PM:  Good afternoon Mr. Bolton.

Bolton:  Good afternoon.  Well, can I just say first of all what a pleasure it is for me to be here, to be invited to conduct what I hope will be an important interview with the Prime Minister at Sky News.  We are well aware that we even have paying customers in Israel, so we very much try to please that audience and those viewers.

And also, of course, we value the very big contribution, particularly in the hi-tech area, that Israeli industry has given to the development of dish television and also pay television.  So, we share quite a lot of common ground.

Now, usually when I talk to august personages such as prime ministers, we are very hurried for time, but on this occasion, we have time for a fairly decent conversation.  So, I thought we would move through a number of issues that concern this conference, of course, in a moment, the perhaps perennial problems of the Middle East, but also maybe begin with some topical questions.

And in a sense, there is nothing more topical, Prime Minister, than the results of the mid-term elections in the United States, particularly since you are on your way to Washington practically to see George Bush.  I do not know if that will be a particularly happy meeting for George Bush, certainly given what has happened here.  What do you think is the significance of this dramatic change in American public opinion?

PM: If you do not mind, before I start with American politics, which naturally is very important – it is almost even more important than our internal politics because it helps sometimes – I want first to take this opportunity to express my deep regret over the events which took place yesterday morning in Beit Hanoun, with the unfortunate shooting of Israeli artillery on innocent Palestinians in Beit Hanoun, which resulted in the killing of 18 civilians, most of them are members of one family.  This is certainly not the policy of Israel, this is not the objective of the Government of Israel, and this is tragic and we are very sad about it, and we deeply regret it.

Of course, unfortunately, this is part of the context.  It could have happened the other way around with all the rockets, the Qassam rockets which are fired at the Israelis in Sderot, in Ashkelon and in other places.  These are shot, aiming at individual citizens on purpose, while what we do is try to spot armed people who are perpetrating this terror against us.  But still, I feel that Israel is strong enough and powerful enough to be able to say that we regret it very much, that this is another good reason why the terror should stop completely and entirely from Gaza, and that we should try to move into a political agenda which will allow us to talk with the Palestinians and this is the message that I am going to bring with me to the United States.

Bolton:  I was going to move on to that.  But to get down to a very important matter, can I put it to you that whatever the intentions of the two sides may be, that this question of proportionality keeps on being raised in this issue that in practice Palestinian civilians or earlier in the year, Lebanese civilians appeared to be hit disproportionately in the view of many people, and that is something which is damaging Israel's standing in the world.

PM: Well, this particular case in Beit Hanoun is out of this context, because it was a mistake.  It was not a planned attack that just killed too many.  It was not supposed to be in the first place.  This was a technical failure of the Israeli artillery.  I checked it and I verified it, and you know, we can only say we regret it.  Unfortunately, it does happen occasionally.  But this was not the policy, this was not the purpose.  There was no plan.  We did not plan to shoot in this direction altogether, and therefore proportionality is not part of this context.  It could be part of the question about Lebanon. You know, I remember talking with Kofi Annan, the outgoing Secretary General of the United Nations, a while ago, and he told me: "You know, the Israeli reaction is not proportional.  And I suggested to him, and maybe you could help me.  I said, "Mr. Secretary General, would you be so kind as to give me what is a proportional reaction for the shooting of 1,000 Qassam rockets on innocent civilians in many of the southern townships of the State of Israel?  How can you measure the proportion?  By the number of rockets?  By the number of sleepless nights for babies and children in all of those areas, who may have not been hit directly, but who are going through the pain and the fear and the horror and the hysteria for more than two years."

Bolton: Many people measure it in terms of the number of people killed, the number of military personnel killed versus the number of civilians killed, and that is why Israel is so often criticized internationally.

PM:  Yes, hypocrisy is a common practice in some countries, and we are familiar with it.  That is why it is true that sometimes people can measure it by the number of the people that are killed.  Most of the people killed in Gaza are armed people, members of the terrorist organizations who are perpetrating these terrorist actions.  And they do not deserve any other punishment.

