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Wednesday, December 4, 2002
Text: Prime Minister's Speech at the Herzlia Conference

Text: Prime Minister's Speech at the Herzlia Conference (Palestinian state)

December 4, 2002 Check Against Delivery
Israel Government Press Office

[IMRA: It should be noted that Israel has absolutely no obligation under
Oslo to permanently relinquish areas handed over during the interim period
since the Agreement explicitly says that the arrangements during the interim
period in no way determine the final arrangements.

"Noting in this Agreement shall prejudice or preempt the outcome of the
negotiation on the permanent status to be conducted pursuant to the DOP.
Neither Party shall be deemed, by virtue of having entered into this
Agreement, to have renounced or waived any of its existing rights, claims or
positions." Interim Agreement, Article XXXI Paragraph 6]

Twenty-seven months ago the Palestinian Authority commenced a campaign of
terror against the State of Israel. Since then, we have been confronting a
ferocious battle against a culture of bloodshed and murder, which has
targeted Jews and Israelis everywhere. This campaign of terror was not
coincidental; it was meticulously planned and prepared by the Chairman of
the Palestinian Authority who misconstrued the high regard for human life in
Israeli society as a way to compel us to capitulate to terrorism and coerce
us into additional political concessions, concession with nothing in return.

The past two years have been a difficult and painful test for Israel's
national strength. The callousness and brutality of the terrorists was
aimed - first and foremost - at undermining the sense of justness of the
people of Zion. This is not the place to ask what led the PA Chairman to
question the inner strength and determination which has always characterized
the citizens of Israel, but it is clear that the terror has not defeated and
will never defeat the State of Israel. They tried to break our spirit - and
failed. This failure has resulted in scathing Palestinian criticism of
Arafat, his path of terrorism and ongoing strategy of violence against
Israel.

Today, most of the weight of the global leadership is in the United States.
From the first days of the establishment of the State of Israel, our bond
with the United States has been a supreme strategic asset. My Government
has further consolidated our relations with the United States and formed a
special closeness with the U.S. Administration and Congress. These special
relations, the understanding of Israel's needs, and the cooperation with
President Bush and his administration are unprecedented. Israel has in the
United States true friends who genuinely and honestly care for our security.

Our political understandings with the United States and the Administration's
understanding of our security needs have provided us with the required
leeway in our ongoing war on terrorism. The war on terror has been
accompanied by exorbitant costs and harsh financial damage, and I hope and
believe that in the coming months we will receive special aid, to support us
in our economic campaign.

On June 24th this year, President Bush presented his plan for a true
solution to our conflict with the Palestinians. The peace plan outlined in
the President's speech is a reasonable, pragmatic and practicable one, which
offers a real opportunity to achieve an agreement. We have accepted in
principle the President's plan and the sequence presented therein. Our
agreements with the Palestinians are based on the lessons the Americans
learned from the Clinton-Barak plan, and my experience as one who has, for
many years, participated in the security and political campaign in the
Palestinian arena.

After concerted efforts, the U.S. Administration has understood and agreed
that the only way to achieve a true peace agreement with the Palestinians is
progress in phases, with the first phase being a complete cessation of
terror. President Bush's speech is a fatal blow to Arafat's policy of
terrorism and serves as proof of the failure of his attempt to achieve
political gains by means of violence and terrorism. Only after a cessation
of terror - and this is already agreed by most world leaders - will the
commencement of peace negotiations between the parties be possible.

The American plan defines the parties' progress according to phases. The
transition from one phase to the next will not be on the basis of a
pre-determined timetable - which would have resulted in a build-up of heavy
pressure on Israel towards the end of one phase and approaching the next
phase. Rather, progress is determined on the basis of performance - only
once a specific phase has been implemented, will progress into the next
phase be possible.

On the basis of lessons learned from past agreements, it is clear to all
that Israel can no longer be expected to make political concessions until
there is proven calm and Palestinian governmental reforms.

In this context, it is important to remember that political concessions
which will be made in the future - as those made in the past - are
irreversible.

Even the current security reality, with the IDF operating freely inside
Palestinian cities, arises from security needs and has not changed the
political situation of two years ago. Israel will not re-control territories
from which it withdrew as a result of political agreements. Therefore, the
achievement of true and genuine coexistence must be a pre-condition to any
discussion on political arrangements.

The Jewish people seek peace. Israel's desire is to live in security and in
true and genuine coexistence, based, first and foremost, on the recognition
of our natural and historic right to exist as a Jewish state in the land of
Israel, while maintaining genuine peace.

The achievement of true coexistence must be carried out, first and foremost,
by the replacement of the Palestinian leadership which has lied and
disappointed, with different leadership which can - and more importantly -
is willing to achieve real peace with the State of Israel. Unfortunately,
there remain a few in Israel who believe that Arafat is still relevant.
However, the U.S. Administration - with the world following in its
footsteps - has already accepted our unequivocal position that no progress
will be possible with Arafat as the Chairman of the Palestinian Authority.
This man is not - and never will be - a partner to peace. He does not want
peace.

The reconstruction of a Palestinian government should commence with
governmental reforms which will ultimately lead to the establishment of a
new, honest and peace-seeking administration, the removal of Arafat from his
command of power and sources of financing, and from the decision-making
process, and his relegation to a symbolic role.

In concordance with the sequence presented by President Bush, a Chief
Executive Officer for Reforms will be appointed to the Palestinian
Authority, and will constitute the head of the executive authority and the
source of administrative authority. The provisional Palestinian government
will administer a more efficient governmental system, fight the prevailing
corruption in the PA and adhere to regulations of proper management. That
government will lead a comprehensive process of reforms, maintain
coexistence and prepare the general elections.

