Fareed Zakaria: Ladies and gentlemen, welcome for a very special session held at the largest forum that the World Economic Forum has, the largest gathering the World Economic Forum has, as befits my guest. I just want to begin with a few ground rules before I start the formal session just to remind people this is being taped for my CNN program, so it is all the more imperative that you turn off your phones, devices of every kind so that we're able to have this session taped and so that millions of other people can enjoy what you are going enjoy, which is a very extraordinary opportunity to talk to the Prime Minister of Israel.

Henry Kissinger says, "Those who don't need introductions crave them the most". I am going to assume that there is an exception here and that Prime Minister Netanyahu, who has dominated the Israeli political stage, the world stage at many moments, does not need an introduction and we will get right to it.

Mr. Prime Minister, welcome. Thank you so much for coming.

Prime Minister Benjamin Netanyahu: Thank you. I'm going to introduce you later.

Zakaria: Mr. Prime Minister, the International Atomic Energy Agency now says that Iran has destroyed 98% of its enriched uranium; that its plutonium pathway, the Arak facility, has been rendered inoperable; that it has done more than most people imagined, and more importantly that the setbacks to its program, the discontinuation of the vast majority of its centrifuges to enrich uranium - that these setbacks are much more substantial than most military experts believed would have been possible by airstrikes, by military strikes. Shouldn't you be happy and celebrating this?

Netanyahu: Well, we always wanted this result, but we wanted something else: We wanted to make sure that Iran doesn't reconstitute a much larger capability to enrich uranium with 200,000 centrifuges, which they'll be free to do after 15 years. So the issue was never what happens now; the issue is how to prevent later Iran breaking to the bomb.

Zakaria: But to be fair, but to be fair, Prime Minister, you were suspicious about the interim agreement, said they would not abide by it; they abided by it. You were skeptical that they would actually make these changes that they have made, particularly to Arak, which was the facility you wanted the bunker-buster bombs for. Isn't it fair to say that Barack Obama has achieved through diplomacy what you could not achieve through military action?

Netanyahu: I always said that you could achieve through economic sanctions and the threat of potent military force results that would set back Iran's program. So that has been, that's the first part that I think is important. But the concern that I have and that others have in the region, just about everyone, is that after a period of time, Iran could resume on a much larger scale its military program because there is no connection to the lifting of sanctions or the lifting of restrictions on Iran's nuclear program to Iran's behavior. It can continue to send its terrorists and its covert armies and overt armies throughout the Middle East, and would have the freedom to enrich as much uranium as it wants, which is the critical component for bombs. That was the source of our differences, the main source of our differences.
And, look, I hope that I'll be proved wrong. I hope that Iran will be seen to be a moderate country moderating its, changing its internal repression, stopping its external aggression. I hope I'll be proven wrong. I'll be the happiest person on...

Zakaria: But you don't have to be...

Netanyahu: But I'm not sure, I'm not sure that I'll be proven wrong and I have my doubts and we shall see very soon.

Zakaria: But you don't have to be proven wrong on those issues. The question is will they be constrained, will they be inspected, will they be monitored, and will they for 15 years at least not have the capacity to quickly develop a nuclear weapon? And if that happens, you get 15 years, which is surely not an inconsiderable period of time.

Netanyahu: Well, you're right and it's no secret that I oppose this deal, but I think that after the deal, that we have basically, three things that we have to do, and I think on this we see eye-to-eye with the United States and with President Obama. The first thing is keep their feet to the fire. You have obligations, keep them. We'll all make sure that we monitor any violation and of course that would require taking appropriate action, reinstituting sanctions and the like.

Second thing is resist Iranian aggression in the region, which continues and might even accelerate, given the amount of funds that they're going to get with the lifting of sanctions. And the strongest way to stop Iranian aggression is to bolster America's allies, first and foremost which is Israel. So we're negotiating now with the United States, I'm negotiating with President Obama, a Memorandum of Understanding to support Israel's security for the next decade.

