LEVIN: Let's take some time and walk through this. Obviously, Iran, we Americans have had to deal with Iran. They kill American soldiers in Iraq. They back terrorism. They back terrorism that have killed American soldiers. They're building ICBMs, obviously, they can hit Israel with ICBMs, but cannot.

(CROSSTALK)

NETANYAHU: They're not building missiles for us.

LEVIN: Yes, (inaudible).

(CROSSTALK)

NETANYAHU: No, they're not building them for us. They can reach us with their regular missile.

LEVIN: Yes.

NETANYAHU: They're building missiles for you.

LEVIN: For us.

NETANYAHU: Yes, coming to a theater near you.

LEVIN: So, tell us why it's the number one, two, three threat?

NETANYAHU: Iran is trying to build an empire, an aggressive empire. You know, the radicals in Iran, which I don't think represent the vast majority of the Iranians who are hijacked by this theocratic theocracy, they just took them over a few decades ago and they keep them under tide and the people protest. But these guys are ruling the place.

They are suppressing their own people and they are trying to conquer the rest of the Middle East with a view ultimately of dominating the world through their version of militant radical Islam, Shiite radicals.

You know, the first targets are Muslims and Arabs, but we stand in the way because we're you. We're the little Satan. Ultimately, they want to get the great Satan. And this sponsor of global terrorism is not only trying to develop a land empire, but they also want to develop nuclear weapons, and I think that has to be stopped.

And I see eye-to-eye with President Trump on that, and I think he's done a major change in American policy to stop Iran from getting nuclear weapons. Can you imagine a radical Islamic regime with ICBMs? Sponsoring terrorist groups? And having atomic bombs?

That's a palpable danger, not only to Israel but to America, to the entire world. And by the way, you know who agrees with me on that? Just about everyone in the Middle East. Just about all the Arab governments. It's a big change.

So, I think this is the number one challenge that we have.

LEVIN: And they are aggressively trying to move their borders toward your borders, aren't they? Through Syria, through Lebanon, with Hezbollah and so forth.

NETANYAHU: Yes, what they want to do is actually develop a land bridge, Iran, Iraq, Syria, Lebanon, Gaza, Yemen -- they are actually trying to encircle the Middle East before they conquer it. And this continuum from Tehran to Tartus on the Mediterranean, they just want to bring their army forward to Syria, which is right next to us.

And I've said that we'll prevent them from having military bases in Syria - - air bases, naval bases -- can you imagine Iranian submarines in the Mediterranean next to the Sixth Fleet or off the coast of Haifa? That's -- we can't allow that, and we don't.

We don't want Iran's aggressive empire to have this continuity towards our borders and towards the Mediterranean. That's a very great danger. They also are trying to arm their Hezbollah proxies in Lebanon with precision- guided missiles that could hit targets inside Israel with the accuracy of five meters, ten meters. That's very dangerous.

I mean, it's clear that we won't tolerate that. But this is all Iran.

Everybody said after the nuclear deal that Iran, you know, coming out of the gate would be a more moderate, more peaceful country. The exact opposite has happened. They use the relief of sanctions to get billions and billions of dollars, which they used to fund this aggressive empire, to fund terrorism worldwide, to fund aggression, and I think it's important to prevent them from continuing these malevolent acts, and above all, I think it's critical for the security not only of Israel, but of the world, to prevent this rogue, Islamic, terrorist-sponsoring regime from having nuclear weapons.

You can see on the other side of the world what a rogue regime with nuclear weapons does. Well, multiply that 30 times and you'll get the danger of Iran. Iran must be stopped.

LEVIN: Now, the result of this threat of Iran, many of these Arab Gulf states seems to me, are a little bit more friendly with Israel, is that about right?

NETANYAHU: That's definitely right.

LEVIN: Because you have a common problem here.

NETANYAHU: Well, I think there are two processes. One is, they recognize that Israel is not a threat, but actually their vital ally in countering the Iranian threat. And secondly, you know, over time, they got to understand what Israel is about. It's technology. It's capacities to help them in civilian areas. They're interested in that, too; much more than people think.

