The storyteller said he was convinced at that moment that Netanyahu himself believed it.
If apocryphal, it is definitely in character. Netanyahu regularly embraces bad ideas or even lies so totally that he convinces himself of their rightness. Others start to believe them too. His outlandish idea, uttered in a speech, was that Hitler would have been happy with just expelling Jews if a Palestinian, the then grand mufti of Jerusalem, had not suggested annihilation instead.