The third thing that I think has to be done is beyond the region to begin to dismantle the global terror network that Iran, and through its henchmen Hezbollah, is establishing in the Eastern Hemisphere and in the Western Hemisphere. I think that's a common agenda that is actually very good for virtually all the countries in the world, and I think it should unite us on a purposeful plan of action.

Zakaria: Do you find President Obama responsive on the issue of providing Israel with even more security guarantees and cooperation than he has in the past?

Netanyahu: Yes, I think this is a real discussion that's taking place as we speak about a military support package for Israel. Remember that Israel faces - Iran's going to get about a hundred billion dollars now. We're talking about the military support, not the economic support. I've ruled that out. In fact, in my first term as prime minister, I ruled out economic support. I said we'll be able to carry our own weight. We don't need economic welfare, you know? We'll build our own economy. But in terms of protecting Israel, and by extension protecting our part of the region, the American assistance to Israel is about 3.1 billion dollars a year. We're talking about a bigger package, but remember that even over a ten-year period, it pales in comparison to the enormous funds that Iran gets.

So yes, we are talking about it; I appreciate it. I think we'll probably reach a successful conclusion, I hope in the coming months. And it's a sign of how strong the American-Israeli alliance is. You know? We can have our disagreements. We do. They're always publicized, they're very dramatic. But the alliance between the United States and Israel is so strong and so powerful that the only thing that's collapsed is the talk of the imminent American-Israeli collapse. It's very clear that's not going to happen and that this partnership is rock-solid and will remain so.

Zakaria: The Iranian foreign minister, when confronted with some of your arguments and objections said publicly, "How can Israel, which has nuclear weapons, sit in judgement over Iran, which does not?" What is your response to him?

Netanyahu: Well, I'm not going to talk about his allegation, but I will say this: Israel doesn't seek to destroy anyone. In Iran still today after the agreement, during the agreement, before the agreement, Iranian leaders are talking about their goal to eradicate Israel off the face of the earth, to annihilate the six million Jews of Israel while denying the Holocaust that murdered another six million. That's what they say. They give a billion dollars a year to Hezbollah for the purpose of creating a warfront and the ability to bomb Israel's cities with statistical missiles, a hundred thousand, and thousands of precision-guided missiles. It's all Iran. You take away the scaffolding of Iran and Hezbollah collapses. They support Hamas to the tune of about a hundred million a year for the purpose of bombing us and Iran... Hezbollah and Hamas say, "Our goal, like Iran, our patron's goal, is to wipe out the Jewish state". So I think that to have a country committed to our destruction and the conquest of the Middle East have nuclear weapons, well, that ought to raise some concern and so there's no symmetry. Israel doesn't seek to eradicate Iran; Iran seeks to eradicate Israel.

Zakaria: What do you think is going on in Syria and is there any path out? You and I have talked about this in the past and you've essentially said they're all killing each other, we're staying out of it except when it affects our core interests. Is it getting so messy, so bloody, that inevitably you will have to be more involved?

Netanyahu: Well, so far the only way we're been involved is first of all to offer humanitarian help. I've set up a field hospital, a military field hospital, right about 50 yards from the Syrian-Israeli border on the Golan Heights. We've taken in thousands of children, women, men, amputees, horribly disfigured, taken care of them at our own expense and we take care not to have their photographs taken because if their photographs are published, they could never go back to Syria. They'll be executed on the spot. So that's one involvement, a humanitarian involvement.

The second is, I've said, look, we will not allow Syrian territory to be used against Israel. So if anybody tries to pass - which is Iran - tries to pass to Hezbollah through Syrian territory game-changing weapons and we see it, we interdict it. If Iran tries through its proxies to set up a second warfront along the Golan, we take action to prevent that. That's the extent of our intervention.

