By Jeffrey Heller
JERUSALEM (Reuters) - Israel should pull out unilaterally from much of the occupied West Bank if a peace deal with the Palestinians remains out of reach, Defence Minister Ehud Barak said in an interview published on Monday.
The proposal by Barak, who leads a tiny political party that surveys suggest might not win a single parliamentary seat in any new election, was swiftly shot down by a deputy to Prime Minister Benjamin Netanyahu.
"It would be preferable to reach an agreement with the Palestinians but, if that doesn't work, practical actions should be taken to begin a disengagement," Barak told Israel Hayom, a right-wing newspaper supportive of Netanyahu.
Israeli-Palestinian peace talks collapsed in 2010 over settlement building in the West Bank, territory Israel captured in a 1967 Middle East war that Palestinians seek, along with the Gaza Strip, for a future state.
Under Barak's plan, dozens of small settlements spread across wide areas of the West Bank would be evacuated unilaterally, with residents receiving financial compensation and new homes either in other settlements or within Israel.
The major settlement blocs that are home to most of the 350,000 settlers in the West Bank, built on narrower tracts of land closer to Israel, would remain under Israeli control - an idea floated by previous governments and rejected by Palestinian leaders.
"The time has come to make a decision stemming not only from ideology and a gut feeling but also from a cold reading of reality," Barak said.
Deputy Prime Minister Dan Meridor, commenting on Barak's proposal, said there was "no way" Israel would pull out of the West Bank, where 120 settlements have been built, without a peace agreement.
"We cannot turn (the West Bank city of) Ramallah into Gaza ... It would mean immediate war and bloodshed. The army has to stay there until there is an agreement," Meridor said.
Netanyahu has said Israel is willing to make "painful compromises" for peace that require giving up "parts of the ancestral Jewish homeland".
But like Barak, he has balked at returning to lines that existed before the 1967 conflict, effectively ruling out a withdrawal from all of the West Bank, where 2.5 million Palestinians live.
Netanyahu has been a strong critic of Israel's unilateral pullout in 2005 from the Gaza Strip, an enclave seized two years later by Hamas Islamists opposed to the existence of the Jewish state.
Barak, who as Labour Party leader traditionally took a more dovish line than Netanyahu on peace issues, now heads the small Atzmaut party in the prime minister's pro-settler governing coalition.
Atzmaut has five seats in the 120-member Knesset. Its poor showing in opinion polls has raised speculation that Barak could launch initiatives to boost his party's profile and try to win the support of centrist voters.
Disagreement within Netanyahu's coalition over the annual state budget, which must be passed by March, has prompted suggestions that the next election, due by October 2013, could be brought forward.
(Editing by Kevin Liffey)