A solution can be found by thinking "outside the box" and with different proposals raised nowadays in the public discourse, he told Ynet on Thursday.
Although Israeli Arabs only comprise 20% of the Israeli population, Prof. Aumann believes they are a very important factor.
"I treat them with respect. They live in key and important parts of the State. There are those who are loyal to the State and those who are not. They voice a lot of dissatisfaction with the State."
'Israeli citizens drawing away from religion'
According to Prof. Aumann, most Israeli citizens have been drawing away from religion over the past few years, a phenomenon which he witnesses with pain.
"I have been walking around the country for more than 50 years, and as time goes by, religion increasingly wears out," he said.
"Today, about 60% of the State's citizen's cannot even complete the sentence 'Shma Israel.' There is a disconnection between the religious and haredi public and the secular public. A part of the public has a lot of respect to religion, but there is not enough knowledge."
Prof. Aumann was awarded the 2005 Nobel Memorial Prize in Economics for his work on conflict and cooperation through game-theory analysis.
About two months ago, he wrote a letter calling on the national religious public to join a new party formed by Knesset Member Effie Eitam and Yitzhak Levy (National Union).
Since winning the Nobel Prize, Aumann has continuously slammed the State's treatment of the Gush Katif evacuees. "The handling of the expelled refugees is a national disgrace. Many of the refugees are still in hotels, almost half a year after the expulsion, without minimal conditions," he said at the time.