Photo by GPO

Thank you very much Yehoshua for your kind words.  Michael, you guys introduced me so many times in the past.  I want to respond to something that Yehoshua said.  I can't ignore the very unique circumstances in which similar things were said.  On Arik's last day of performance almost two years ago, we were sitting at the ballroom adjacent to the office of the Prime Minister in Jerusalem and I think the buyers of Bank Leumi came to pay their check.  It was a big check, 2.5 billion shekels.     Not bad.  Not as big as the checks of Bonds, but not bad.  And Arik Sharon said, you know, I don't know what's so great about being Prime Minister of Israel.  Occasionally it occurs to me to think that it's too demanding and it's too tough and maybe it's not such a big deal.  But then he added, when I watch the line of people waiting to replace me, it occurs to me that it must be a good job.  Why would all these guys want to take it over?  So let me answer you this, Yehoshua, I don't know what's so great about this job, but there are quite a few.  I don't think they're jealous or envious, but they wouldn't mind if circumstances would allow it, of course graciously and nicely as everything is done in Israeli politics, with lots of modesty and restraint, but if in spite of all these extraordinary expressions of modesty and restraint, it will occur to them to take over, there would likely to be a few who would want to be there.  But until then, I'm here and I intend to stay for a while, so I guess we'll still have chances of meeting, either here or in different parts in America, where we for many, many years used to meet with the Bonds groups. 

Michael thanked me for coming shortly after I returned back from a short trip, actually, not such a big deal, it was Europe.  And after visiting with President Putin last week in Russia and just before I'm having lunch tomorrow with Mahmoud Abbas, Abu Mazen, the President of the Palestinian community and having after lunch a session with the National Adviser of the President of the United States for National Security, Steve Hadley, so, indeed the time is filled now with activities that are all focused on the major effort that we are making in order to embark on a meaningful international meeting in Annapolis.  Now, the one thing which I hope and this is something I also discussed with the President several times, we don't want to mislead anyone that Annapolis is the event that will conclude peace between us and the Palestinians.  We are not there yet.  Annapolis is not made to be the event for the Declaration of Peace.  Annapolis is a milestone, an important milestone, a significant milestone, in a process which still has to go a long way before we have reviewed all of the issues, analyzed them and established a basis upon which we can implement what hopefully will become the two-state solution; the State for the Jewish nation which is the State of Israel, and the State for the Palestinian nation which will be the Palestinian state.  Jews will live in the State of Israel in the Jewish State, and Palestinians, all Palestinians will be living in the Palestinian state which is being considered and will be established for one purpose mainly which is to be the homeland for the Palestinians, not to be a Palestinian state where Palestinians will not live because they will want to live in the State of Israel.  That will not happen. 

Now I must say without going into names, that one of the things that fill me with great sense of excitement, I should say even pride, is that degree to which a large number of international leaders from one side to the other, share with us today these perceptions of what should be done and how it should be done and what should be the role of Israel and what can be demanded from the State of Israel and so on.  In this respect, and in many different others, it was very exciting to go to Paris and to feel that we have a real, genuine, powerful and very sincere friend in the Elysee Palace.  I don't want to say anything about the previous one.  No.  I must say that he received me in a most gracious manner when I visited the Elysee while he was President.  I can say that there is a new spirit, a warmer, a more spontaneous, more emotional spirit of respect, of friendship, of warmth, which characterizes the present leadership in France and it penetrates to all levels of government almost momentarily.  In Great Britain, it's different.  The former Prime Minister of Great Britain was a great friend, Tony Blair.  And the present is equally a great friend.  I heard, I don't know if it's true, that were some differences between the two of them over a period of time.  As far as Israel is concerned, they are on an equal footing.  They both respect us, they like us and they cooperate with us and they don't hesitate to express their support in a most explicit and powerful manner as Prime Minister Gordon Brown did in a joint press conference that we had.  It turned out that we even agree on the soccer team that we both like in Great Britain.  Don't take it lightly because today an Israeli person is the coach of the most famous London team in soccer which made big headlines all over the world.  So while I  have enormous respect and certain pride in an Israeli coach coaching the richest team in Great Britain, at least I was on common ground with Gordon Brown where we both expressed our priorities and our priorities were on that particular case somewhat different. 

