Naftali Bennett interview: 'There won't be a Palestinian state within Israel'

Leader of rightwing Jewish Home party, which looks set for a coalition role, wants 'more realistic approach' to insoluble conflict

The Israeli-Palestinian conflict is "insoluble" and most Israelis "couldn't care less about it any more", according to Naftali Bennett, the surprise star of the election campaign, whose extreme rightwing nationalist and pro-settler Jewish Home is within sight of becoming the country's second biggest party.

In an interview with the Guardian, Bennett said he did not intend to waste the next four years "babbling about Israel and the Palestinians", and defended his plan to annex most of the West Bank in the face of international opposition, which was the "result of ignorance".

"There is not going to be a Palestinian state within the tiny land of Israel," he said, referring to the area from the Jordan river to the Mediterranean. "It's just not going to happen. A Palestinian state would be a disaster for the next 200 years."

He declined to be drawn on which cabinet post he would seek as a key coalition partner, but said his primary concern was the economy. "If there is one thing I would want to achieve over the next four years, it is to break up the monopolies here and to break the stranglehold the big unions have on the Israeli economy. I think it's a sin that most Israelis can barely [afford to] live here."

Under Bennett's leadership, Jewish Home has experienced a spectacular rise in the polls since the start of the election campaign, causing panic and dismay within the main rightwing alliance, headed by Netanyahu, from which support has drained. A poll in the Jerusalem Post on Friday put Jewish Home at 16 seats in the 120-place parliament, while Netanyahu's Likud-Beiteinu was predicted to win 32 – down from 45 forecast at the start of the campaign. Another poll put Jewish Home equal to Labour, on 18 seats each.

Bennett said his priorities were "to restore values to Israeli politics", to lower the cost of living and to advocate a "more realistic" approach to the Israeli-Palestinian issue. "If we hand over [the West Bank] to the Arabs, life here will be miserable and in constant conflict for the next 200 years," he said. "I want the world to understand that a Palestinian state means no Israeli state. That's the equation."