Full transcript of interview with Ehud Olmert
Published: June 9 2006 23:53

Transcript of interview with Ehud Olmert, Israeli prime minister, given in
English to Financial Times and London Independent on 6 June 2006:

http://news.ft.com/cms/s/a2fadffa-f704-11da-a566-0000779e2340,dwp_uuid=99eafd16-a001-11d8-81c6-000e2511c801.html

[IMRA: In the elections PM Olmert said he wanted to retreat to permanent
borders. Now he wants to retreat to a temporary line if part of the world
temporarily "recognizes" the temporary line. Olmert isn't claiming that his
proposed retreat would put a stop to the ongoing "slicing" of the Israeli
"salami". He also isn't clear what constitutes "recognition". Does this
mean that products manufactured within the "recognized" lines but beyond the
"Green Line" would qualify as "Made in Israel" for customs clearing in
Europe? ]

"Q: During the election campaign, many of the electorate read your plan as
something that would fix Israel's borders possibly within the four years of
your first term. Now you seem to be talking more about a long-term interim
settlement until such time as the Palestinians.

EO: There is not a difference. It's just a matter of, you know, sometimes we
fall in love with specific definitions and we lose track of the main
substance of what we want. And therefore, you know, don't rely on the
phrasing that I use now in comparison to a few months ago or vice versa.
What I want to say is this: we need to separate from the Palestinians into
boundaries that can be defensible. Now, whether technically it will be
called permanent or not permanent, if these boundaries will be satisfactory
if they will be protected by the fence, if the international community will
recognise Israel's right to have such boundaries, will appreciate at the
same time that separation from the Palestinians and creation of a contiguous
Palestinian territory in which a Palestinian state can be created, if all
this will happen the basic objective will have been achieved. And that's
what I have in mind."]

Olmert heads to Europe

Q: You obviously had a very successful trip to Washington. Do you think you
will get a tougher ride in Europe where they seem very keen on negotiations?

EO: I intend to say exactly the same thing to Prime Minister Blair and
President Chirac, Prime Minister de Villepin as I said to President Bush:
that I certainly want to have negotiations with the Palestinians on the
basis of the fundamental principles that were outlined very, very accurately
in the Road Map and the Quartet decisions. And I believe that this decision
will be wholeheartedly accepted by Prime Minister Blair and by President
Chirac. They want negotiations and I want negotiations. The question is what
happens if, in the event, that negotiations can't take place. So, first of
all one must remember that I did not create new demands or any new framework
for negotiations which is not precisely the one that has been carefully
defined by the international community.

Q: With some Israeli reservations?

EO: Not about the Quartet. Not about the Quartet decision. I talked to
President Chirac and I was more than happy to hear him say time and again
and repeat it in a most accurate and explicit manner that France will not
talk to anyone that does not accept Israel's right to exist, that does not
recognise all the agreements that were signed between Israel and the
Palestinian Authority and implemented, not just hypothetically, but live by
these agreements, and also without the practical disarming of the terrorist
organisations. This is what Tony Blair said. This is what Jacques Chirac
says, and I am entirely with them on these issues. Now, if there will be a
partner who performs this, I'll be the happiest man. In the event that there
will not be a partner then the question is: what's on? What do we want to
do? Do we want to sit idle and do nothing, do we want to wait? For how long
do we want to wait? One year, two years, three years, 10 years more? Or do
we want to do something and then what is it that we want to do? This is
something that I'll certainly discuss with these leaders and this is
precisely why I'm so anxious to go there. I want to hear their advice, I
want to hear their observations, I want to be impressed with their
priorities. But, one thing I know from them already: what are their
preliminary conditions for starting negotiations and they are insistent that
without these conditions there can be no meaningful process of negotiations.

Blair and the World Cup

Q: You spoke before the elections of your relations with Tony Blair.

EO: I like him very much. I think that he is a fantastic guy. And I like
him. He has one big weakness that can't be ignored and this is that he is a
big fan of the Magpies [Newcastle United] which is not my priority in
British soccer.

Q: You support Man U?