I think that the relations with Russia are also very interesting.  Don't get excited.  They are not exactly on the same ground as the others obviously, and no one expected.  And there are many things that the Russians are involved with which I'm not particularly happy with.  However, unlike the past, we can talk with them and maybe sometimes also influence their thinking.  I know that there are some Israelis maybe, someone told me that maybe they were my political opponents, but I can't believe that political opponents sometimes can make such mistakes on national issues, but they criticized my unexpected visit with President Putin, but tell me, what's so bad if the Russian President in perhaps the busiest week that he had in his entire eight years as President of Russia, traveling all over Europe from one end to the other and spending his nights in a plane in order to make up for the time, finds three hours and more to sit tête-à-tête with the Prime Minister of Israel to explain to the Prime Minister of Israel the priorities of Russia, the policies of Russia and to listen to his arguments.  Who knows maybe even here and there even to accept some of what the Prime Minister of Israel says.  Is it worse then the time when the only way for us to have watched the Russian leaders was through television or through their appearances in press conferences where they threatened Israel's foundation. 

So even those who are not traditionally the staunchest supporters of the State of Israel are now having an entirely different attitude and I must say that I don't consider Putin in any way an enemy.  On the contrary, I think he's a friend.  With more friendships in our part of the world that sometimes is comfortable for us but he's also a friend of Israel and when he said to me under no circumstance will I give my hand to threaten the foundations of Israel's security, I think that this is at least interesting if not encouraging.  In any event, all of those countries, all of us, first and foremost the Americans, naturally, but also, East Europeans, West Europeans, Central Europeans, Angela Merkel, Prime Minister Prodi and others, are now playing and working to facilitate this process between us and the Palestinians.  Now one thing must be clear and this has been absolutely clear throughout from day one that there will be no negotiations other than the direct bilateral meetings between us and the Palestinians.  We are not going to have negotiations in any international event.  An international event is made in order to create an umbrella of support, to sponsor or to encourage the direct contacts, but the real meaningful negotiations are only the ones which are conducted directly between the two sides, when each one of the sides is prepared to assume the responsibilities essential for the implementation of their commitments within the framework of an agreement. 

The other thing which is very important and perhaps is different in the present pattern in comparison to anyone in the past is that on this one it is clear to both sides that we're not just moving to an agreement and then once we have an agreement this agreement will be implemented as is.  First of all, the Roadmap, according to the sequence of the Roadmap, will have to be implemented so that we can be confident that the prerequisites for Israel's security are fully accomplished before we are required to make any concession that might under different circumstance, jeopardize the security of Israel.  In other words, the implementation of the Roadmap according to its original sequence is a precondition for any movement on the actual implementation of what ever understanding we may reach at with the Palestinians.  I think that this is a good pattern, a pattern which on the one hand offers a genuine, serious meaningful and sincere political horizon for the Palestinians and we are anxious to offer these political horizons because we want the Palestinians to know that they have something worthwhile looking for their future.  And we want more and more Palestinians to believe that this is possible and achievable, but in order to actually achieve it, they will have first to go through the process of battling terror and battling terror in the most effective manner, because we will make no concessions that will open Israel for and expose us for dangers that are intolerable.  So this is now the main priority.   I think that we are getting our act together in the right appropriate manner without too much excitement, but with a genuine desire to share the expectations and to contribute to these efforts.  If all goes well, then hopefully we will meet in Annapolis.  I don't know that they will invite all of you.  In the event that they don't, I promise to represent you.  And from then on we will continue our negotiations with the Palestinians.

