2. We're talking about long term trends, not a three year bubble 2007 - 2010.
The Muslims are out breeding you, 2.1% growth in occupied territories (Gaza/West bank combined). In Israel overall you have a 1.8% growth rate but even there a large portion is Arab, not Jewish and the projection is that OVERALL the population will shift over the next 20 years to a more Arab one. The power base of the people surrounding Israel is “increasing” while Israel is flat lining: Saudi Arabia, Iran, Egypt in all aspects (economic, political, social, militarily). In fact, in the Middle East at large the booming centers of growth today are NOT Israel but places with names like Qatar, Dubai, etc. While these nations pose no immanent threat to Israel, their governments and populations do see Israel and the Jewish population in a negative way and their political, economic and military might is increasing both regionally and on the world stage. The influence of Israel on the other hand and the political will/need to support them is waining in the West.
Netanyahu is right and the problem is even worse than most recognize or wish to accept. You have to look at this long term and at a macro level, not slicing it up with definitions and geographically so you get some "feel good" answer.
There are trustworthy sources:” http://www.gov.il/FirstGov/NewsEng/NewsEng_ArabPopulation.htm