Bolton:  But in that case, a lot of women and a lot of children were killed.

PM: Occasionally there are, because they are using – and this is also something I will never forget, you asked me about American politics, and of course, in a minute you will ask me about retired Secretary of Defense of the United States, Mr. Rumsfeld, and I will never forget that I once, I switched on to Sky, obviously, and I watched a live interview with Donald Rumsfeld talking about one of those misguided missiles in Iraq that – or guided – that killed many civilians in a place where some terrorists were hiding.  When asked about it, he said, "What do you want?  They are using innocent civilians as human shields in order to cover up for the terrorists who are perpetrating atrocities against other innocent people.  What can we do?"

So, unfortunately, it does happen here.  We try to avoid it. I never use it as an excuse.  This is not an excuse.  What I am trying to do is to explain to you that unfortunately, against our better intentions, it occasionally does happen.  And we regret each and every case.

Bolton:  And what is the state of military operations in Gaza now?  Could it happen again tonight?

PM: Military operations will continue as long as there will be Qassam shooting on innocent people.  What kind of military operations, depends.  But we are not going to stop it.

Bolton:  I mean, have you changed the orders, the rules of engagement?

PM: No, we will not shoot with artillery. We will take precautions in order to avoid unnecessary mistakes.  That is for sure.  But I want to be very sincere with you.  We try to avoid the unnecessary involvement of innocent civilians which are not part of terror.  But I cannot promise that it will not happen. 

We will do everything in our power in order to avoid it.  It will be, I think, not serious to promise that it may not happen.  It may happen.

Bolton:  You could say you simply will not attack targets of that sort and in that way.

PM:  As I said before, Adam, this really was a mistake.  It was a technical failure of the artillery which unfortunately does occur sometimes.  The direction was entirely different.  The direction was an orange grove from where we spotted the firing of Qassam rockets seconds before.  And instead of going this direction, it went that direction.  I can only promise you that we will never shoot directly where there are innocent civilians living.  But I cannot promise you that where we will shoot here, it will not by some technical failure will go there.  I hope it will not.  Believe me, we do not gain anything from it; we do not want to gain anything from it.  It does not help.  It just does not help. 

But what is more is that the Qassam shooting does not help either.  And they have to remember it.

Bolton:  Some of the people here have said that they worry this could be a watershed moment in terms of the political process, because it appears to have hardened and united the Palestinian attitude.

PM:  How much harder can they be?  Let us be realistic.  You look at them and you really wonder.  Here is Gaza, take Gaza. 

I still, even today, take pride… you know, when asked how the Disengagement happened, I still say that I was one of the initiators, perhaps the first, and I am proud of it.

Bolton:  The problem is, you are not disengaged, though, are you, militarily?

PM:  No, we are disengaged.  Well, occasionally we have to react, but we are disengaged because we pulled out all of the Israeli civilians and we dismantled 17 townships which were a great pride for us in many different ways.  We did pull out from there.  And I am still proud of it because I think it was an essential step forward in creating a new reality.

But one cannot ignore the fact that in spite of this, in spite of the fact that they cannot claim that we occupy one centimeter of Gaza, they did not stop shooting Qassam rockets at us from day one.  What else do you need to do?  What else do you need to do in order to convince them that it is time for them to reconcile, to change their priorities, to get to the table and sit down and talk seriously, rather than shoot and shoot and shoot and call for more terror, and cause so many victims on the Palestinian side, and destroy every fabric of life at a time when they could flourish.  I mean, they can look at us – it is not from a big distance – and they can see how the economy of Israel is flourishing.  And can you imagine what they could have had they been more cooperative?

Bolton:  But just on this specific point, when I was here covering Prime Minister Blair's visit in September, there was a sense…

PM:  May I ask you something?  Since you mentioned that you came with Tony Blair, did you come with your wife?

Bolton:  Did I come with his wife?

PM:  With your wife? 

Bolton:  No, she was not here.  She used to work for him.  She does not anymore.