So, as a result of these two forces that I described before, security on the one side, civilian technology on the other, there's been a dramatic change. I'd only call it -- you know, I'd call it a sea change or a fan change, you know, it's huge, it's just a complete change of -- in the relationship between Israel and most of the Arab world.

And there are problems left. We have the Palestinian issue that we still have and that we haven't resolved, but in a way, we're out flanking that. For a while, not formally, it won't -- it will take some time, but I draw a lot of hope from the new relationship of Israel to the Arab states and you're quite right, at least one factor, a dominant factor in this change of heart is the recognition of the threat of Iran.

LEVIN: You strongly oppose this Iran deal.

NETANYAHU: Yes.

LEVIN: You took a lot of heat from certain elements in our country and probably your country.

NETANYAHU: I didn't notice that.

LEVIN: Yes, right?

NETANYAHU: What are you talking about?

LEVIN: And you committed this horrific offense of talking to the American people in Congress, and in a very gentlemanly, polite way, explaining your objections to the Iran deal. Can you can explain your objections to the Iran deal and what the position of the Israeli government is right now?

NETANYAHU: Yes, I will, but I want to say one word. Look, we've had tremendous relations with successful administrations. I appreciate the fact that successive American governments supported Israel, even when we had disagreements. I had big disagreements with President Obama, but we signed a Memorandum of Understanding for military aid to Israel for the next decade, and I appreciate that.

But I never hid the fact that I had major disagreements with him, and the biggest disagreement was on Iran. The disagreement was this: The nuclear deal, as structured, basically takes away the constraints on Iran's nuclear program by a date certain. Iran can do anything it wants in the interim, it can conquer countries, which exactly is what they're doing, and then still get the removal of these limitations.

I said, "Look, make sure, don't remove these restrictions until Iran changes its behavior." In other words, condition the lifting of those restrictions not on a change of calendar but on a change of behavior, that's essentially what I said in the US Congress.

That was rejected at the time because people said I was stopping and I was bringing war. I wasn't bringing war. War is coming to us as a result of the fact that Iran is out of its cage. That's what's happening right now.

And I think it's time -- still time, to stop Iran, to put restrictions back on, to say you have to change. You cannot devour one country after the other. That's what they said. They said Iran will now join the community of nations after this nuclear deal. No. Iran is just devouring the nations, that's what it's doing.

I think you need a change of policy I am and very glad to see that there has been such a change in Washington by President Trump.

LEVIN: Let me remind you, every week night, you can watch LevinTV on crtv.com. Give us a call at 844-LEVIN-TV.

Iranian drone violates Israeli sovereignty, and you said that is a big deal, and we're not going to permit that in Israel. Can you can explain that?

NETANYAHU: Well, Iran sent a drone to try to penetrate our territory. We shot it down. We targeted the control center, manned by Iranians of this drone in Syria. It was in a Syrian air base; and you know, we had some, you know, exchange of blows with the Syrian army.

We just won't tolerate this violation of our sovereignty and of our security. So, Iran is trying to come close, we're pushing it back. I think they know we're serious. They understand that we back up our words with deeds. These are not flimsy red lines. They're real. We mean it.

LEVIN: Are you getting support from the West when you draw a line like that? Or parts of the West?

NETANYAHU: I think people understand, we have these concerns. You know, Israel is not a huge country. It's a very powerful country. It's a very successful country. It has a powerful army, but it's a tiny country. I think it's bigger than Rhode Island, but that's about it. It's about the size of New Jersey.

So, we can't -- we don't have margins of error. I think people understand that and they respect that, but whether or not they understand it in parts of the West, we understand it. We just do what we have to do.

In America, I think people get it.

