JERUSALEM - Israel's prime minister gave a cool reception Wednesday to a new Arab Mideast peace initiative, saying the conflict with the Palestinians was not about territory but rather the Palestinians' refusal to recognize Israel as the Jewish homeland.

The remarks signaled trouble for Secretary of State John Kerry's new push for Mideast peace and risked reinforcing Benjamin Netanyahu's image as a hard-liner unwilling to make the tough concessions required for peace.

Netanyahu has not commented directly on the Arab League's latest initiative, but his words questioned its central tenet - the exchange of captured land for peace - and appeared to counter a modified peace proposal from the Arab world that Washington and Netanyahu's own chief negotiator have welcomed.

The original 2002 Arab initiative offered a comprehensive peace between Israel and the Muslim world in exchange for a withdrawal from all territories Israel captured in the 1967 Mideast war. Sweetening the offer this week, the Arab sponsor said final borders could be drawn through mutually agreed land swaps.

Netanyahu questioned the premise that borders are the key.

"The root of the conflict isn't territorial. It began way before 1967," he told Israeli diplomats. "The Palestinians' failure to accept the state of Israel as the nation-state of the Jewish people is the root of the conflict. If we reach a peace agreement, I want to know that the conflict won't continue - that the Palestinians won't come later with more demands."

As part of his effort, Kerry has been pushing Arab leaders to embrace a modified version of the Arab peace plan. The changes are meant to win Israeli support by agreeing to Israeli control of parts of the West Bank and East Jerusalem.