Binyamin Netanyahu could have chosen to launch an "I told you so" offensive after the failure to crush Hizbullah last summer. From the start of the war, which he strongly backed, he had urged the government to authorize a major ground offensive, regarding this as the only means to achieve the declared aim of breaking the Iranian-inspired fighting force and remaking the reality in southern Lebanon. But Netanyahu, who was one of Israel's more insistent and articulate media defenders as the fighting raged on, has allowed himself only relatively muted criticism of the stewardship of the conflict. His chosen course, it seems, has been to rely on the electorate to draw conclusions as to who is best qualified to govern Israel, rather than incessantly lambasting the performance of those currently in office and hyping his own credentials. If so, the strategy appears to be working, with opinion polls suggesting that, given the chance, the public would turn back to the man who governed Israel from 1996-99, even though it has only been a few months since this same public rejected him so thoroughly as to lower the Likud's Knesset representation to a pitiful dozen mandates. His aides argue privately that it was not so much Netanyahu himself that the voters rejected, as a combination of the painful-but-necessary economic reforms he initiated when finance minister and the sordid, microphone-silencing, vote-trading machinations of the Likud's Central Committee, which he has moved to reform. Those same aides acknowledge that, for all the current government's unpopularity, the balance of interests among the various Knesset factions could stave off further elections for a while yet. But when polling day comes, they insist, their man is set fair to emerge on top - provided he sticks to the dependable rather than arrogant approach, "softly-softly" rather than "I told you so." So softly is Netanyahu treading these days, indeed, that even his voice is barely audible on the tape of our interview, which was conducted at the Herzliya conference shortly before he flew to the US and UK this week to muster support for the campaign to bring Iranian President Mahmoud Ahmadinejad to trial for inciting genocide. We talked almost exclusively about Iran; the interview was cut shorter than anticipated, and I didn't get to questions I'd wanted to ask about Syria, the Palestinians, settlement policy and more. Netanyahu is convinced that the ayatollahs will ultimately be thwarted by "the forces of freedom, the forces of moderation, both in the world and within Islamic societies." But the acid question for the Jews, and specifically for the sovereign Jewish state that Ahmadinejad has made the prime initial target of his genocidal ambitions, is "what happens in the interim?" What do you think President Bush is going to do about Iran? I don't know. It is perhaps the most important test of his presidency. All the things that he's been advocating - standing up to terror, preventing terror from acquiring the means of mass death threatening our lives and our civilization - all of that will be severely tried if the ayatollah regime has nuclear weapons. All nuclear proliferation is bad, but if Holland gets nuclear weapons it is not as bad as a runaway messianic Islamic regime with an ideology of apocalyptic mass death. The president of the United States has said that it is unacceptable. Ultimately he will have to answer the question of what is he going to do about it. Can Iran still be stopped short of military action? It can be stopped. Whether it can be stopped short of military action is something that is worth trying. So far the international community is not trying. The sanctions at the UN are welcome in the sense that at least there is an international consensus, but the teeth are not sharp. It is possible to sharpen these economic teeth, either with tougher UN sanctions or with the addition of voluntary sanctions - by companies, pension funds, leading corporations, who divest their holdings in companies that do business in Iran. Would this be sufficient to get the Iranian regime to stop its nuclear program? No one can answer this until it is tried. But it has to be tried quickly to make a difference. After a few months, if it has no effect, you can ask whether we should move on to the next step. But this is roughly the time that is available: We are talking about a few years, several dozen months. And the next step if all else fails? [At the UN] you've got the gamut of political and economic sanctions, [through] to blockades and military action as well. [But] I don't see the UN system punishing Iran sufficiently. I do see selective boycotts and selective economic sanctions wielding a more powerful effect and perhaps leading to more effective UN action. If you just leave it to the Security Council, they will take their time and think about it. If you couple that with independent action in several countries, particularly in the economic and judicial process, then I think it might cause something of a pause in Iran. What happens if [this process] doesn't go forward? Well, all I'll do is repeat what President Bush has said and what others including me have said: Iran should not be allowed to acquire nuclear weapons. Do you share former National Security Council head Giora Eiland's assessment that Ahmadinejad would sacrifice half of Iran to wipe out Israel? The problem with Iran, unlike any power that possesses nuclear weapons today, is that it will not necessarily be deterred. It may be right now led by a messianic cult that is willing to risk, even sacrifice, its own lives, for some heavenly apparition in their minds... an apocalypse in which the millions of believers will go to heaven and the millions of non-believers will go to hell. It is very hard to predict what people will do if they actually believe this. There is reason to believe that Iran is now governed by these wide-eyed believers who have no inhibitions and apocalyptic goals... These are people who are planning to get control of weapons of mass genocide without any hesitation in using them. You've drawn comparisons between Iran and the Nazi regime. But you don't need the [Nazis'] industrialization of murder to kill vast numbers of people anymore. There are similarities and differences. The similarity is a global fanaticism that is sparked by Jew-hatred. Jews were the targets of the Nazis and are the target of the extreme militant Shi'ites. But only the first targets. Part of a larger assault. The difference, of course, is that the goal the Nazis put forward was of racial superiority and here the