EO: Yeah. I am a fan of Man U. But that is not because they are red. Because
he [indicating aide] is a fan of a team in Israel which is a red team and I'm
the fan of the yellow and black [Betar Jerusalem]. But I think that Tony
Blair and myself are certainly wishing for Wayne Rooney to fully recover in
order to represent the British national team. I heard Sven Goran Eriksson
just say the other day that while everyone is important there is no one like
Wayne Rooney and so I hope for Great Britain that he will recover fully and
be able to represent Great Britain, so that Great Britain will have the most
powerful team they can have to represent them for this challenge.

Q: We shall see.

EO: I can only say I regret the fact that Israel has not qualified for the
finals because that would have changed everything in our lives here. Anyway
I, as I said, like Tony Blair. I think he's a fantastic guy and I like
talking with him, I like sharing with him my views, my desires, my
expectations and my plans.

Q: Have you met Gordon Brown?

EO: I have met Gordon Brown. I am very friendly with Gordon Brown and I'm
going to see him. He's the minister of finance and we have many important
bilateral economic issues that need to be examined and Gordon Brown has been
very supportive and I'd like to certainly discuss these issues with him. He
was my guest here. I was his guest in Great Britain.

Israel's image

Q: Looking more widely at the situation of the Europeans vis-à-vis the
conflict, this week, today, is the anniversary of the '67 war 39 years ago.

EO: This is precisely the day.

Q: Thirty nine years ago in Britain it was difficult to find anyone who was
not wholeheartedly behind Israel in that conflict. The situation now, is to
say the least, somewhat more ambivalent.

EO: Yeah.

Q: Does Israel bear any responsibility for that shift in opinion and how has
it come about and do you think that you can go some way towards resolving
that on your visit?

EO: For me to say that Israel doesn't bear any responsibility whatsoever
under any circumstance will be silly and not serious. Of course there is a
certain responsibility. When you want to find out what has influenced this
shift in public opinion in Great Britain over the years since 1967, 39 years
ago, from the days when everyone was praying and crying for the safety of
Israel: first of all that generation largely has disappeared.

And there is a new generation and this new generation doesn't remember that
Israel was not in the territories altogether, that we never wanted to be in
the territories, that we never really wanted to take over and occupy any
territory and that it was imposed upon us by the aggression of the
Palestinians and the Egyptians and the Syrians. And therefore for many of
the younger generation the reality where Israel is administering the
territories is the reality of life. And they don't know what lies in the
background of it. So that's one reason why there has been such a shift on
the part of the people.

And I think that also it is sometimes quite harder to explain the
complexities of the situation because Israel is known to be such a
sophisticated, powerful, modern nation.

But, you know, so many of the people who look at the situation just do not
remember that the Palestinians want Israel to return back into boundaries
the width of which is 12 kilometres, that can be cut into pieces within
minutes. And they are also not familiar enough with the historic facts to
remember that the Palestinians brought it upon themselves when throughout
history they always refused to make peace when peace was possible. So,
indeed there is a shift in the public opinion and I hope that with the
apparent desire of Israel to pull out of territories, to separate from the
Palestinians and help create a two-state solution, that this attitude will
change.

Palestinian referendum

Q: It was reported that Sunday's cabinet meeting had been very dismissive
about the Palestinian prisoners' document and about the referendum as well.

EO: I still am.

Q: You don't think potentially if this were successful that it could turn
Abu Mazen into a partner?

EO: Look, do you want to change the basic principles that were outlined by
the Quartet in the Road Map, you want to change the Road Map? I think that
if you start to walk on this road you soon enough will find yourself in deep
danger. If you don't want to change it, then look at the letter of the
prisoners. In there, they don't even mention the state of Israel, they don't
even refer to the right of Israel to exist as a Jewish state. They don't say
anything - I'm sorry - and they insist on the right of return which is the
almost automatic, outright destruction of the state of Israel. So why should
I accept something that challenges the very fundamental principles of Israel's
existence to become a basis for some improvement? Why should I accept this?

Q: Many of your intelligence officials are reported to have said that it is
pretty important in terms of Abu Mazen. Even on the right of return, it's
pretty vague. It doesn't say the right of return to Jaffa or Tel Aviv?

EO: Why do they have to be more explicit than just say: right of return? Do
you understand what right of return is? Do you think that they don't think
that you understand it? So why do they have to go to be explicit?

