Negotiations focusing on a divided Jerusalem must be halted, as such a move would only lead to a vacuum which would be filled by Hamas and Iran, opposition leader and Likud chairman Binyamin Netanyahu warned on Wednesday.

"I am not saying what to do, but what should definitely not be done is to retreat from Jerusalem, and to allow for another base of terror here, in the heart of the state," Netanyahu said during a speech at the Jerusalem Conference. "Let's be clear: Wherever we retreat, Hamas goes in. An agreement with weak Palestinian officials in the Palestinian Authority weakens them even more."

The Likud leader pointed to past Israeli withdrawals as examples of the danger posed by a divided Jerusalem.

"Two of our withdrawals brought Hizbullah and Hamas to positions of power - the withdrawal from Lebanon strengthened Hizbullah, and the withdrawal from Gaza strengthened Hamas," Netanyahu said.

"When there is an agreement with a Palestinian government which is this weak, it signals to Hamas and to Iran that Israel is leaving and Iran is able to fill the vacuum," he continued. "If we withdraw from Jerusalem, Hamas will go in. It will turn into a haven for global terror. If you want peace in Jerusalem, leave it united."

During his speech, Netanyahu attacked Prime Minister Ehud Olmert directly, accusing him of duplicity, and saying that despite claims to the contrary, Palestinian-Israeli negotiations are discussing core issues, including Jerusalem.

"The prime minister said that we are not talking about Jerusalem, and that we are leaving it until last. But I say, if it looks like a duck, and it walks like a duck, then they plan to divide Jerusalem," Netanyahu said.

"The only possible process to have with the Palestinians is the economic process. My government would develop the Palestinian economy, assist in investments and the creation of employment, and simultaneously test the ability of the Palestinians to prevent terror. The economic process does not need to be tied to the political process," the opposition leader concluded.

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