In an exclusive interview Tuesday night on CNN's Erin Burnett OutFront, Israel's prime minister Benjamin Netanyahu sat down with Erin Burnett to talk about Israel, the United States and the threat of terror around the world. Netanyahu insisted on Monday that Egypt's decision to cancel a natural gas deal with Israel did not indicate any sort of diplomatic tensions between the two countries, but rather a business disagreement between companies. "The termination of the natural gas supply from Egypt is not motivated by political decisions, but is a business dispute between the Israeli and the Egyptian companies," said Netanyahu, according to a report in Haaretz.

The termination of the gas deal could ultimately involve American policy to both Israel and Egypt.

In the interview with Erin Burnett, Netanyahu talked about Israel's desire for a peace deal–and how the prime minister believes he can deliver it–and the threat from Iran. Netanyahu also talked about Mitt Romney, who Netanyahu worked with three decades ago.

Here's a transcript of the entire interview:

CNN – ERIN BURNETT
"ISRAELI PM INTERVIEW"
INTERVIEW WITH ISRAELI PRIME MINISTER NETANYAHU
CORRESPONDENT: ERIN BURNETT
ERIN BURNETT:
Mr. Prime minister, thank you so much for inviting us and letting us–
PRIME MINISTER NETANYAHU:
Listen, take a look around.
ERIN BURNETT:
We– we came here to your courtyard. I knew we had to move– there was a table here earlier. When we got here there were two coffee cups on it. I guess it was yours and Tony Blair's–
PRIME MINISTER NETANYAHU:
Uh-huh (AFFIRM).
ERIN BURNETT:
–when you were– you were talking this morning. But how important is this space for you. This is sort of your– this is your getaway space, right?
PRIME MINISTER NETANYAHU:
No, this is my prison courtyard, (LAUGH) because the prime minister lives here like the pres– president of the United States. And maybe the Pope. One or two other people.
ERIN BURNETT:
Does it ever feel like you're sort of under house arrest? I mean that this is–
PRIME MINISTER NETANYAHU:
Yeah. For good reason, but– I suppose so. But it doesn't mean that– there aren't– an endless number of people who wanna get into this business, though.
ERIN BURNETT:
Oh, I'm sure.
PRIME MINISTER NETANYAHU:
And live here. (LAUGH)
ERIN BURNETT:
I'm sure there are. Iran. There's been 16 years of diplomacy, as– as you've talked about. You've said repeatedly– you said in– in March. I know you said it– to the army radio this morning. It's not a problem of days but it's also not a problem of years. And you said that first in March so I– I would imagine not years plural. That means you think this will be resolved by next spring?
PRIME MINISTER NETANYAHU:
Well, I hope it's resolved and I hope it's resolved peacefully. So (UNINTEL) the international community is putting the– a lot of pressure on you on making clear that it's (UNINTEL) and must stop. If it stops with the sanctions, the– the dominations (?) of sanctions, diplomacy, other pressures– as the prime minister of Israel I will be– the happiest person in the world.
ERIN BURNETT:
00:02:05:00 Do you think the sanctions are working? I mean I saw a story today about– I think it's 56% of Iranian– Iran's fleet, tankers, sitting off the coast with oil, full of oil, 'cause they– they can't– they can't sell it. It would appear that sanctions are working.
PRIME MINISTER NETANYAHU:
Well, they're certainly taking a bite out of the Iranian economy, but so far they haven't rolled back the Iranian program or even stopped it by one iota. I mean I hope that changes, but so far I can tell you the centrifuges are spinning. They were spinning before the talks began. Recently with Iran they were spinning during the talks. They're spinning as we speak. So if the sanctions are going to work they better work soon.
ERIN BURNETT:
How do you know what they're doing?
PRIME MINISTER NETANYAHU:
Oh, we know.
ERIN BURNETT:
You know?
PRIME MINISTER NETANYAHU:
We know and others know and we share what we know. This is not– a case of—Saddam Hussein.
ERIN BURNETT:
They say that it's for peaceful purposes. The– that–
PRIME MINISTER NETANYAHU:
They say it's for peaceful purposes.
ERIN BURNETT:
They say it's for peaceful purposes.
PRIME MINISTER NETANYAHU:
Well, you know– well, you have a sense of humor. I mean they said it's for– medical isotopes. Right? That's– that's why they're developing ICBMs to carry medical isotopes to Europe or Israel or the United States. That's why they're building these underground bunkers– hidden between– underneath mountains. For medical isotopes. You know, that's– that's why they're telling the world that they're gonna erase Israel. The medical isotopes.