First of all, I don't know of any intelligence, I didn't read any
intelligence and it's my habit to read intelligence reports on a daily basis
and I haven't seen it. But I will go further. You take the Hamas, the most
extremist, fundamentalist, religious, radical organisation and you say that
there is a document in which there are other factions that are somehow less
extreme than Hamas. It's not a context of comparison, you know, this is not
a basis by which you measure and judge any improvement.

It's the basic principles that were accepted by the international community,
that your country and the United States and the UN defined. It's not the
ones that I would have defined. The Quartet principles is not - maybe I
would have defined things that are entirely different. They defined it and I
said fine, I am ready to abide by these principles. Stop and disarm the
terrorist organisations. Do they talk about it in the letter of the
prisoners? Not in the remotest.

So, what am I going to be: recklessly irresponsible for the future of my
country and accept negotiations where every day there can be a bus exploding
in the middle of Tel Aviv or Jerusalem. So, what will I say then to the
public opinion? I am negotiating with Abu Mazen and it's not Abu Mazen who
is exploding the buses, it's someone else among the Palestinians? So, I mean
what is it all about?

Q: In practical terms, what would Abu Mazen actually have to do on the
ground in order to qualify in your view for negotiations?

EO: To carry out the principles in a manner that was defined by the
international community.

Q: Would that mean disarming Hamas, the elected government?

EO: Of course, of course, of course. This is the principle. This has been
defined by you guys, I mean by your governments, and I am absolutely ready
to subscribe to it.

Q: In Gaza at the moment, at every crossroad you have two Hamas guys on one
side of the road and two Fatah people on the other. To ask Abu Mazen at this
point to disarm them would mean fighting throughout.

EO: So you want me what?

Q: But that is the reality.

EO: Reality depends on the determination of the Palestinians. They have to
come to terms and have to come to grips with reality. What do they want in
life? Look, you know in my speech in the US Congress I said in one sentence
that I think was a key, I said this is what we will do, what we will try and
do and this and that, but in the end it depends on them. We will not be able
to do for them what they are not prepared to do for themselves.

It's their responsibility, it's their ultimate responsibility of the
Palestinians on what their priorities are. You know, yes, of course, when
armed people from Hamas and armed people from Fatah are standing opposite
each other there is more likely to be a confrontation amongst them. But you
want me to what, to put on line the life of this country in front of people
that are killing each other and that they openly and explicitly that they
want to wipe Israel off the map? They don't recognise not only the existence
of Israel but the right of Israel as such to exist. I must be crazy. And I'm
not.

Q: It doesn't sound as if you're going to be having many meetings with Abu
Mazen.

EO: I want to research with him and to discuss with him what needs to be
done to help him possess the powers needed to cope with the challenge of
Hamas and the challenge of terrorists within the Palestinian community. I
want to help him. I want to take all the necessary measures that can assist
him in this direction.

Q: When do you think that's likely to happen?

EO: Probably towards the end of this month.

Q: Is the referendum a factor in your timing?

EO: The referendum is an internal game between one faction and the other. It
is meaningless in terms of the broad picture of chances towards some kind of
dialogue between us and the Palestinians. It's meaningless.

Q: It could be argued that if he called a referendum and he won, even though
you don't accept the terms of the prisoners document, he would be
strengthened somewhat.

EO: Look, everything that can strengthen Abu Mazen is favourable. However,
at the end of the day he will have to make these basic principles that were
outlined. So he will not be able to get away by saying I forced a referendum
that accepted a programme which is far behind the basic principles that the
international community defined anyway.

West Bank withdrawal plan

Q: You talked before the election about permanent borders resulting from
what we now call realignment. You said in a Time Magazine interview that
they might not be permanent but they would be pretty close. How negotiable
with the international community are those borders?

EO: First of all, I'll tell you what. You know it's a problem sometimes when
you speak to journalists. They quote you and then they read what they wrote
and then they even explain it. It's dangerous. I don't retract on anything
that was attributed to me. What I wanted to say and what I want to say now
is I want to separate from the Palestinians - OK - into defensible borders
that can provide security for the people of Israel, of course in
consideration of demographic changes that took place in the territories
since 1967 and to which the president referred in his famous letter of the
14th of April 2004 as you all recall, I'm sure.

Now, this is what I want. I want to separate from the Palestinians. I want
them to have their independent, separate state on a contiguous territory and
I want Israel to exist of course as a Jewish state in its own territory, as
an independent state in its own territory. The Palestinian state, the
Israeli state, separate. This is my dream. If we can, you know, negotiate
specific borders that can be acceptable to achieve peace, better. That is
why always I prefer an agreement and negotiations.