Now if you ask me what will happen in Syria, can a unitary Syrian state be put together again? I doubt it. I wish it could happen, but I'm not sure you could put Humpty Dumpty back together again. I'd say the best result you might be able to get is a benign, sort of benign Balkanization, benign cantonization in Syria. That's as good as you're going to get.

But right now we have two concerns in Syria. We don't want ISIS to win and we don't want Iran to have a Syrian dominion from which it can operate these two warfronts against us and those are our concerns and we take our actions accordingly.

Zakaria: But isn't there a problem there, which is ISIS and the Assad regime, which is supported by Iran and Russia, are the two main fighting forces. In other words, you're searching for or hoping for a third outcome, a third force. In a way, so are the Arabs, so is the United States. Is it viable?

Netanyahu: Well, my rule is simple, you know? When both your enemies are fighting each other, don't strengthen either one. Weaken both. And that's more or less what we try to do. I think ISIS - and there's a difference between ISIS and Iran. There are two sides of the militant Islamic coin. There's a difference. ISIS wants the caliphate now, here and now. That's the power of ISIS, the idea of here and now so we'll redeem history, if you call it that - a really sick redemption - and you, the individual fighters will be redeemed and you'll go to this Islamist paradise with all the trappings right away. That's how they get all these people to come to fight for it.

Iran says not caliphate now, but imamate later. The Hidden Imam will come back later and first we have to establish step-by-step our power. But both of them want to dominate first the Middle East and from there well beyond.

I think that the first order of the day is to defeat ISIS. I don't think it's an un... I think it's a doable thing. I think ISIS can be defeated. ISIS is an idea plus territory plus oil. It is possible to knock out the oil, which takes away half their revenues. It is possible to get at the nerve centers of their ideas, which are concentrated basically in two places - it's in Raqqa and it's in Mosul. It doesn't require taking care of all of Syria and Iraq, and we have these discussions with the United States and with others about this task. But to the extent that people ask our view, that's our view.

Zakaria: Why do you think, as far as I can tell, there have not been many or hardly any Palestinians who have been seduced by ISIS?

Netanyahu: Well, they're probably more Swedes in ISIS than Israeli-Arabs, and that's good. But nevertheless, it's a concern that we all have. I mean, the Daeshization of the Islamic world is a great danger, first of all to the Islamic world, and then to everyone else. In Israel I think, Israeli-Arabs I think are part of our society. We have a lot of things that we need to do. My government just put in billions of dollars' worth of programs now to integrate more of our citizens, our Arab citizens, into our society, especially into the economy, which I think is important. The Palestinians themselves are split - half of their society is controlled by militant Islam under the Iranian sway and there is Daesh in Gaza, and the other half, I think we've been careful to enable the economy to continue even as we have this wave of stabbings because we don't want to, the overall population to fall into that trap.

But I think this is going to be a constant challenge. I think we have to, I think we have to fight ISIS both as an idea, but we also have to fight ISIS as a state. The greatest danger to the peace of the world comes from the two Islamic states: the Islamic state of ISIS and the Islamic state of Iran. Those are the two principle disruptors of the international order stitched in between East and West and now spreading east, west, north, south. And I think that we'll have to deal with them separately and in different ways. ISIS is defeatable in the short order if there is will and system and strategy.

Zakaria: How do you defeat the idea? How do you...? If you, if a Muslim leader were to come to you and say, look, 95% of my society is moderate, mainstream, non-violent, but I do have these pockets of extremism. What do you think is the answer to purging these Muslim societies of this, of extremism, even if it affects only a small minority?

Netanyahu: You want my...?

Zakaria: Yeah.

Netanyahu: In a word? I think the key is despair, it's to rob them of hope, the hope that their wild fantasies will actually win out the day. That's the main thing you have to say. They have to keep on defeating them over a persistent... Because this has been around, you know? This has been around for centuries. It's been brewing under the surface and now it pops up and people have hope. Yes, we can establish the instant caliphate; yes, we can dominate the world; yes, we can re-impose a medieval creed, a savage creed that is a thousand years old, over modernity. And you have to show the opposite. No, modernity defeats you.

