Israel's Prime Minister Binyamin Netanyahu told German Chancellor Angela Merkel on Thursday Jewish settlement in Judea and Samaria should not be allowed to hinder final status talks with the Palestinian Authority, Germany's Sueddeutsche reported.

The meeting in Berlin between the two leaders was the first of 2011. On the table were issues of contention between Germany and the Jewish state, including Berlin's continued trade with Tehran and banking policies, peace talks with the PA, and Germany's endorsement of anti-Israel resolutions in the UN - the latter of which has been a sore point between Netanyahu and Merkel.

While both leaders touted the productivity of their meeting, it became clear during the press conference they had not succeeded in smoothing out their differences vis-a-vis Israel's negotiations with the PA.

Netanyahu: Final Status Agreement Will Take Time
Netanyahu stressed the only solution to the Arab-Israeli conflict is through negotiations and engagement by both sides, a clear reference to the current trend of unilateral moves and rejectionism by the PA. He added that a breakthrough would take "a good amount of time discussing [outstanding issues]."

The press conference was focused on renewing peace talks between Israel and the PA. Netanyahu stressed Israelis "wait for peace, yearn for peace, and seek peace, security, and stability."

During the press conference, Netanyahu took the opportunity to comment on Tuesday's airstrike in Port Sudan, "There are those who think Israel's hand is everywhere in the world and behind every event, but that's not always true."

"We are looking for peace and stability in a changing world and in a changing region," Netanyahu told the media. "The only stable place here is, paradoxically, Israel. But we can never be sure about this stability because we do not know what will happen in Iran."

Merkel: Final Status Agreement By Autumn
Merkel noted the upheaval in the Middle East and characterized a final status agreement between Israel and the PA as "more urgent than ever."

At the same time, Merkel categorically rejected the unilateral creation of a PA state, saying, "The goal remains a two-state solution. Unilateral recognitions make no contribution to this goal, which I think is essential to meet."

Merkel proposed new negotiations should take place through the Middle East Quartet, which consists of the United Nations, European Union, USA and Russia.

Summing up Germany's attitude, Merkel said that her government is committed to the goal of achieving a final Israel-PA peace agreement by the autumn of 2011. "Important progress should and can be achieved in our opinion," she added.

Merkel did not explain why she felt this was possible despite abject refusal by Palestinian Authority officials to come to the negotiating table as well as unrealistic PA preconditions for talks, and strident insistence on taking unilateral steps toward statehood - which are a blatant violation of the Oslo Accords that allows the PA to exist to begin with.

"The nuclear program of Iran is more than ever a threat, " Merkel said. "And everything must be done to prevent Iran from acquiring nuclear weapons in coming. In Iran, we saw the region's first democratic revolutionary movements begin, and they were put down brutally, too." 

PM Briefed On Thursday's Terror Attack
During his Berlin trip, Netanyahu was briefed Thursday afternoon's attack from Gaza, which left two Israeli civilians injured.

He said that Israel would not tolerate attacks from terrorist organizations, Voice of Israel state-run radio reported.

Netanyahu will visit leaders in Prague after his Berlin vist. The Czech Republic is widely considered one of Israel's strongest European allies.