The world has blown the settlements issue entirely out of proportion, Israeli Foreign Minister Avigdor Lieberman said on Thursday.

Lieberman made the comments in response to remarks made earlier by German Chancellor Angela Merkel, who said that Israel's construction in West Bank settlements jeopardized the two-state solution.

"The situation in the West Bank and the cessation of settlement construction shouldn't top the international community's agenda," Lieberman was quoted by local daily Ha'aretz as saying.

"We have to allow the residents of the West Bank to live normal lives," the foreign minister continued. "We can't strangle them. We must explain our stance and refrain from strangling people."

Lieberman also criticized what he termed as the Israeli government's concession policy, saying "we are certainly a government that wants to advance toward a resolution of the (Israeli-Palestinian) conflict, to come up with solutions, that isn't afraid to take responsibility."

"But taking responsibility doesn't mean that we always have to concede. We are always loved and applauded when we concede and concede. I'm not sure that these concessions lead to any kind of result," he said.

Earlier Thursday, Merkel demanded in a speech to the Bundestag, Germany's lower house of parliament, that Israel halt construction in the West Bank settlements, saying it endangered efforts to achieve a two-state solution with the Palestinians.

Merkel's remarks are in line with the positions of the European Union and the United States. The Obama administration has repeatedly urged Israel to freeze settlement expansion.

Yet the Israeli side has so far not backed down from its demand that "natural growth" be allowed in order for settlers to lead a normal life. The Jewish state wants to retain certain major settlement blocs in any final agreement with the Palestinians.

(Xinhua News Agency July 3, 2009)