PM:  Would you tell us, the audience… I mean, you do not mind that I am asking you questions, rather than answering.

Bolton:  No.

PM:  Tell us a story about your wedding.

Bolton:  The story about my wedding?

PM:  Yes.  At 10 Downing.

Bolton:  What, when we got married?

PM:  Yes, what happened when you married.  Was there any demonstration outside.

Bolton:  Well, as it happens…

PM:  Alright.

Bolton:  Okay, okay.

PM:  You see, these British guys, they only know how to ask the questions.  They do not know how to answer.

Bolton:  This was not a demonstration against me or my wife, I hasten to add.  But, we were in a church in Piccadilly in the center of London, and when there were quiet bits in the service you could here demonstrators against the war, against Tony Blair – "Blair Out".

PM:  Why?  Because of what?

Bolton:  Because of Iraq mainly.

PM:  And also? …Tony Blair is someone I admire greatly.  I like him very much, I have to say.  He is my kind of guy.  He is a good guy, he is a really good guy.  And he suffered a lot because of what was perceived in Great Britain as his great support for Israel.  Partly, it was expressed while he was found to be in the wedding of Adam Bolton and his wife, who used to work for Tony Blair.  That is the story.

Bolton:  He was there in the church as they were chanting, "Blair out," outside.  Alright, that is the story. 

PM:  I did not want to embarrass you.

Bolton: But just to get onto this question of the political process and where it is now.  We've talked about the hardening of the Palestinian attitude.  There has also been, for example, criticism of what happened from Margaret Beckett, the British Foreign Secretary, yesterday.  So, do you think public opinion is turning against Israel? 

PM:  Look, first of all, I can understand, simply and easily, why so many people were uncomfortable with this event.  I am very uncomfortable with this event.  I am very distressed.  This is the worst that could happen to them and to us.  And the reasons are less important, but not entirely unimportant. 

Now I think that Ms. Beckett knows it.  The British Government knows it.  The President of the United States understands it, and many others.  I do not think that there is going to be a wide criticism against us, because you can count on the terrorist organizations to put things very soon in the right perspective with the continued shooting of Qassam rockets.  Even today is just another example of the total lack of flexibility and understanding that is screwing everything for such a long time.  But, I want to add to this, I have a lot of respect for Abu Mazen, and I can say, and I do not want anyone to misunderstand, when we will sit down to the negotiating table, he is going to be a very tough negotiator.  He is not a patriot of Israel, he is a Palestinian patriot.  And, I trust him that he will fight for the Palestinians' interests very vigorously as he does.  But at least he is decent, he is upfront, he is against terror, and therefore I am ready to sit with him any time – today, tomorrow – without any preconditions. 

Bolton:  Why has that not happened yet then?

PM:  Because he does not want.  He is unfortunately preoccupied with the divisions in the Palestinian community, with the pressure of these hard-liners from Hamas, with the terrorist groups, and apparently he does not possess the power to overrule them and to come forward. 

I am ready.  I passed him the message many times.  I am ready any time, any place, without preconditions, to sit down and talk.  And he will be surprised.  He will be surprised when he sits with me of how far we are prepared to go.

Bolton:  What can you offer him?

PM:  I can offer him a lot.  I will offer it to him, not to you.  But I want to say more, I want to say more.  The most sensitive, the most important thing for the Palestinians is the release of prisoners.  I do not know if you are aware of it, but long before the abduction of Gilad Shalit, I met with President Mubarak, with King Abdallah II, with Tony Blair, with President Bush, with President Chirac, and I said to them when they asked me, "What are you up for?"  I said, when I am going to meet with Abu Mazen, I will release hundreds of prisoners – unconditionally.  Why?  Because I want everyone amongst the Palestinians to see that when there is a leader who is prepared to sit with us, he deserves to be recognized rather than the extremists.  And I say today to the Palestinians, you do not know how many prisoners you could get, how many of your kids could be at home had they released Gilad Shalit.  The enemies of the prisoners are the Hamas people, the extremists.

