While the Iranian regime will survive the current turmoil in the short-term, the upsurge in civilian opposition "has called into question the rule of the ayatollahs and of the fundamentalist regime," Finance Minister Yuval Steinitz said on Tuesday. What's more, the former chairman of the Foreign Affairs and Defense Committee told The Jerusalem Post, the regime's self-evident difficulties have undermined its capacity to export the "Islamic revolution" across the Muslim world. "When states or groups see a certain government declining, the motivation for maintaining relations also is reduced." Steinitz said he did see emphatic room for optimism that the unrest would ultimately see the halting of Iran's ongoing drive toward a nuclear capability, "but it certainly does impact the regime's ability to proceed. It becomes much harder for the administration as soon as it has open antagonism directed against it from its own people. Also, as the regime becomes less popular, there are fewer people within Iran who are willing to aid the government in any program, including the nuclear one," the minister said. Noting that Egypt last week signed a deal with Australia for the construction of a nuclear reactor, Steinitz acknowledged that Egypt had stressed the peaceful nature of the program, but said President Hosni Mubarak had also, in the past, spoken of an Egyptian nuclear program "as a counterweight to Iran." The minister recalled that he previously stressed to the US Senate the dangers of the Iranian program prompting regional nuclear proliferation, involving Egypt, Saudi Arabia and Syria. Still, on a more positive note, he said that Israeli-Egyptian ties had been enjoying "a new honeymoon" in the past year. Amid the current fevered speculation about a possible deal for the release of kidnapped IDF St.-Sgt. Gilad Schalit, Steinitz argued that Israel should not seal a deal "at any price.' Next time, he warned, Israel could be asked to exchange hostages for territory. "Today we could be asked to return Rajar and tomorrow it could be Zarit [on the northern border]. And we'd say, 'What's a community here or there." Instead, Steinitz advocated what he described as "aggressive pressure" against Hamas to bring about Schalit's return. "Operation Cast Lead was a wasted opportunity," said Steinitz. "We should have taken control of all of Gaza... and released Gilad Schalit. And if we had done so, I think there would have been less international criticism." He added that the current situation regarding Gaza, with "an armed Palestinian entity supported by Iran on our border," was becoming "a strategic problem." This reality "is a violation of Israel's basic security doctrine, that there will not be any armed bodies west of the Jordan River," he argued. "Israel cannot accept an armed Palestinian state and that is exactly what there is in Gaza," said Steinitz, indicating that the situation was untenable and would have to change. "Even prior to the Six-Day War, there was a quiet agreement with Jordan that there would be no major military concentration of forces in Judea and Samaria," he recalled. "Even without peace, there was an understanding that no major tank columns or artillery units would be placed on the West Bank of the Jordan." Under the Oslo accords, too, he went on, "Israel maintained that we would not allow Palestinians to bring in missiles and rockets." Yet in Gaza, "that is exactly what happened."