President Shimon Peres took a hard line on Hamas in an hour-long meeting with Iceland's Foreign Minister Ingibjorg Solrun Gisladottir on Tuesday.
Gisladottir is visiting Israel for the first time after assuming office less than two months ago.
She asked Peres was why Israel refuses to negotiate with Hamas.
Peres told her that European leaders who have no experience of living with day-to-day terrorism, and therefore do not understand it, should not criticize the measures Israel takes to protect its people, according to Beit Hanassi.
While the IDF always prefers to take the moral high ground, he said, there are, unfortunately, times when innocent people are caught in the cross-fire as the IDF retaliates against terrorists.
Peres also said that as long as Hamas declared it was not bound by agreements that the PLO had reached with Israel, and as long as Hamas pursued a policy of terrorism and murder and fired rockets at Israeli civilians, Israel could not conduct talks with Hamas, according to Beit Hanassi.
"If someone shoots you in the street," he said, "who's at fault, you or the assailant?"
Peres told Gisladottir that Israelis on the Left and the Right were united in their desire for peace, but only on the clear understanding that there would be two states for two nations that would live side by side in full peace and security.
But the reality of the situation is that Hamas is not interested in peace, he said. Hamas's goal is to establish a fanatically religious state that would be an extension of Syria and Iran, he said.
For the sake of peace, Israel evacuated Gaza in a difficult and painful process, Peres continued, but since then rockets have been fired at Israel without letup, even though not a single Israeli lives in Gaza today.
Israel could not allow Palestinian extremists who were opposed to peace to impose their rule and murderous policies on the rest of the Palestinians, Peres said.
Gisladottir is also leader of the Social Democratic Alliance. Iceland is currently a candidate for a seat on the UN Security Council for 2009-2010, and the purpose of her three-day visit is to familiarize herself with Israeli issues as well as those of the region.
Gisladottir also met with Foreign Minister Tzipi Livni.
During their working lunch, Livni outlined conditions in the region and the Israeli position on the new Palestinian Authority government headed by Prime Minister Fayad Salaam.
Although both Israel and Iceland describe relations as warm, neither has an ambassador stationed in the other. Gisladottir will tour the border with Syria and Lebanon, and visit Sderot.
The two countries hope to strengthen economic ties and to continue their cooperation in the development of Third World countries.
Peres is due to meet on Wednesday with European Union Foreign Policy chief Javier Solana and on Thursday with China's special Middle East envoy, Sun Bigan. Ex-British prime minister Tony Blair, the Quartet's new Middle East envoy, has asked for a meeting with the new president next week.
Aaron Magid contributed to this report.