I really think this is the issue, and you say, well, can you actually root out the idea? I fall back on a conversation I had with my father. My father was a great historian of the Jewish people, but he was my father. He died a few years ago at the age of 102, and I remember when I was six years old, which is about 60 years ago, and I was going to our garden, the garden around our house. And I see my father working at the garden. And he said, "Well, help me out. I'm planting these saplings, these little trees. You take a, you know, take a hole and start digging a ditch, and now, you know, pour some... You have to weed out the weeds, and then pour water and then fertilize them." Okay? I did that. A year later I go out and my father's working in the garden again. I said, "Father, what are you doing?" The same thing. "Come and help me. You know. Dig the ditch around the trees, and weed out the weeds." And I said, "But Father, we weeded out the weeds last year." He said, "You have to keep weeding the weeds out. But you see, the sapling has grown."

Today, 60 years later they're gigantic trees. Israel has grown like that too. You fight the weeds. You have to pull out the weeds. You have to deprive them of the hope that the weeds will overcome the garden. And that's a continuous battle. I don't know, and I cannot tell you, that there is a formula for the victory, how to weed out medievalism in modern times. Science, education, all that should be working for us, and maybe the information technology that we discussed here will be a major tool for that. Because you have to give people choice, give people the freedom to see other possibilities and not to cloister young minds, you know, with these extraordinary and savage dogmas. So I would say that's a solution.

If you ask me to project into the future and you say, "15 years from now, who wins out - modernity or medievalism?" I would say modernity wins out. Because ultimately people would prefer the benefits of freedom, choice and pluralism. But we saw that in the previous century, that another dogma arose, thought it would conquer the world. It took a lot less time to knock it out and in the process 50 million or 60 million died, including a third of my own people.

So we want to make sure that number 1. We don't have these casualties and these tragedies. But we have to, the main thing we have to do is keep weeding it out. Don't succumb. And don't lose hope. You have hope, they should have despair.

Zakaria: In your struggle against Iran, you have made some unlikely allies. There is a kind of a tacit alliance between the major, what I call the moderate Arab states, Egypt, Saudi Arabia and others with Israel. Is that an awkward situation to be in, given that Saudi Arabia is an Islamic state. It practices many of the forms of Islam that people regard as highly puritanical, quasi-medieval, even medieval. They chop people's heads off; they chop hands off; they have laws about blasphemy and apostasy. Not a lot of churches in Saudi Arabia, certainly no synagogues. How comfortable are you with that tacit alliance?

Netanyahu: I see the world as it is, not as I'd like it to be only, or not as we remember it nostalgically, and I work from that premise. I think Saudi Arabia recognizes today that it needs a path to reform as well, and they see, as do many in the Arab world that, they see Israel as an ally rather as an enemy, because of the two principle threats that threaten them. The first is Iran, and the second is Daesh. If you're closer to the Persian Gulf, Iran comes first. If you move to North Africa, to Egypt, Daesh comes first. But there's always the second. And so when they look around and they say, "Well, who can help us in this battle that threatens our very future?" Obviously Israel and these Sunni Arab states are not on opposite sides, and that's natural.

That, I think, tells you that there's a bigger story. I said this yesterday. I went to, with my wife, to a dinner, the opening dinner here and I met some of our European friends, including members of the EU. And I said, look, I have one request. That the EU policy shaped in Brussels, not the individual European countries but the EU policy vis-à-vis Israel and the Palestinians, merely reflect now the prevailing Arab policy to Israel and the Palestinians. And there's a great shift taking place and it might be. We used to think that is we solve the Palestinian-Israeli conflict it would solve the larger Israeli-Arab conflict. The more I look at it, the more I think it may be the other way around - that by nurturing these relationships that are taking place now, that could actually, with the Arab world, that could actually help us resolve the Israeli-Palestinian conflict. And we're actually working towards that end.