This is a farce. Nobody can seriously– nobody can take them seriously.
ERIN BURNETT:
No nations with nuclear weapons have ever gone to war with each other. I mean take India and Pakistan. They haven't used them. Could it be that Israel and Iran could end up in a situation like that, where the acquisition of a nuclear weapon ensures it would never be used?
PRIME MINISTER NETANYAHU:
Well, I'm not gonna comment on Israel's– purported capabilities. I will say that– to date, since the advent of– the nuclear age after Hiroshima, all nuclear powers have been very careful– with the use, or more accurately the non-use of the nuclear weapon.

When it comes a militant Islamic regime I wouldn't be too sure, because unlike, say, the Soviets, they can put their ideology– before their survival.
So– I don't think you can bet on their rationality.

Iran is giving– its– terror proxies, Hamas in Gaza and Hezbollah in– Lebanon, it's giving them the most advanced lethal weapons. Whatever weapons they have they give them. And they're firing now 10,000, 12,000 of their rockets on– on Israel's cities. They're– they've been– helping them to murder diplomats worldwide and to kill American soldiers in Afghanistan.

Think of what they'd do with nuclear weapons. And– I don't think you want to– to bet that peace– in the Middle East and the security of the world on Iran's rational behavior. I think it's a much safer bet to do what I and President Obama and others have said. Prevent Iran from acquiring atomic bombs.
ERIN BURNETT:
One thing is interesting, though. You talk about some of the negative parts about the regime. There is a Jewish member of parliament in Tehran. And one of the most popular soap operas there called Zero– Zero Degree Turn. Main here, an Iranian, falls in love with a Jewish woman. He helps– smuggle Jews out of Paris– to save them from the Holocaust. It was very popular in Iran. What makes you so sure that they are anti-Semitic in a way that would cause them to use the weapon against Israel?
PRIME MINISTER NETANYAHU:
Well, I draw a distinction between the people of Iran and the regime that has– tyrannized them. Taken over their lives.
ERIN BURNETT:
The regime let the show air, though.
PRIME MINISTER NETANYAHU:
Well, the regime is the one that– you know, has to kill people in the streets– and– and goes into their homes after they cull the internet. And they just make people disappear. So this is a regime that is very brutal to its own people. Do they on occasion– let out some– some– fig leaf? Yeah. Well, who cares.
Iran is not free. Jews in Iran– have a lot to worry about. But the Jewish state that Iran openly calls– a cancer that has to be excised from the Middle East, that has to be eradicated, certainly we must take seriously Iran's claims– to annihilate it.
ERIN BURNETT:
The way the talks seem to be going, the U.N. negotiators, U.S. negotiators are saying that the sanctions are working. They may in fact roll back some sanctions. That's what the Iranians want and there has not been a direct rebuttal to that from the other side. The– the really tough sanctions that are supposed to take effect this summer.
PRIME MINISTER NETANYAHU:
Well, I think it would–
ERIN BURNETT:
What happens– do you–
PRIME MINISTER NETANYAHU:
–a big mistake.
ERIN BURNETT:
–what do you think? Okay.
PRIME MINISTER NETANYAHU:
I think it would be a big mistake to rescind the sanctions or lighten the sanctions. I think they have to– there has to be– a scale (?) NEEL PLEASE CHECK OFF AUDIO of– sanctions. And so far– and that's the acid test. The sanctions haven't worked. How do we know that? Because nothing has been stopped. What has stopped in the Iranian program?
ERIN BURNETT:
What if they halted full enrichment to 20% and started importing that. Would that be enough?
PRIME MINISTER NETANYAHU:
I think what they– they need to do are three things. One, they have to stop all– enrichment. Second, to take the enriched–
ERIN BURNETT:
All enrichment, even to 3% level?
PRIME MINISTER NETANYAHU:
Yes. That's because they– they say they need it for, what? Medical isotopes? So you can– the second point is– after you stop all enrichment is remove the enriched material and you'll get– these– rods from– another country that can allow you to use– nuclear energy for peaceful purposes. And third, dismantle the underground bunker at Qom.

