Former U.S. President Bill Clinton is attacking Republicans for their small-government policies, saying America has to stop "conducting its public policy as if it was in a parallel universe divorced from reality."

He also urged Israel to make peace with the Arabs, saying the Jewish state will never have a better partner that the current Palestinian leadership.

Clinton spoke for an hour on Thursday before an adoring audience of global leaders from business, government and academia, who interrupted his words several times with applause — never more loudly than when he said Israel should seize what he described as the chance for comprehensive peace with the Arab world.