Zakaria: The American ambassador last week had some very strong words about Israel's settlement policy. Do you believe that there is any prospect of a solution to what you I know regard as a huge problem, which is that Israel rules over vast millions of Palestinians who have neither a country nor the right to vote. What is the... How is this going to end?

Netanyahu: First of all they have their own government, they do vote.

Zakaria: Not national sovereignty.

Netanyahu: Yeah, well, I think it's a question of who has, ultimately, the security control. Because what we've seen is that when you have Western forces withdraw in the Middle East anywhere, then immediately, what comes in is militant Islam. It happened to us in Lebanon - we went out, Iran walked in with its proxy Hezbollah; it happened to us in Gaza - we walked out, Iran walked in with Islamic Jihad and with Hamas. And of course people in Israel who want a solution, as I do, between us and the Palestinians, say well, we don't want to govern the Palestinians, but we don't want the territories that are handed over to them to be used as territories, as a launching ground for militant Islamic attacks, as happened before in Lebanon and in Gaza.

So, the only way you can resolve this is to have a negotiation, to resolve all the outstanding issues, first and foremost the persistent refusal to recognize the Jewish state in any boundary, which I think is the core of the Israeli-Palestinian conflict. And, you know, you can't resolve something like this, including the question of settlements and borders and security, without a discussion. We haven't been walking away from negotiations. Unfortunately the Palestinian leadership, for the past seven years, has deigned to meet with me for six hours in the first year. And since...

Zakaria: But they say you create facts on the ground by building the settlements that make it highly unlikely that there will ever be a Palestinian state.

Netanyahu: Well, they say that, but in fact that's not the case. Because the settlements take up a very small amount of land, and in any case, it's something to be negotiated. Let's negotiate.

And every time I come to a forum like this, I say, okay, you know what Fareed? Issue the invitation to Abu Mazen, President Abbas, and it will give me an excuse to stay in Davos a long time, and we'll just wait until he comes. Okay? I've said that at the UN; I've said that in Washington; I've said that in Paris; I've said it in London; I've said it any place that I've been, and he's refused to come. And that remains the problem. He wants to go around the negotiating process and have an international diktat at the UN or wherever. And that, that is not the way we're going to resolve the issue. You have to sit down, and negotiate. We're willing to do it. They're not. I hope they change their minds.

Zakaria:  Do you worry about the delegitimization of Israel? What are the trends that you see happening with regard to other countries' relations with Israel?

Netanyahu: I see two opposing trends. One is what you've just described - it's the attempt to boycott Israel, the attempt to defame and slander Israel, which continues as we fight the terror, the same terror that afflicts just about the entire world... We're sort of set apart, double standards. Take the UN Human Rights Commission: I think 60% of its resolutions, 60% of the resolutions of that UN committee, misaptly named, by the way, are directed against Israel. The rest of the world is 40%: Syria, Iran, Libya, you name it. Okay? Israel - the democracy that upholds human rights, that is beleaguered by this... fights and lives according to real human norms and democratic norms.

So obviously that trend exists. It exists in the UN, it exists, unfortunately in the EU, and some other international bureaucracies. That's a given, and some of it is actually getting worse. And that's paradoxical, because there's a completely contrary trend of countries coming to Israel. I'm talking about small countries like India, China, Japan, Russia, just about every African country - not every, but virtually every African country, countries in Latin America and of course the Arab states.

Why are they coming to Israel? Because of two reasons. The first reason is militant Islam and the terror that it spews, and everyone is concerned with it, some are downright frightened. And they say, "Who can help us with this? Who has military intelligence or Mossad intelligence or operational experience or data bases and so on?" They said, well, Israel. It's definitely there. So they're coming for that reason.