If they no military goals they should respond to this readily.
What we want are factual results. We wanna see the Iranian program rolled back. That's unfortunately not achieved by talks in which Iran has one goal. To stall, delay– run out the clock. That's basically what they're doing.
ERIN BURNETT:
Do you worry that you're gonna put yourself in a position, though, that you may have to strike? A strike which even former head of Mossad said would only delay, not end the Iranian nuclear program. That by saying, "It's not days. It's not years," you're gonna end up with a date where if you don't do it, you look like you couldn't or you wouldn't, so you have to.
PRIME MINISTER NETANYAHU:
I'm not worried about what we look like. I am worried about stopping this. And I think there– there're really three principles that should guide us. They've been echoed by the United States– and I think any sensible person understands it.

The first is that Iran's nuclear weapons program must be stopped. The second is that containment is not an option. And the third is that Israel– the state of the Jewish people, must have the capacity to defend itself by– by itself against any threat.
ERIN BURNETT:
I wanna talk a little bit about U.S. politics. Obviously you're– you're an important player in U.S. politics as the prime minister of Israel.
PRIME MINISTER NETANYAHU:
No– no, I'm not.
ERIN BURNETT:
No?
PRIME MINISTER NETANYAHU:
I– yeah, I'm gonna stop you right there, Erin. You know why?
ERIN BURNETT:
Why?
PRIME MINISTER NETANYAHU:
Because I have enough politics of my own. I don't need to enter American politics.
ERIN BURNETT:
Well, like it or not, people care about what you think about all kinds of things in the U.S. And you know Mitt Romney. You worked with him at Boston Consulting Group, right? Am I– fact–
(OVERTALK)
PRIME MINISTER NETANYAHU:
Well, I didn't work with him, but when I entered the Boston Consulting Group– 35 years ago– something like that, he was– well, I was a young recruit and he was– already a star manager. He looked the same.
ERIN BURNETT:
Yeah, that's just saying– now good (UNINTEL).
PRIME MINISTER NETANYAHU:
That is true. Yeah, I don't look the same. He looked the same.
ERIN BURNETT:
He has that kind of Ken doll look. (LAUGHTER)
PRIME MINISTER NETANYAHU:
Yeah. Well–
ERIN BURNETT:
It's– yeah.
PRIME MINISTER NETANYAHU:
–so– but– you know, I didn't see him for many years and then I met him– many years later when I was a minister of finance and he was the governor of Massachusetts. And we've been in touch since then.
ERIN BURNETT:
Is he– a friend?
PRIME MINISTER NETANYAHU:
Well, look, here– here's the– an answer that will– satisfy you. I respect Mitt Romney as I respect Barack Obama, the president of the United States. And that's the end of the ranking– and the– questions that you will undoubtedly try again and again to– draw me into. (LAUGH) I have enough politics here than to get into American politics.
ERIN BURNETT:
I– I wanna ask you one thing– about, though the Iran issue and– and– and Mitt Romney. He wrote an op-ed in The Washington Post, which I'm sure you saw.
PRIME MINISTER NETANYAHU:
You don't stop, do you?
ERIN BURNETT:
No, I– I– you know–
PRIME MINISTER NETANYAHU:
No, you're a very talented INTERVIEWER
ERIN BURNETT:
–I'm paid to be relentless.
PRIME MINISTER NETANYAHU:
No, no. Go ahead. (LAUGH) And I'll be–
ERIN BURNETT:
As– as I believe it's your job to–
PRIME MINISTER NETANYAHU:
No, I'll be relentlessly fending you off. Go ahead. Try again.
ERIN BURNETT:
Okay.
PRIME MINISTER NETANYAHU:
You'll get the same result.
ERIN BURNETT:
Okay. He said that he would– as pertains to Iran. "Press for ever tightening sanctions”, “buttress my diplomacy with military action” and “speak out on behalf of democracy." That sounds identical to Barack Obama. Is that your perception? That they would have pretty much the same U.S. policy or not?
PRIME MINISTER NETANYAHU:
You know, I'm– I'm just not gonna get into American politics. If you wanna talk to me about the American policy, then I think the right policy is to make sure that Iran doesn't get nuclear weapons. By the way, that would be a catastrophe for world peace. A great– danger to American interests and to American lives.