LEVIN: Palestinian issue, this phrase that we use, the Palestinian issue, the Palestinian issue, why is it so difficult to come to terms with the Palestinians? Could part of the problem be is they're really fractionalized? You've got Hamas and you've got Fatah. Is it part of the problem that they use hundreds of millions of dollars to fund and support the families of terrorists and terrorism? What are the issues?

NETANYAHU: Well, it's what you said, Mark. What does it mean when they take out about 10 percent of their budget, you know, about $400 million a year to pay murderers who are sitting in jail for murdering Jews? Or the families of murderers who murdered Jews?

LEVIN: What do they mean?

NETANYAHU: $400 million a year. It sends a message to young Palestinians. Kill Israelis and you will be rich. That's crazy. We don't do that. You know, if somebody murders Jews, Arabs, it doesn't make difference. Israelis, Palestinians, you go to jail. over there, they're crowned as heroes, if they sit in our jail. You know, they're given these stipends. What is this? So, what's the problem? What does it indicate?

It indicates the core of the problem and the core of the problem has never been the Palestinian state. The core of the problem has been the Jewish state. The Palestinians were offered, you know, in 1948, when Israel was established, the UN set out a proposition. Two states, Jewish state and an Arab state. That's how they called it at the time -- an Arab State.

And we accepted and the Palestinians rejected it. In fact, the entire world rejected it and they tried to snuff us out. We were tiny. You know, Israel is a few miles wide, it's nothing.

We were able to survive, and still, when I look back, 70 years later and ask you why is there no peace? Because the Palestinians say, we don't want a state next to Israel. We want a state instead of Israel. And every time they get a piece of territory like in Gaza, we just walked out of it and gave it to them, they use it to fire thousands of rockets at us or dig terror tunnels or send suicide killers against us.

And so, I think the root cause of this conflict is the persistent refusal of the Palestinians to recognize a Jewish state and any boundary, and it's about time that people confronted them and said something very simple to them, which is what I say to the Palestinian leader, Abbas. I say, "Recognize the Jewish state, for god's sake." That's it.

And you know what they say? They refuse to do it. That's the core of the conflict. That's why it hasn't been solved, otherwise it would have been solved long ago.

LEVIN: I hear you're a fan of Churchill, I'm a fan of Churchill, lots of fans of Churchill. Why you in particular are you a fan of Churchill?

NETANYAHU: Well, because he said, "Nip it at the bud." Nip bad things at the bud, and he had the courage to say it when it wasn't popular, and he was right. And imagine what the world would have been like had he been Prime Minister in 1935 and not a few years later.

You may have avoided what he called the unnecessary war. You may have avoided the unnecessary holocaust. You know, when I look at the world today and I say, "Look, we can avoid the unnecessary war. We can avoid the unnecessary horrors by preventing Iran from getting nuclear weapons."

LEVIN: I have to ask you a question, I want to close with this, Mr. Prime Minister. I'm a former Chief of Staff, turned Attorney General in the Reagan administration and I'm a little confounded, I think a lot of Americans are.

We read the stories coming out of your press, this investigation and this - - they now have 1,000 something or 3,000, 4,000. I followed your career and I thank you've been investigated every day of your career, but there are two things that struck me based on my own experience.

Number one, I have a judge and a lawyer texting each other about how to conduct themselves including in the courtroom. I have never seen anything like that.

Number two, I don't know if it's two or three former assistants or people in your government are being pressed by the investigators. They plead the crimes and then the media says, "Uh-oh, Netanyahu is in trouble," and then I read this and I say, "These people are kind of being flipped." So, I don't know how truthful that can be. I don't want to put you on the spot, but what you think about that.

NETANYAHU: Well, I want to think if I want to comment on that, and I may, but right now, my only comment is this. Mark, you are a very perceptive man.

LEVIN: Well, I appreciate that.

NETANYAHU: In more ways than one.

LEVIN: Well, thank you. And I want to thank you for appearing on the program. I am a great admirer of yours, and God bless you and the state of Israel.

NETANYAHU: Thank you, and God bless America.

LEVIN: Amen to that.

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