Israel bank chief urges action for peace

JERUSALEM (AP) -- The outgoing governor of Israel's central bank took a parting shot at the Israeli leadership Thursday, saying the country hasn't done enough to push for peace with the Palestinians.

Stanley Fischer, an internationally respected economist, has been a loyal partner to a series of Israeli governments during his eight-year tenure and rarely voiced political opinions in public. But in an interview to Army Radio, Fischer said Israel should push to strengthen Palestinian leaders to help create an independent Palestinian state.

"I think we could have done more efforts to reach an agreement with them," Fischer said.

His comments came as U.S. Secretary of State John Kerry was expected in Jerusalem later Thursday to meet with Israeli and Palestinian leaders, his fifth visit in recent months to try to jumpstart peace negotiations.

Talks have stalled for nearly five years, in large part over disagreements on Israeli settlement construction. The Palestinians have demanded all settlement building in the West Bank and east Jerusalem end before renewing talks, while Israel wants no preconditions to negotiations. The Palestinians claim the West Bank and east Jerusalem, areas captured by Israel in 1967, as part of their future state.

Israeli leaders have often expressed the belief that there is "no partner" in the Palestinian leadership that can be trusted to broker a peace deal. Fischer argued that there are worthy partners for peace in the Palestinian leadership, "but we have to help them strengthen, we need to help them create the state they want to create."

He said Salaam Fayad, who recently resigned as Palestinian prime minister, would have been a good partner for a peace agreement, but did not receive enough financial support from donor countries. "You can't rule a country without money," Fischer said.

Fischer, who is Israeli-American, added that he believes it is possible to reach a peace deal in which Israel gives up most of the West Bank and keeps only the large settlement blocs, concentrated population centers located near Israel's frontier with the West Bank, in exchange for compensation to the Palestinians. He said this solution is "almost clear to all."

Israeli Prime Minister Benjamin Netanyahu has said he is interested in peace negotiations with the Palestinians, but expressed skepticism Thursday about their effectiveness.

"Let no one among us delude him or herself that if we make a peace agreement with the Palestinians, that this agreement would eliminate the wild defamation of the state of the Jews," Netanyahu said.

Before taking the post of Israel's central bank chief, Fischer served in top posts at the World Bank and International Monetary Fund, and was a senior executive at Citigroup. As a professor at MIT, Fischer advised Ben Bernanke, now serving as U.S. central bank chief.

Fischer has served as the Bank of Israel's governor for eight years. He is stepping down this month.