I am ready.  I say it often.  I could not be more open.  I could not be more sincere about it.  I will not release one to the Hamas, because they will not be paid off for extremity, but to Abu Mazen, many – I am ready to release many.  I was, I am and I will. 

Bolton:  Beyond prisoners, what about territory? 

PM:  You heard about the Realignment Plan, right?  That I spelled out before the elections.  For the first time, at least in the recent history of Israel, a candidate for Prime Minister who was quite safe at that time, comes here and says, "I'm ready to pull out of almost 90% of the territories."

Now, I did not change my basic attitudes.  Realignment has to be reviewed, and the pattern has to be reexamined.  But the Palestinian know that I am up for business.  If they were serious, if they were ready, they would stop terror.

Listen, we are not going to commit suicide here.  Let it be clear.  We are going to fight, and we have proved it.  We proved it in Lebanon.  We have no sense of humor when someone attacks us.  We take it very seriously.  But we are ready to compromise in a serious manner if they are up for some serious business.  But they are controlled by the terrorists.  And Khaled Mashal is the prophet of the Palestinians, not Abu Mazen.  That is why everything is stuck. 

Bolton:  Do you think that in his remaining months in office, Tony Blair can add anything to this process?

PM:  You know, there was one time that I did not [unclear].  You know, because you were in my garden, in my home, when he was having dinner with me, and then we went to the press to be interviewed, to answer to some questions.  So, this was the first time that I thought that maybe Israeli journalists are not the worst in the world. 

They asked Tony Blair… they asked me, actually, one British correspondent, very important, very dignified, asked me: "Mr. Prime Minister.", so we looked at each other and he said: "No, no, this is a question for Mr. Olmert."  He said, "Mr. Olmert, why do you have to waste your time on this lame duck?  He has got no influence.  He is out of office soon.  Why do you have to waste your evening with him?"  And I thought, "gee, I mean these journalists in Great Britain, they can be quite hard sometimes."

I have a different opinion of Tony Blair.  I think that he is a genuine friend of Israel.  I think that he is a remarkable person.  I think that he has brought great leadership to Great Britain, and has done a great many things for the Middle East.  And I think that he could be very helpful, and he has some good ideas about building up a platform for civil administration for the Palestinians, something that he shared with me.  And I said to him right away: I am ready to take part in it, not in any patronizing manner that I am going to control the Palestinians, but if there will be an international effort, led by Great Britain, to help strengthen the civil administration of the Palestinians, in order to make it reasonable and effective and helpful, I am ready to be part of it, and join in with him. 

And by the way, you know, I always thought that – at least in Israeli politics – when a prime minister promises that he is going to retire soon, that this is a commitment for a very long service.  So I don't know yet about Great Britain.

Bolton:  What about if Tony Blair goes back to Syria, talks to President Assad again. Nigel Sheinwald was there.  Would that be a good idea or a bad idea?

PM:  I do not think that, based on what he heard from his messengers, that he is very happy to go to Syria soon.  This is my assessment.  But it remains to be seen.  Maybe he will tell me something that I do not know. 

Bolton:  [Unclear] said that unless Syria is engaged, there can be no settlement.

PM:  First of all, I disagree.  We signed an agreement with Egypt, without Syria.  We signed an agreement with Jordan, without Syria.  We signed some agreements with the Palestinians, and the reason for the failure of these agreements with the Palestinians had nothing to do with the Syrians. 

I am not against having an agreement with Syria.  It is just that, you know, Bashar Assad cannot eat the cake and have it at the same time.  That is something that we cannot accept.  He cannot sponsor the Hizbullah, sponsor Kahled Mashal, finance and actively support the terrorist actions throughout the Middle East, cannot be the most devoted partner of Iran, which calls for the liquidation of the State of Israel, and at the same time, get the bonus of the appearance of moderation by having some contacts with Israel.  This does not go together.

Bolton:  So, what would the basis of an agreement with Syria be?

PM:  He has got to change, a little bit.  He has got to show some signs of change, some kind of seriousness.

Bolton:  And in exchange from Israel?