And the second reason is not merely to fight the forces that want to take mankind back to the past. It's to seize the opportunities of the future. If you want water recycling, go to Israel. We're number one. We recycle virtually almost 90% of our waste water. Number two is Spain, 25%. If you want increase dairy production, and you know, if you're a country like China or India, that's of interest. Well which cow produces most milk per cow? I know you think it's a Dutch cow or a French cow, but you're wrong. It's an Israeli cow, it's a Jewish cow. It's a computerized cow. I mean, every moo is computerized. Okay? And if you want to do cyber, and you say, well, we got, you know, we have... Israel is a country of eight million, and in 2014 we had 10% of the global private investment in cyber security, except for change in 2015 - it doubled to 20%.

So Israel is a cyber power, Israel is in agriculture, and water recycling and IT and health and all the areas that are changing life and that are being discussed in this forum. So if you want to fight the forces of the past and seize the opportunities of tomorrow, people say, Israel has got, you know, each foot planted very firmly in both great challenges that face the world today.

So the countries are coming. And some of them, and here's where the two, the twain shall meet. I said to leaders that I meet, and one of them I'll quote without naming him. I said, look, we have a fantastic relationship, unheard of in, you know, 10 years ago, 15 years ago, just unheard of, unimaginable. Don't you think it's time that your voting pattern in these international bodies change accordingly? And some of them, you know, say, "Uhm, yeah, we'll begin to change it." But this particular leader just said, "Yes!" And he just changed it on the spot. It moved. You can look at some of the most, more interesting votes in some of these international bodies and you'll see what I mean.

So I think eventually the ganging up on Israel in international bodies is going to change, as the interest of countries that compose those bodies become reflected in the way that they vote internationally. And I think that will be good.

There's a real change. Israel is courted; Israel is sought after. Israel... The last thing is, one other great leader from one of the big business organizations said to me, "Boycott Israel? How can I boycott Israel?" He has a very big R&D operation in Israel. He said, "If I boycott Israel, I'll boycott myself." So I think that is telling you that on the state level and on the business level, Israel has become a very interesting country for governments and businesses alike, and I think that reality is changing. And the most dramatic change, without a doubt, is the relationship that is beginning to develop between Israel and most of our Arab neighbors in order to fashion a Middle East free of the dominance of militant Islam.

Zakaria: Last question. I know we're going a little bit over but as you can tell, this is a fascinating conversation. You have had a long tenure in Israeli politics. You might have an even longer one. You know, they said that you should choose your father carefully if you want to live long. Your father lived to 102. What do you want your legacy to be? What do you want people to think of? There are many people who thought you might be the Nixon who took the United States to China, by which I mean the hardline conservative Israeli politician who would make peace with the Palestinians and create a two-state solution. Do you still hope, or did you ever hope that that would be your legacy?

Netanyahu: Yes. I mean, first of all, I'm not through it. Let's get that straight. I think my first responsibility is to ensure the safety and security of the one and only Jewish state. That's not an easy feat. But if I look back 67 years since the founding of Israel, we were, you know, we had a few hundred thousand people; today we have eight million. We had a tiny GDP; it's much bigger today - our GDP per capita has grown by leaps and bounds. We've built an army that can defend ourselves and can also offer a modicum of stability in our neighborhood.

I want to ensure the future of the Jewish state while trying to achieve peace and stability in our region. That's a tall order. We've revolutionized our economy. I had something to do with it, to create a market economy. We need to, you know, my father's generation was entrusted with regaining for the Jewish people what was lost in antiquity, that is, a state of their own. My generation is charged with protecting and nurturing what was regained. And in so doing I think we can also change the world. The things that we're doing in Israel are changing the world. You know, they're changing it in medicine; they're changing it in communications; they're changing it is cyber; they're changing it just in so many things that can benefit our neighbors and the rest of humanity.

To do all that, I have to make sure that the future of the Jewish state is safe and sound. That's my one goal. And I would like to be remembered as the protector of Israel. That's enough for me. Protector of Israel.

Zakaria: Mr. Prime Minister. Pleasure to have you.

Netanyahu: Thank you.