But Silvan Shalom, vice prime minister and regional development minister, told the Jerusalem Post in an interview Thursday the authority is already functioning as a state.
"True they don't have borders, but we also don't have borders," he said.
"No matter what we do, I do not see a Palestinian leader who is willing to accept what Arafat rejected, and I don't see a Jewish prime minister who can give more than what Barak offered. Therefore, I see it as a dead end," he said.
But Shalom said the indirect talks about to get under way can still create more understanding between Israel and the Palestinians.
"I am in favor of talking," he said.