PM:  In exchange?  You would like me to already exchange with you what he may expect to exchange with me if he will change?

Bolton:  I am saying, if he gave you that, what would you give him in exchange?

PM:  Look, Israel has, I think, proved in the past that we are ready for serious business with Syria if they are ready.  Serious business. 

Everyone understands what it is. I know I have to spell it out explicitly.  I am taking too many risks today with you.

Bolton:  Okay, let us move on to President Bush.

PM:  Yes.

Bolton:  Is he a lame duck?  Is it a waste of time really going to see him at all? 

PM:  I hope it is not a waste of time for him.  I hope that no one in America says, "are you going to spend some time with this guy from Israel – Olmert?  What the heck?  You know?  We read that he is on his way out, so why do you spend your time?"  I think it is a good opportunity, certainly for me, and I think also for him.  There is a lot that we need to talk about.  There is a very serious agenda for both of us.  President Bush is president for another 2 years, and I want to remind you of something you will remember because you are a veteran observer of international politics.  You know that the two best years, the two best years of Bill Clinton in government were after the mid-term elections in 1994, when the poor guy lost the House and I think the Senate as well, and Newt Gringrich became Speaker of the House.  And everyone said, "Bill Clinton is dead.  He will never be re-elected."  And probably one of the reasons why he was handsomely re-elected in 1994 was because – I am sorry, it may have been 1996.  I do not remember, but after the mid-term elections… I think 1996, he was first elected in 1992, it was 1994 and in 1996, he was re-elected – was because he battled against a majority of Republicans in Congress, which worked in his favor.

So, do not eulogize Bush yet. He is the President of the United States of America, and it is 50-50, 50 against 49 with Joe Lieberman.  And it is not a vast majority, and I do not want to go into internal politics of America.  I can only say this: thank G-d Bush is the President of the United States of America.  That I can say as Prime Minister of Israel.

Bolton: But we know from the exit polls that sixty percent of Americans said they now oppose the military occupation in Iraq. We know that similar numbers are now saying that in Britain.  We know that the consequence has been that, Rumsfield a man most identified with that policy, has been fired, so there is presumably a very significant shift in Middle East policy as a whole.  Isn't there?

PM:  You know Bush, do you?

Bolton:  I met him.

PM:  You know he is a man of integrity and a man who is absolutely, entirely, 100 percent devoted to his principles and loyal to his convictions.  So, I don't think that there is going to be any dramatic shift in the basic attitudes of the administration of George W. Bush while he is in power.  What will happen after him depends very much on who will take over, whether Democrats will win, or the Republicans will win, I think it's too early to judge.  I personally don't think that there will be a dramatic policy change in the Government.  That does not mean that there will not be some reconsiderations about the timing of the American pullout from Iraq.  I think it's too early to say. 

I can say that from our perspective any pullout, whenever it will take place, will have to be very carefully planned, in order not to upset the very delicate balance of the moderate countries in the Middle East and that includes some Arab countries and emirates and so on.  And I think that this is a major consideration.  I think that America, regardless of whether it is a Republican America or a Democratic America, will be very cautious before it makes a move that can jeopardize the balance, the delicate balance in this part of the world which is so extremely important for the stability in much larger parts of the world.

Bolton:  Does it matter to Israel that there is, I think, now a record number of Jewish legislatures around the world?

PM:  First of all, I think that we entertain the support of so many legislatures, both in the House and in the Senate, that we don't count their religion, so it's interesting; it certainly is a reflection of the vitality of the Jewish community in America, but as far as Israel is concerned, thank G-d we have many supporters in America, also some Jews. 

Bolton:  Alright, let's move on and talk about this conference, the conference on export and international cooperation.  What is your vision for Israel in ten years time?  Describe the Israel that you can foresee and you'd like to see.

PM:  I don't think that you noticed that we have with us here the Governor of the Israeli Bank, Professor Fischer, sitting next the to the Minister of Finance, Mr. Hirchson, and the chairman of the Manufacturers Association, Mr. Brosh.

