An American plan to resolve the Israeli-Palestinian conflict within two years may lead to the establishment of "Hamastan in the West Bank," Strategic Affairs Minister Moshe Yaalon said during an event at the Washington Institute for Near East Policy in honor of late journalist Ze'ev Schiff.

The peace process may take up to five years, Yaalon said, adding that "instant peace" will fail because of realities on the ground.

The minister called for a reexamination of some basic assumptions underlying the peace process, including the two-state vision ostensibly being the only viable solution, and the perception that Israel's "occupation' and settlement activity constitute major obstacles for peace.

"These assumptions stood behind the Oslo process, and its failure indicates that they deserve to be reexamined," Yaalon said. "Such examination will reveal that, whereas the Israelis were really ready for this kind of a solution, including myself, the Palestinians do not accept that ‘the two state solution’ refers to two states for two peoples."

"In their view, one state should be the Palestinian state and the national identity of the other state should remain undefined, so that in the future it can become a Palestinian state as well," he said.

Yaalon calls for Palestinian reforms

However, Yaalon avoided directly addressing what appears to be the focal point of current disagreements between the US and Israel – namely, the two-state solution. Israel wishes to keep "all options" open in respect to the character of the future Palestinian entity, he said, adding that just like the Americans, Israel believes in honesty between friends.

"It is our duty to explain the facts to our American friends," he said.

Yaalon also proposed a different "road map" en route to separation from the Palestinians that would not threaten Israel, focusing on reforms in five key areas: Palestinian education, economy, politics, law and order, and security.

"We believe that an almost exclusively top down approach that characterized the way the Palestinian issue was handled under the Oslo and Annapolis processes should be replaced by a determined performance based, bottom up approach that characterized the road map," he said, adding that such approach "would focus first on building the necessary infrastructure for peace."

"We have spoken much over the past few years about dismantling the infrastructure of terror," he said. "Let us begin to talk about building an infrastructure for peace."