The Israel that the world sees is– is a lot about the start up nation. But it's entrepreneurial, it's creative, it's successful, it's wealthy, it's incredibly powerful. It's not an underdog. And a lot of the– the narrative about Iran or being attacked seems to be more of– a victim. Everyone's out to get us. And a lot of the Israel that– that we see is– is a dominant, powerful Israel, not a victim.
PRIME MINISTER NETANYAHU:
I wouldn't say dominant. I would same Israel's a vibrant democracy. Tremendously creative. As wild entrepreneurs.

They're changing the– they're curing diseases around the world. Your cell phone probably has four or five Israeli– IT applications inside it. It's just changing the world. We have the greatest number of Nobel prize winners per capita of– of any country. So there's tremendous creativity that is useful for good. For peaceful means.

We're not seeking to dominate anyone. We have– we're seeking to live in peace with our neighbors. I hope they decide to do the same with us. We don't teach our children to say, "I wanna be a doctor, I want to be– a dentist or I want to be a technologist and I want to fight the Arabs." ERIN BURNETT:
About 40% of the world's Jews live in the United States, nearly as many as in Israel. Peter Beinart's new book, The Crisis of Zionism, talks a lot about the Jews that I know that I'm friends with. They are marrying people who are not Jewish. About half of American– non-orthodox American Jews now do.

He talks about non-orthodox American Jews under the age of 35. And I thought this was amazing. On– they're half as likely as people over 65 to say they're emotionally attached to Israel. Less than half of American Jews under 35 say they feel a strong sense of belonging to the Jewish people. Part of the reason for that appears to be Israel now seen more as an occupier than– than as a victim in the traditional– in the traditional sense. Are you worried about American Jews?

PRIME MINISTER NETANYAHU:
No, I– I– I think there's a much stronger bond than– meets the eye. There's a very– there's a very strong bond– that we can encourage and develop, especially by having young Jews from the United States and Jews from around the world come here. And there're these fantastic programs that just bring them in by the tens of thousands, just to visit Israel.

I think ultimately the future of the Jewish people is intimately bound with the future of the Jewish state. And my job as the prime minister of Israel is to ensure that future.
ERIN BURNETT:
I'm gonna ask you about another issue that– hasn't gotten much coverage recently because Iran has been getting so much coverage. I was in– Dubai recently interviewing Sheik Mohammed, the Prime Minister of the UAE and the Ruler of Dubai. And we talked about Israel and here's what he said.
SOUNDBITE OF SHEIKH MOHAMMED
"You know, I tell you, we have nothing against Israel. We have nothing against Israel. And what want is for the Palestinians– a country for the Palestinians and the country for Israel. I promise you that if the Arab world would open to Israel, Israel will benefit more than us because Israel has things to offer in the market."
PRIME MINISTER NETANYAHU:
That's very wise. That's very wise and I agree with him. I– I think that peace would benefit us, as I think it would benefit the Palestinians, as it would benefit the entire– region.

I think there's one other thing. I think that I could deliver a peace agreement. I could get the Israeli people to follow me if I believe that I have a serious partner on the other side willing to make the necessary compromises on the Palestinian side. Many compromises that people talk about are on the Israeli side. But there are necessary compromises on the Palestinian side. And, you know, peace is always a two way compromise.

