Peres said it was important to remember that Palestinian former president Yasser Arafat was regarded with suspicion and even hatred by many Israelis when he was engaged in the negotiations that yielded the Oslo Accords.

"Even when I began negotiation with Arafat, they said: 'There's no chance'," Peres told the Israeli website in an interview published on the Jewish state's Independence Day.

"I think the same thing about Hamas. The name does not interest me, what matters is the content. Anything can happen, because Hamas has problems too, and it's not so strong."

Israel has repeatedly said it will not talk to Hamas, and the Islamist group has also said it has no interest in holding negotiations with the Jewish state.

Peres, who was jointly awarded -- with Arafat -- the Nobel Peace Prize in 1994 as architects of the Oslo self-rule accords, spoke to the news site after a surprise unity deal between Hamas and the secular Fatah movement of Palestinian president Mahmud Abbas.

The agreement has caused consternation in within Israel's right-leaning government, with Prime Minister Benjamin Netanyahu warning Abbas he must choose between unity with Hamas and peace talks with Israel.

But Peres said Israel should not be focusing on the unity agreement.

"If they want to unite, let them unite," he told Ynet.

"We are discussing our own security issues, and if they establish a union with an organisation that continues to espouse the destruction of Israel, it's no longer an interior affair, it's a foreign affair, and it concerns us.

"We see among the Arabs two camps -- the camp that is ready to negotiate peace -- the Fatah -- and the camp which doesn't denounce terror," he said.

"The two camps are trying to unite. It is not our business, we don't want to intervene in their decision to unite. What is our business is that the West Bank will not become a Gaza, we would like Gaza to become a West Bank."

Peres said he was convinced it was still possible to reach a peace deal with the Palestinians, despite the fact that talks have been on hold since September 2010 over the issue of settlement building and show no sign of resuming soon.

But he said it was crucial to reach an understanding "quietly," adding: "Publicly, there's no chance."

Peres also weighed in on the controversial issue of Jewish construction in east Jerusalem, which Israel captured in the 1967 Six Day War and annexed later, in a move never recognised by the international community.

The president said it would be better for Israel to focus its energy on building upwards, rather than expanding into Arab neighbourhoods of east Jerusalem, which the Palestinians want for the capital of their future state.

"You can sometimes house 10,000 people in one tower," he said. "Today the whole world is building vertically."

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