A few days ago, I chatted with Mr. Fischer about the state of Israeli economy, the state of business and so on, and he said to me that five years ago, when someone asked him, "will the day come, or when the day will come when the Israeli balance of payment will be positive?"  And he thought at that time that it will not happen in his lifetime and it happened this year.  We are going to have a surplus of exports over imports of about 4 and a half percent of the gross national product of Israel.  It's about six, perhaps more, billion dollars, surplus. 

I remember all my life, ever since I was aware of what economics is all about, and what business is all about, we always said, export, export, export.  We have here a guy who soon will be recognized, Stef Wertheimer.  I know him, I don't know how many years, 25 years. He once, you could look at him, you wouldn't believe, but he was a Member of Parliament.  He doesn't want to remember those four years, but he was.  The one sentence that I remember from him, whenever one would mention his name to me, Stef Wertheimer, is exports.  When I was first appointed Minister of Industry and Trad – now there is Mr. Yishai sitting here, he is the Minister of Industry and Trade, I was four years ago – the first thing he came to me and say, squeeze for exports, don't forget exports, exports is the name of the game.  We have a positive surplus, it's unbelievable. It's unbelievable. 

So when I look at the Israeli economy for the next ten years, I think that if we will handle ourselves with the same combination of care, of discipline and with the right priorities, then in ten years time, Israel is going to come close to our dream of being one of the economies where the income per capita is around $30,000, which is on the higher echelon of the European economies.  I think that what we need to do is on top of this to invest more in research and development.  President Brosh said it before and he is absolutely right.  We need to do it and we will do it. 

We have to continue to invest in the periphery, and we have to make a dramatic change in the priorities within the State of Israel to seriously cope with the social difficulties, particularly of the underprivileged in our country.  The gap is too wide; it has to be narrowed down.  It's not enough that we, through the consistent growth of our economy, we are raising the income per capita; we have to make genuine efforts so that this income will be divided in a more evenly manner than it was up until now.

Bolton:  That includes Arab Israelis as well.

PM:  Absolutely.

Bolton:  Now I have to ask you, why is Mr.
Lieberman then part of your Government?

PM:  Lieberman doesn't have to do at all with the social conditions of the Israeli Arabs.   I can answer this question in two ways and I will answer it in two ways.  First of all, I'll answer the hypocrisy of some. Lieberman was hardly a member of cabinet in all the history of Israel. What were those who are preaching to Lieberman doing about the condition of the Arabs in Israel?  Zero.  So I don't need the criticism of those that never did anything, only knew how to criticize.  By the way, while Lieberman was in the Cabinet, strangely enough, he voted for the Roadmap and he voted for a two-state solution with the Palestinians.  So he's not that bad.  You know, it's very good to have a Lieberman in the Cabinet and to encourage him to take the right positions when it comes to a vote in the Cabinet.  So I don't think that there is a problem here. 

I think that we have to do a lot more to meet the needs of the Arab population in Israel, and we haven't done enough, and I am going to change it.  There are two segments of the Israeli population which suffer from poverty more than all the others.   One is the ultra Orthodox community and one is the Arab community.  These are two entirely different communities, but they are on the lowest echelon of our society and we will have to take serious measures in order to change it.  Already in this budget we have allocated 3 billion, 800 and 9 million shekels, in addition to the natural growth, in comparison into the budget of last year, to cope with social needs and a large part of these budgets are going to be allocated to the periphery in the south and in the north to also meet the needs of the ultra Orthodox and the Arab community in Israel. 

That we would have done with or without Lieberman and we will do it with Lieberman.  And on top of it, since you asked about Lieberman, we need a stable government in Israel.  We are sick and tired of going to elections every two years.  We are going to change the government system in Israel and this is going to be one of my top priorities, and Lieberman is going to be very helpful in making these reforms possible and that's why I'm very happy that he's in the Government.

Bolton:  I have to put it to you that stability is one of the things, talking to the businessmen here, that they throw back against the politicians, that we simply haven't had any sort of economic stability, any continuity in Finance Ministers or things like that.