ERIN BURNETT:
Would you accept their belief, though, that they should have a country which is contiguous. Not islands–
PRIME MINISTER NETANYAHU:
Yes.
ERIN BURNETT:
–here, islands there, but one space.
PRIME MINISTER NETANYAHU:
Yeah, we talked about that.
ERIN BURNETT:
No checkpoints.
PRIME MINISTER NETANYAHU:
I don't think that this is what– no checkpoints? I'm the prime minister who removed 400 checkpoints– barriers, roadblocks and so on to facilitate the growth of the Palestinian economy. This is in line with what I believe is essential. That is the– the economic growth that is– a great supplement, a great– bulwark of the– of– of actual peace.

It's not a substitute for a political peace, but it helps. And I'm– I'm very much in favor of that. I– look, there are so many issues to discuss but you have to discuss them. Can't discuss them in the press. Not even on CNN. We have to sit down opposite one another. That's what leaders do.
ERIN BURNETT:
But, you know, yesterday I saw some of the best of Israel. You know, we saw a winery. We saw the Moroccan oil hair plant that I keep–
PRIME MINISTER NETANYAHU:
Oh, I haven't–
ERIN BURNETT:
–telling you about.
PRIME MINISTER NETANYAHU:
–used it…but I’ll(LAUGH) ask my wife to try it.
ERIN BURNETT:
Yeah. At the end of the day at– at sunset, I went to a refugee camp. And– we were actually– we were gonna talk to some adults. You know what happens. Children come flocking over and lots of boys came flocking over. And– they were playing soccer - football.

And I asked them what they wanted to be when they grew up. And they all spoke Arabic. And they said– and this is pretty amazing, considering that most of them weren't in school. Dentist, engineer and I wanna fight Israel. Every one.
PRIME MINISTER NETANYAHU:
The first two I like. The last one I didn't.
ERIN BURNETT:
How can you change that? I mean you talk about hinges of history. Isn't this issue more important in (UNINTEL) camps?
PRIME MINISTER NETANYAHU:
How do you change it? You change it by educating people for peace. And I think one of the failings of the Palestinian authority has been that they air– on their national– media– they control the media. They hear all this stuff about Israel, doing away with Israel. They have kindergartens for– reveling in suicide bombers. Kindergarteners.

So I'm not surprised that kids grow up with this hatred. The only way you change it is by having peace agreements. And speaking peace to your people. I spoke three years ago to– my people about a solution on a demilitarized Palestinian state that lives alongside the Jewish state.
ERIN BURNETT:
How can you have a state–
PRIME MINISTER NETANYAHU:
Because they'll become dentists–
ERIN BURNETT:
–that's demilitarized–
(OVERTALK)
PRIME MINISTER NETANYAHU:
–they'll become dentists, they'll become doctors if they have a peaceful state.
ERIN BURNETT:
Don't they have the right for a real state?
PRIME MINISTER NETANYAHU:
Sure.
ERIN BURNETT:
Say demilitarized.
PRIME MINISTER NETANYAHU:
Well, demilitarized is a real state. It just means that they can't field the armies. They can't fire rockets. We wanna make sure that if we have– a peace– arrangement, we walk away from certain areas, that they won't be used a third time by– Iran and its Palestinian proxies to fire rockets on Tel Aviv and Jerusalem. But we don't want to run their lives. I don't wanna govern the Palestinians. I don't want them as– subjects of Israel or as citizens of Israel. I want them to have it own independent state. But a demilitarized state.
ERIN BURNETT:
And– and, to be clear, one that isn't separated by Israel as in there's Palestine part here, Israel–
PRIME MINISTER NETANYAHU:
No.
ERIN BURNETT:
–then Palestine. All one.
PRIME MINISTER NETANYAHU:
Not as a Swiss cheese? No.
ERIN BURNETT:
Not Swiss cheese?
PRIME MINISTER NETANYAHU:
No.
ERIN BURNETT:
Mr. Prime Minister, thank you very much.
PRIME MINISTER NETANYAHU:
Thank you. Good to see you.