If, as appears at this time, there won't be negotiations because the
Palestinian are not ready, because they are not prepared to assume
responsibility, because the extremist fundamentalist, religious radical
government of Hamas is not prepared and Abu Mazen is too weak, then I'll try
and discuss this issue with the international community. I don't have in
mind a specific border. I'm not going to come to Tony Blair or to Jacques
Chirac or to Angela Merkel or to anyone - I didn't come to Bush - and say to
them this is the line, take it or leave it, I am not going to negotiate it.
No. We have a desire to separate from the Palestinians.

I believe this is desire is shared by most nations of the world that care
for what happens in the Middle East that they want us and the Palestinians
to settle it. I'm sure most of them want Israel to live in security in our
country and not to be jeopardised by any future development. I am sure that
they all want that the Palestinians will have their own independent and
contiguous territory where they can establish their state. So there are many
basic premises that are shared by all of us. The rest depends on
circumstances, on negotiations and discussion.

If the Palestinians will be ready again, I'd more than be happy to negotiate
with them because I want to have another side accountable, with a clear
address, that I can charge with responsibility for events that may take
place in the future. What they say is if they don't come, if they are not
ready, if all of us agree that they are not ready, what are we going to do?
Wait forever? Waiting is the worst. It's playing into the hands of the
extremists that don't want any development and that are ready to sacrifice
it with blood and terror. And I say, I am not playing into the hands of the
extremists.

If you will not allow the more moderate Palestinians to take over and assume
responsibility, then I move forward. But I move forward after talking to
Tony Blair and to Jacques Chirac and to George W. Bush and to others and
trying to prepare a framework that appears to me reasonable to the
international community. And at any given time in the future, even the
Palestinians will then be able to meet their requirements as posed by the
international community, then we will continue to talk.

So it does not preclude any future negotiations with Palestinians. It will
perhaps only reduce the scope of differences because if Israel pulls out
from a large part of the population or of the territories, then much less
will be left for any possible future discussions between us and the
Palestinians. But at the same time it's also true that if they will not come
and if we will withdraw into certain lines and if we will separate this with
a big fence as we intend to do and that will be the practical border
separating us from the Palestinians, it may last for many years. I don't
know.

Q: You haven't given a huge amount of detail yet on the exact withdrawal.
But I wonder if you could share a little bit more with us. I wonder, for
example, if Hebron would be included.

EO: I am absolutely, absolutely - I understand the curiosity which you
manifest and I am not certain that I want to satisfy all of your curiosity
at this point.

Q: But at some stage you will have to tell the Israeli public what the plan
is. They are concerned more than anybody with the exact location of this
border.

EO: Until now, I was accused of being too explicit to the Israeli public
opinion in an unparalleled manner. I have outlined my political plans before
the elections at a most crucial time and everyone said this guy is crazy. He's
risking his support and he's spelling out specifically and accurately what
his plans are. No one did it in the past, why should he do it? I did it
because I wanted to have a clear mandate. Of course, I would have been much
more comfortable if I'd have had 33 or 35 mandates instead of 29. But at
least the 29 that were elected know precisely ahead of time what the policy
of the government would be and they are committed to support it and no one
in the Israeli public opinion can complain that I have misled them by
telling them exactly what it would be.

What would be the specific items and the accurate lines and exactly which
settlements, where and so on and so forth, of course, when we will reach
this point and we will conclude these negotiations we will outline the exact
framework of this political plan and it will be submitted for approval in
the party or in the Knesset or in the cabinet and of course we will discuss
it openly. We are not going to hide anything from anyone. We are going to
share it with the public opinion and precisely for this reason because we
want the public opinion to join in supporting it and to give us the
necessary moral foundation for what we want to achieve.

Coalition politics

Q: Do you think the Israeli political parties are as evolved and
sophisticated as Israeli public opinion or do you think the inevitable
coalition strains will start to tell? Is the present coalition capable of
advancing this plan?