PM:  You had a lot of continuity and stability in the actual policies.  You had too many ministers, but now we have the best, so I'm not worried. 

Bolton:  One other area that came up certainly this afternoon, was a suggestion really that the Government is overlooking bio-tech.  Do you accept that in terms of…bio-technology is not…

PM:  That we are overlooking bio-technology?  Here is the Chief Scientist sitting in front of us.

Bolton:  Well, he was on the panel when this…

PM: He complained about it?

Bolton: He didn't complain about it.

PM:  He didn't complain.  You know, I don't want to fire someone in the middle of the day.

Bolton:  It was the industry that was complaining about it saying relative to hi-tech and they're not getting the attention they deserve.

PM:  I think that we have to increase the allocations through the Chief Scientist for research and development and that includes also bio-technology.  I think that we, I myself for instance, last year allocated through the Chief Scientist to the Ben Gurion University major funds in order to establish the National Center for Bio-Technology which will be part of the academics of Ben Guiron University, and the industrial park which is going to be developed, Industrial Park for Bio-Technologies next door.  So we are making efforts. 

I think what we have to do is to combine government allocations with private funds.  I think there are more bio-technology companies in Israel than in any other country in the world.  I think there are more than 1500 companies dealing with bio-technology in the State of Israel, which is almost as many as there are in Europe.  And therefore there is a good market here and there are good opportunities and we have to allocate more and I said it before, we need to invest more in research and development and bio-technology has got to be a major part of it.

Bolton: There have been major problems with the brain chain, have been problems with higher education.  You set up a panel to deal with higher education.

PM:  That's right.

Bolton:  What have you got to do with Israel's universities?

PM:  What do I have to do with Israel's universities?

Bolton:  Yes.

PM:  First of all, I graduated one.  One of my children is teaching in another, and another one wants to come and teach in another.

Bolton:  You set up a panel which suggests you have got of work to do.

PM:  We have got work to do.  I think that we have got to increase the investments in scientific research.  This is primarily what we have to do.  Now what I think we have to do, and I hope that this panel which we appointed – the Minister of Finance, Minister of Education and myself just the other day – what they have to do is to increase the allocations for the universities by changing the fees of students, providing better loans and grants and scholarships to help those who need it and also to emphasize or to focus on those departments which we think can be very helpful for developing that which is higher potential in the Israeli society.    The hi-tech professions, technologies, the sciences, life sciences and so on and so forth.  And I hope that they will come with serious recommendations.  I am not committed to support everything, but I am very interested in it.

Bolton:  You sound like a man who is sort of settling in for a long stint in office, yet you look at the opinion polls, a very negative one about trust relating to you yesterday. Do you think you're going to be able to survive? 

PM:  You know, a year ago, in this particular conference which I was present as the then Minister of Finance and Minister of Industry and Trade, had you made a poll amongst the participants, what are the chances that within four months, Ehud Olmert would be the Prime Minister of Israel, you would probably get 1% or one and a half percent, so in comparison to these I am in wonderful shape and this is just the beginning. 

So listen, Israeli politics is very volatile and very dynamic and one thing which I have learned over the years is that you have to be very careful and build up your strategy for a long time, and that is what I am doing.  And my plans is that we will go through the full term of four years and 8 months, so we have almost four years still ahead of us.  And then I promise you, Adam, that I will arrange for the Prime Minister's Conference to invite you again to interview me about the plans for the next four years.

Bolton:  Alright.  Two final very different questions.  The thing that everyone around the world remembers your premiership for so far is Lebanon this year.  Didn't you lose that in the sense that Nasrallah is still there?

PM:  On the day that we decided to respond to the provocation of Hizbullah, we outlined the three objectives for the war.  One was to implement fully Resolution 1559 of the United Nations which was adopted 2-3 years before but was never implemented; to deploy the Lebanese army in the south of Lebanon; and to remove the danger or the threat of the Hizbullah.  The 1701 which includes 1559 of the United Nations was adopted, implemented, Lebanese army is deployed in Lebanon and there is an international army on top of it. 

