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Yawning gaps among Prime Minister Binyamin Netanyahu's senior ministers were on full display Monday as they revealed dramatically different diplomatic visions at a Herzliya counter-terrorism conference.While Justice Minister Tzipi Livni (Hatnua) said that Israel needed to link itself to the West and moderate Arab states in the region by taking daring initiatives to solve the Palestinian conflict, Economy Minister Naftali Bennett (Bayit Yehudi) said those pushing for a Palestinian state in Judea and Samaria were locked into a “failed conception” as dangerous for Israel now as was the 'failed conception” that led to the 1973 Yom Kippur War.Livni, speaking at the annual conference held by the International Institute for Counter-Terrorism in Herzliya, said the “struggle against terror is, among other things, an attempt to reach peace, just as reaching peace comes through the struggle against terror.”Livni said it was important to know with whom one fights, and with whom one makes peace. “Sometimes people get confused,” she said. “It is clear that you fight the extremists, those engaged in terror, and make peace with the moderates. But sometimes this is not clear, neither around the world nor in Israel.”In the world, she said, there was sometimes “confusion” regarding terrorists, and a sense that that there may be justified reasons for terror.“There isn't,” she said, unequivocally. “There is no legitimate reason for terror: nothing to understand, no reason to speak to them, no reason to listen what is bothering them. They are motivated by deep religious ideology, that is their roots and motivations. They are unable to accept 'infidels’.”On the other side, she said, directing her words to “part” of Israel's leadership, there are those who see moderates in the Palestinian camp as terrorists, and “are not willing to pay the price of a diplomatic arrangement.”“Just as it is a mistake to try to appease the religious terrorism, it would be a mistake from Israel’s point of view to let the cruel terror in this region work against all rational thinking that obligates us to initiate and find a solution to the national conflict between us and the Palestinians,” she said. She made a clear distinction between the religious ideology motivating Hamas, and what she believes is the nationalist ideology propelling the Palestinian Authority.Livni set up a construct whereby the world is divided into the bad – the religious motivated “leaders” who use women and children as human shields and do not accept the “other” – and the good: people from different religions and nationalities who accept the “other.”Among the later camp, she said, there can be conflict, but it it is not religiously motivated stemming from an inability to accept anyone who thinks differently.In order to “win,” she said, there is a need for coalitions, and every country will have to choose sides, with no middle ground available.“It is impossible to say that I am part of the moderates, but will wink and finance terror. Qatar is an example, but not the only one,” she said.Israel is obviously in the moderate camp, but the national conflict with the Palestinians is preventing it from becoming a full fledged member, she said. This, in turn, prevents Israel from joining coalitions with other members of the moderate came against common threats.“Those who use the threats in the region to explain why it is forbidden to conduct negotiations are preventing our ability to deal with the world, and the Arab world, against those same threats,” she said.Amid a terror marked by medieval cruelty, Israel needed a daring diplomatic initiative to link it closer with West and the moderate Arab world in its joint fight against common threats,” she concluded. .Finance Minister Yair Lapid (Yesh Atid), in his speech to the conference, echoed Livni's comments about the need for a daring diplomatic initiative, saying it was impossible to settle for a situation where there was no “diplomatic vision.“It can't be that Operation Protective Edge ends with a temporary cease-fire, and we will sit and wait for the next time they fire on us,” he said. “Instead of that we have to first of all restore our relations with the United States.”Lapid, like Livni , slammed the recent decision to declare 4,000 dunams in Gush Etzion as state land, “without even bothering to inform them [Washington].”“In normal days I support strengthening the settlement blocs,” he said. “But in my conversations with administration officials I hear the same thing over and over: friends don't act this way with each other.”He said that instead of fighting with the US, there was a need to go to an international conference where “we will say that Israel's security will always only be in our own hands, but that we are willing to separate from the Palestinians and be part of the coalition fighting Islamic terror.”“The diplomatic process is stuck,” Lapid said, and the international conference is the only idea on the table. “The prime minister needs to know that if he goes to such a conference he will have a wide political backing from us that will enable him to deal with the handcuffs that the extreme right will try to place on him.”Lapid said that if anyone thought that along with security and diplomatic paralysis, he would pass a budget that hurts the middle class, then they “do not understand why I entered politics.”Bennett and Communications Minister Gilad Erdan (Likud) represented the right wing flank of the eight person security cabinet – which both Livni and Lapid are members of.Bennett said he followed the speeches made by some of his government colleagues during the conference, “and I must say that I do not believe what I hear.”“ I feel as if I am living in the 90s,” Bennett said. “It's not me, the Left lives in the 90's. ISIS is moving in the east, Hezbollah is getting stronger in the north, Hamas is building terror tunnels in the south, and they are continuing with the regular refrain that a Palestinian state will solve all the problems.”Bennett noted a recent survey in the West Bank that showed that if elections were held there now, 66% of the people would vote for Hamas leader Ismail Haniyeh, and only 25% for PA President Mahmoud Abbas.“Most of the public in Judea and Samaria want Hamas now,” he said, contrasting that with the Left's desire for Peace Now.“What Palestinian state are you talking about?” he asked. “How many times can you repeat the same refrain, the same conception. It's like someone sitting on the beach where this is a tsunami, but looking only at his isolated aquarium, and not seeing what is happening around.”Bennett said that he was ridiculed a few months ago by saying that a Palestinian state would destroy israel's economy, until Ben-Gurion Airport was partially closed for two days during Operation Protective Edge and people began to realize what he was talking about.“Does anyone still think that it is right to give Palestinians the hills overlooking Ben-Gurion Airport?” he asked. “One mortar a month and we will not have an economy.”Similar sentiments were articulated by Communications Minister Gilad Erdan (Likud), who said one of the fundamental lessons of the Gaza fighting was that despite efforts over the years to minimize the significance of territory for the country's security, territory does matter.“From a diplomatic perspective, I think to continue to talk about Palestinian nationalism with the same determination and confidence as was done 10 or 15 years ago is not responsible,” he said.“We have to change the hard disk, and not lean all the time on the same old solutions,” he said. “I know that not all my colleagues in the government are willing to look at reality as it is.”