goal is the superiority of a religious creed. The other difference is that Hitler embarked on a world conflict and then sought to develop nuclear weapons, and Ahmadinejad is doing [it the other way around]. And, further, that there weren't a billion Germans in the world to infect with this mad faith. But from the point of view of the Jews, here's the problem: I have no doubt that, just as in the case of Nazism, militant Islam will eventually be defeated by the forces of freedom, the forces of moderation, both in the world and within Islamic societies. It is an untenable thing, to twist reality and society to agree with your creed. It just doesn't last. The question is what happens in the interim. In the case of Nazism, it went down after it took with it a third of the Jewish people. In the case of militant Islam, it plans to take down immediately that half of the Jewish people who have converged on Israel. In the case of Nazism, the Jews were defenseless because they were dispersed and had no state. In the case of militant Islam, [its advocates] think they can do away with the Jews simply because we have concentrated in our own state. The main difference is that we didn't have the powers of statehood. We do have them now - to act against militant Islam, to mobilize others. Is there a problem of the physical concentration of the Jews in the face of this kind of threat? The answer is to a certain extent yes. But there is also the advantage of having the tools of sovereignty that the Jews lacked [in the Nazi era]. Do you trust the government to know how to handle this? So far this government's performance has not been stellar. (Lengthy pause.) Would you care to elaborate? Well, look at how they dealt with just a proxy Iranian regime. That record leaves a lot to be desired. I hope they'll do a better job. I'm not going to talk about what we need to do to muster our needs for our own self-defense. But on the international front there are many things we should be doing that we're not doing. For example, this effort to delegitimize this [Iranian] regime through bringing Ahmadinejad to trial for inciting genocide, something that is expressly forbidden by the UN's anti-genocide convention. Or, for that matter, the gathering of initiatives to get divestment from pension funds and other financial institutions that invest [in Iran]. The government now says it is starting to act ... Good. Glad to hear it. If they're beginning to take on these initiatives, then I'm for it. And I'm not saying that cynically. Fine. Good. [But] there is a lack of leadership and a lack of the purpose and central direction that is required in dealing with repelling this threat both internally and externally. Both domestically and internationally this has to be the guiding purpose of the government. It has to be handled first and foremost by the prime minister, and from the prime minister down to levels of government. It is a time of emergency. And if marshalled effectively, we do have the tools necessary to protect ourselves? I think so. But we're running out of time. That's the only really irreversible cost of the continuation of this ineffective government. The fact that they don't continue the economic reforms is regrettable but correctible. The fact that they are not paving the ground for educational reform and health reform is again regrettable but correctible. All these things can be taken up again if there is a new government. But getting the nuclear genie back into the Iranian bottle once it has been released will not be feasible. When the chief of the Mossad says that within three years Iran will have a nuclear weapon, that's 1,000 days, and each day that goes by is a day lost to our efforts to stop this. Do you fear a sell-out of Israel by the international community? What they'll try to do is say, 'Well, in order to calm them down, we should have some movement on the Palestinian problem,' which of course sounds good on the face of it. But then you remember that if the pressure is on Israel to divest itself of more territory, who does the territory go to? It goes to Hamas, which means effectively it goes to Iran. You don't weaken Iran by strengthening Iran and giving it forward positions to have its proxies fire rockets at Israeli cities. There are a lot of non sequiturs in the positions of Western governments right now... It's very hard to engage with something that they've been believing for close to 40 years - namely that the root cause of this problem is the Israeli occupation of Arab territory, and not realizing that in fact it is as a result of Arab aggression against an embryonic Jewish state. And second, this question has been superseded by Islamic forces that don't care a wit about territorial compromise and want to eliminate Israel altogether and many other countries and regimes with it. Ceding land to Hamas will not help. It will communicate to Iran that the West has no stomach to really face up to the Islamists and that in fact Iran is winning. That is exactly what happened the last time we did it, which was a year ago [with the Gaza disengagement]. Is there a moderate Palestinian leadership? Is Mahmoud Abbas a moderate Palestinian leader? Certainly more moderate than Hamas. His recent speech left something to be desired. He said that guns should never be used against Palestinians, that we will not fight extremists... Would you [if prime minister] try to bolster him? I would try to bring down Hamas. I would make clear to Abbas what it is we expect of him. Do I think there more moderate Palestinians? Yes. But I think that they are weak. They don't have a chance so long as Hamas rules Palestinian society. That has to be changed. But whatever we do with the Palestinians is unlikely to impact Iran. Whatever we do with Iran is much more likely to impact the Palestinians. The Islamic tide has swept over Palestinian society and is trying to sweep Iraq and much of the Middle East and the world. If you stem that tide at its source you have a much better chance of having agreement downstream, so to speak. But if you build small ramparts here, they can be washed away by a nuclear-armed Iran. With a nuclear-armed Iran, the danger is not only physically to Israel but because it will erode and destroy any of the peace agreements we have made and will make with the Arab [world]. How would you have fought the war differently? At the time, you said you would have launched a ground invasion early on. Yes, that's what I would have done. I would have fought the war differently... by concentrating much larger forces at the enemy's weakest points.