I can only say this: that the Hizbullah lost the appetite to fight with Israel for many years.  You can ask Nasrallah.  When all was said and done, when all his cheap rhetoric is gone, and you ask the Hizbullah,  I know more than I can say, but you ask Nasrallah, whether he would have loved to repeat this experience again, and he will tell you: not for many, many, many years. 

Now, the truth is that I had many experts. You know, if there is one thing which we are definitely rich with is commentators.  Believe me, we have the greatest, most thoughtful and serious commentators in the world.  There is nothing that they don't know. Nothing.  So, I heard during the war and after the war that Israel lost its deterrent against our enemies.  There is no deterrence anymore. Why? Because of this war.  And it disturbed me a lot; it really discouraged me.  And I kept thinking about it.  And I came to somewhat different conclusions, and I wanted to try it on you and maybe you'll share with me my conclusions.  Here:  

On the twelfth of July did we have deterrence against the Hizbullah?  What is deterrence?  When your enemy comes close to the point where he has to decide to give you a punch and suddenly he remembers who you are and how you are going to respond and he backs off.  Was this the case on the twelfth of July?  Not at all.  There was zero deterrence.  They tried to abduct Israeli soldiers in January.  They continued in March.  They continued in June and they finally succeeded in July. 

In all of those occasions when they attacked Israel and shot rockets on our northern part of Israel, there was no deterrence. They kept fighting, they kept trying.  Now ask them if they will try again.  I will only remind you of what Nasrallah said, "Had I known only 1% of what would happen, I would have never started."  Now he knows.  Therefore my judgment is that as a result of this war, of this "disproportionate reaction" of Israel, they will not start another such war against the State of Israel.  And therefore I think that the outcome of this war is very good.

Bolton:  the Iranians don't seem to get that message though, do they? Iran doesn’t appear to have gotten that message.

PM:  Iran is a different. I don't think that the danger of Iran started on the twelfth of July.   Only those who were asleep for many years didn't notice that Iran was becoming an imminent danger, not just to Israel, to the whole Western civilization.  It is a danger.  Now we are a lot more conscious about this danger than we were before the twelfth of July because of the war in Lebanon.  Therefore in this respect also we are more conscious, we are more aware, we are going to address ourselves to this in a much more serous manner, and there is a greater chance that we will be ready to prevent it better than we could had the fighting in Lebanon not take place altogether.

Bolton:  I have a final question on a lighter note, bearing in mind your interest in football.  Are oligarchs good for football clubs and for international football?

PM:  What do you think?  You have it in Great Britain, that's where it started.  I'll tell you what.  I guess you know that I am a fan of Manchester United and every time I meet with Tony Blair, and I want to tease him, I say: okay, Tony, you are so great, you are wonderful, you are doing so many great things, but how do you fail?  So he says, where?  I say: look at your team, Newcastle United, is losing all the time.  So he says, I know you are a fan of Manchester United, so I tell you I don't mind that Roman Abramowitz spends so much money on Chelsey; he spends money but not on soccer in Israel, on something different.

Bolton:  Your club, I think, has another oligarch.

PM:  Pardon?   No, my club, yes, I don't think that he's an oligarch. Not that he is one of my revered personalities, but he came to Israel at the age of 20, so he didn't make his money in what is considered to be the oligarch pattern of making money.  In this respect he is not an oligarch. But all the big soccer teams are owned by rich people, right?  And I'll tell you something, whether I like him or not, I am a great fan of Beitar Jerusalem, and I hope that they will win the championship in Israel and will go to play in Europe and will do well in Europe.

Bolton:  And of course, there is an upcoming engagement between Israel and England, I think as well on the football field.

PM:  We are going to play against Great Britain.  First we are going to play against Croatia soon.  And I very much, I hope that Robinson will be the goal keeper in the game between Israel and Great Britain.

Bolton:  I think we'll leave it at that.  Thank you very much indeed, Prime Minister.

PM:  Thank you.