In between we have to continue to build our economy.  Now I know that everyone who talked with you probably told you how successful the Israeli economy is.  I'm sure, but if there will be some difficulties this parade will not be so crowded, because then some probably will stay aside, but success always had many fathers and that's right, and indeed there is a lot to be proud of.  In the last three-four years, the Israeli economy growth is at a pace which is unparalleled to any of the western countries.  Last year we had a growth of 5.2 percent which is much higher than America, much higher than Canada, much higher than Europe.  This year we're going to have 5.1 or 5.2, I'm not certain about that, but very dramatic, higher than any in Western Europe, higher than any in America.  Not only the growth has gone up, but the income per capita is today almost $24,000 per person in Israel. The PPP, which is the purchasing power, I mean that takes into consideration the comparisons on the standard of living, the cost of living, and so on and so forth, so it's not just the dollar comparison, it’s a more complex criteria,  it brings Israel's per capita into close to 30,000.  Foreign investments are higher than ever.  Unemployment is lower than ever.  Our surplus of the balance of payment is positive.  Exports are growing, so wherever you look at it, you can see that the Israeli economy is doing very well.  There is a lot that we can be proud of.  And I will say to you there is a lot that you can be proud of.  Because naturally part of the money that you invest is serving the growth, the investments, the expansion, and the success of the Israeli economy.  It's a good investment first of all.  I know sometimes the rates are … but this is a world without rates anyway.  It changes so rapidly.  Interest rates are not so high anyway.  What I'm saying to you is that your investments in the Israeli Bonds prove now more than ever before to be good for you, and don't take it lightly, you don't like to lose when you invest, certainly not when you invest in the State of Israel, but also these investments are very worthy for our economy.  And they are part of this flow of money, which enable Israel to expand the infrastructure, the basis which is so rapidly growing.  And I'm very proud that in the last couple of years since I became Prime Minister, a major part of the growth is now starting to move into the direction of coping with the social needs of the State of Israel with education and with the social needs.  Inevitably, once you start to invest in education there are demands always for more and more and more so we have now the high school teachers strike.  This is not because we don’t give, it's because we gave only last year an addition of 6 billion shekels into the new wages package with the teachers, so now that they learned that we have 6 billion more, they say why not eight, why not ten, why not twelve and so on and so forth.  So that doesn't mean that we are not going to have political difficulties, but we are investing now in education than ever before, more in welfare than ever before, more in children at risk than ever before, more in early childhood kids between the age of birth to the age of six that we never invested in a comprehensive system that will be spread cross country from north to south.  We are investing hundreds of millions of shekels in each one of these items this year that we never invested before in order to be able to provide preventive sophisticated holistic solutions rather than to spend ten times more on corrective services.  I don't need to tell you that what you can prevent is so much more effective and less costly than what you have to invest in correction when things are going in the wrong direction and this is something that we are doing in a very effective manner compared with the past and we are capable of doing it because of the enormous success of the Israeli economy in the last few years; the growth, the exports, the foreign investments, and the almost unlimited expansion of technological innovations that are coming from Israel and are taking over almost every corner of the world.  So Mr. President, my dear friend, Yehoshua Matza, I remember that when you went to America, the beginning, how many years ago was it, six?  You were hesitant.  There was no question in his mind and in my mind that he will be very successful, but the question was will the Israeli economy be as fast growing as he believes that he will be able to push the Bonds to be so that we will be capable to absorb all of the funds and the investments that the Bonds investors will be ready to put into the economy of Israel.  That he was such a success, there never was any surprise.  We all knew he would.  That we were such a success, you must admit that there was a little surprise, so I want to thank you, I want to thank you Michael for all the efforts that you and the many investors in the Bonds organizations are making for the economy of the State of Israel.  I know many of you.  I met many of you so many times.  I met him more because in between the missions he used to come also and speak with me, all the way from Cleveland,  can you imagine?  And I want to thank you David and ask you to send my warmest wishes to your father, my good friend Sam Halperin from New Jersey.  Good people, good cause, enormous love for Israel.  I believe also good business for you and good business for us.  Thank you very much. 

Bobby Goldstein:  Can you address the "rumor mill" about the division of Jerusalem?

Prime Minister:  A very good question.  I will tell you something very briefly.  For many, many years, whenever there was a debate about the future of Jerusalem, why when you talk about Jerusalem you also include the refugee camp in Shuafat as part of Jerusalem, who needs it?  Now when someone says, that maybe in the course of an agreement with the Palestinians, we will get rid of the refugee camp in Shuafat, everyone says how can we even think of having Jerusalem without the refugee camp in Shuafat?  So it's a matter of perception, where you are and what you are doing at a particular time and who are the political opponents that you have to embarrass, but I don't think seriously, any one who talks about the real Jerusalem divided, no way.  No way!