The elections in the Palestinian Authority should be held only at the
conclusion of the reform process and after proper governmental regulations
have been internalized. The goal is that these will be true elections -
free, liberated and democratic.

Parallel with, and perhaps even prior to the governmental reforms, a
security reform will be carried out, consisting of three principle parts:
1. Dismantling all existing security (/terrorist) bodies, the majority of
which are, in fact, involved in terror; these organizations, which are
directly subordinate to Arafat, are essentially corrupt, and responsible for
the deaths of hundreds of Israelis. These bodies will be replaced by two or
three new organizations which will consist of a police force and security
services; these new organizations will have a uniform command, which will be
responsible for dismantling the current complex web of militias and armed
gangs.
2. A Minister of the Interior will be appointed, and will be responsible
for collecting illegal weapons and transferring them to a third party which
will remove them from the PA territories and destroy them, and outlawing
terrorist organizations.
3. In addition, cooperation on security issues between the PA and Israel
will be renewed immediately.

The security reform must accompany a sincere and real effort to stop
terrorism, while applying the "chain of preventive measures" outlined by the
Americans: intelligence gathering, arrest, interrogation, prosecution and
punishment.

Another important matter is the international demand for honest, effective,
non-corrupt and transparent administration of the PA financial system; it is
of great importance that the PA manage its financial affairs in concordance
with the rules of proper government which will obligate the Palestinian
Authority, inter alia, to produce a detailed budget, under a budgetary
control system. This budgetary auditing system will ensure a balance between
income and expenditure, and will verify that budget spending only serves
appropriate economic purposes for the benefit and welfare of the Palestinian
people. Such a supervising mechanism will also prevent the transfer of
money for the financing of organizations or individuals involved in terror.

Taking the financial system out of Arafat's hands, and appointing a strong
Minister of Finance with authority, constitutes an important factor for
stopping the terrorist system operated by the Palestinian Authority. We are
hopeful that the newly appointed PA Minister of Finance will operate a body
to oversee and handle foreign aid funds received by the PA, and channel
those funds to clearly defined projects which will benefit the Palestinian
people and which are not contaminated by terror and corruption.

Peace and coexistence cannot be achieved without reform in the fields of
education, media and information; the virulent incitement mechanism
instigated by the PA against Israel must be stopped immediately; there can
be no peace while the Palestinian education system instills in their young
generation a culture of hatred, violence and terror.

Today, there is an increasing understanding in the world that stopping the
phenomenon of suicide terrorism is dependent on: the cessation of
incitement, ending the religious ratification of terrorism by radical
elements in the Muslim world - with the encouragement and support of various
Arab states.

The Palestinian justice system and law-enforcement must also undergo
significant reforms. It is unheard of that in a law-abiding country, one
hour after being arrested for theft, a suspect is sentenced and hanged,
while on the other hand those involved in terror enter and leave prison in
the "revolving door" principle. As long as those who commit crimes against
the State of Israel are not severely punished, no progress will be made in
President Bush's sequence.

The two sides will advance to the next phase of President Bush's sequence
when a new, different, responsible and non-corrupt Palestinian leadership
emerges. Terror will cease, and the Palestinian leadership will not allow
it to be renewed. Civil and economic cooperation will be established.
Incitement will be stopped and education towards peace will be fostered. At
the same time, Israel will act to lift military pressure, create territorial
continuity between Palestinian population centers, and ease daily life for
the Palestinian population.

The second phase of President Bush's sequence proposes the establishment of
a Palestinian state with borders yet to be finalized, and which will overlap
with territories A and B, except for essential security zones. This
Palestinian state will be completely demilitarized. It will be allowed to
maintain lightly armed police and interior forces to ensure civil order.
Israel will continue to control all entries and exits to the Palestinian
state, will command its airspace, and not allow it to form alliances with
Israel's enemies.

As I have promised in the past, President Bush's sequence will be discussed
and approved by the National Unity Government which I intend to establish
after the elections, and I will do my utmost to establish as broad a
National Unity Government as possible.

In the final phase of President Bush's sequence negotiations will be opened
to determine the final status of the Palestinian state and fix its permanent
borders. As I emphasized, no progress will be made from one phase to the
next until such time as quiet has been restored, Palestinian rule has
undergone fundamental changes, and coexistence is ensured.

We all want peace. It is not a competition over who wants peace more. We
also know that entering into political negotiations for peace is the true
path which will bring about acceleration of economic growth and prosperity.
I have said it before, and will say it again today: Israel is prepared to
make painful concessions for a true peace. However, the government under my
leadership will not be seduced into believing false promises which will
endanger the security of the State of Israel.

My ideological and political path is well-known to you from the many
functions I was privileged to fill during my decades of public service.
These decisions are not easy for me, and I cannot deny that I have doubts,
reservations and fears; however, I have come to the conclusion that in the
present regional and international reality Israel must act with courage to
accept the political plan which I described. There are risks involved, but
also enormous opportunities.

I know that there are many who will attack the political outline I have just
detailed. During the last few years many of us were tempted to believe in
lightning-quick solutions which would lead to the security and peace we have
longed for, and that this long-lasting conflict between our two peoples
could be solved by the "blade of a sword" - I am familiar with these voices
from both sides of the political spectrum.

Regrettably, this is not the way things are. These methods have failed -
the solution to the conflict must be gradual and controlled. We must, in
all stages, act with prudence and determination, exercise judgement, and
make very sure that all commitments and agreements are implemented by both
sides.

It is true that this is not a shining path which will lead us to instant,
magical solutions, but I am certain that only by going forward in this
direction, step by step, will we be able to achieve security for the Israeli
people, and reach the peace we all yearn for.

Thank you, and happy holiday.

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