EO: I believe so. Yes. I believe that the coalition is strong enough. And,
you know, don't take these, you know, little outcries that come from here
and there to give you a wrong impression. This is, this Knesset is made out
of relatively speaking many newcomers in comparison with what other Knessets
were. And some rules and some of the adjustments are not completely
understood by all participants. These are the signs that will disappear soon
and I do believe that this will be a solid and stable coalition. However, I
am sure that by the time that all of the specific plans will be on the
agenda for approval by the Knesset that there may be much more vocal
opposition to it than the ones that we have now - by Likud, by former
supporters and present supporters of Likud and other parties. I absolutely
believe with all my heart that the majority of the public opinion in Israel
is going to be entirely in favour of this plan and I am going to do
everything on line for this because nothing interests me and nothing is more
important for me and nothing is more significant for me than achieving
peace. So I'm sure I will be able to carry on with me the majority of the
public opinion.

International support for realignment plan

Q: You are obviously very confident that you will get international
agreement - European as well as American to do this.

EO: I don't know. I didn't say that I know. I just said I would do
everything in my power to convince the Europeans and I want Tony Blair and I
want Jacques Chirac and I want Angela Merkel, I want all of the other
political leaders in Europe to understand that I care for what they say. I
want to listen to them. I will seek their advice. I will seek their opinion.
The days that Israel was separated from Europe are gone. There is a new
basis for relations that I want to cultivate and to strengthen.
Q: More so than your predecessor [Ariel Sharon], perhaps.

EO: I think my predecessor started it. And had he carried on I'm sure that
he would have done more and more about it. We used to discuss this issue a
lot and he was entirely on my wavelength in terms of what needs to be done
with Europe. And he did a lot to improve the relations with Europe. He did a
great deal with Tony Blair. He did a great deal with Jacques Chirac. I'll
tell you something. He came back from France and he told me: you know, we
didn't understand many things. He said Jacques Chirac is a great leader. And
obviously he liked very much Tony Blair and there was trust built between
the two of them. So I want to develop it, I want to broaden it, I want to
strengthen it. I don't come with any fears and I come with open arms. I say
to the Europeans: hey guys, why should you be cut out from the mainstream of
politics in the Middle East? Why should it be only America? America will
always to be primary power, there's no question about it. But you guys can
play a major role and we want you to play a major role and we are ready to
join forces with you in order to allow you to play this role.

Q: Suppose the Europeans start to get very sceptical about realignment,
maybe because they take the Palestinians slightly more seriously and they
just say no. What will you do?

EO: I will just work harder. I don't believe that at the end of the day they
would prefer a stalemate or a deadlock and a status quo forever. I believe
in the understanding and the sophistication of the British and the French
leaderships. At the end of the day, you know, they will have to ask
themselves and answer it: what do we want here? Do we want things to remain
like this forever or are we prepared to support someone who comes and says:
I want to move things, I want to change the direction which is certainly
acceptable to all. I want to change in the direction that will separate
Israelis and Palestinians which will allow to create a contiguous
Palestinian territory that will eventually become the independent
Palestinian state and that, at the same time, will maintain the integrity of
the state of Israel as an independent state.

Q: There are doubts in Europe about whether an independent Palestinian state
is really possible given the facts on the ground at the moment.

EO: We are not talking about the facts on the ground at the moment. I am
talking about changing these facts on the ground. I am talking about pulling
out from territories. Don't tell me.Look, I think that the position of the
Palestinians is they want 100 percent of every bit of territory. It's a
negotiating position that will have to be discussed. I'm not.I don't believe
that there is one European leader, serious European leader, which would say
that unless the Palestinians receive 100 percent of every demand of theirs,
there can be no peace. I'm sure that the Europeans, with their experience,
with their depth of understanding and historical memory which is so dominant
in the minds of many European leaders, they know that territories were
exchanged, that populations even moved sometimes, that territorial
adjustments were made in order to create better circumstances for a peaceful
solution. In one format or another, in one manner or another, at the end of
the day we will have to find ways to do it here. And I don't believe there
is a serious European leader that would say no, either we give the
Palestinians accurately 100 percent of what they want or there will never be
peace. This is childish and the Europeans are not children.

Q: If the Palestinians were to be a partner at sometime in the future do you
think the settlement that you would reach would be along the lines of what
Ehud Barak [former Labour prime minister] offered at Camp David [in 2000]?

EO: I don't think that Barak remembers what he offered. So how do you want
me to comment on it?
Q: There were some parameters.

EO: Look, either I don't remember or I don't want to remember. In either
case I would come up with the same answer: let's wait for negotiations to
eventually take place and when that time will come, I hope the sooner the
better. It's too early now to go into those details and I don't want to bind
myself to any position.

[Aide interrupts with news that Palestinian Authority Mahmoud Abbas has
extended deadline for Hamas to accept prisoners' document before he calls a
referendum]

EO: I just heard now that Abu Mazen postponed the ultimatum for another
three days which is certainly going to.

Q: Strengthen Abu Mazen?

EO: No. It corroborates my argument. You know, you must understand
something. The reason I feel confident is not because I think there is a
superior wisdom here. It's just that I come with clean hands and an open
heart. I'm ready to sit down with Abu Mazen and tell him: Hey, my neighbour,
what do you need so that I can assist you to establish your authority for
which you want to speak? And if he doesn't possess this authority.Look, it's
not a minor issue. You take, you know, you make negotiations on the most
fundamental issues in the history of my nation. This is not something that
can be easily discussed. I have to make sure that I am doing the right
thing. I can't afford to make any mistake. This guy is actually unable to
actually even exercise his authority. What shall I negotiate with him about?
And now this is something that serious political leaders with a certain
experience can't ignore, certainly not Tony Blair nor Jacques Chirac. They
are very experienced people.

Q: During the election campaign, many of the electorate read your plan as
something that would fix Israel's borders possibly within the four years of
your first term. Now you seem to be talking more about a long-term interim
settlement until such time as the Palestinians.

EO: There is not a difference. It's just a matter of, you know, sometimes we
fall in love with specific definitions and we lose track of the main
substance of what we want. And therefore, you know, don't rely on the
phrasing that I use now in comparison to a few months ago or vice versa.
What I want to say is this: we need to separate from the Palestinians into
boundaries that can be defensible. Now, whether technically it will be
called permanent or not permanent, if these boundaries will be satisfactory
if they will be protected by the fence, if the international community will
recognise Israel's right to have such boundaries, will appreciate at the
same time that separation from the Palestinians and creation of a contiguous
Palestinian territory in which a Palestinian state can be created, if all
this will happen the basic objective will have been achieved. And that's
what I have in mind.

Q: Some Israelis, including the former head of Mossad, Efraim Halevy, have
said Hamas is not going to go away and sooner or later Israel is going to
have to talk to Hamas, which may have some resonance in London because of
Britain's position towards Sinn Fein. Do you completely rule that out?

EO: You know, first of all I have to say with the utmost respect to Mr
Halevy that this will not have been his first mistake in understanding the
dynamics of this situation. But, the difference between Sinn Fein, for
instance, and us, is that Sinn Fein ultimately wanted to accept a peaceful
solution and agreed to the basic, some kind of basic principles that were
outlined for such negotiations to take place. I don't see that Hamas - of
course, the Hamas will disappear - but you know there is always a danger.
You can't count on the other side and say, look, you always have to
acquiesce with the more extreme elements because they will prevail.

If you accept that they will prevail, you help them prevail. And what I say
is that there is a choice given to the Palestinian people. Is it
indispensable, is it obvious that they can only choose the more extreme
element amongst them or that there can be changes. I don't say that I expect
all of the Palestinians to be different from Hamas but why do we have to
accept from the beginning that the Palestinians will always be ruled by the
more extreme elements such as Hamas instead of by more moderate elements
that already compromised.

Palestinian humanitarian crisis

Q: Recently you were quoted as saying talk of a humanitarian crisis was
propaganda.

EO: First of all, we will do everything in our power to assist the
Palestinians to cope with the humanitarian needs in the territories
irrespective of any formal obligations of one type or another. We will make
sure that there will not be any humanitarian disaster in the territories.
Full stop. That's because we don't want one child in any Palestinian place
to suffer from the intransigence and the recklessness and the lack of
responsibility by this leadership, At the same time, I have to say, knowing
that all the basic foods are in abundance in Gaza that they have all the
ingredients that they need for another three, four months. To say that there
is a humanitarian crisis already. No. It's a gross exaggeration which I don't
have to accept. But I'll do everything that I can to help them cope with
whatever humanitarian demands there may be.

Q: On a more technical level, is the government trying to do anything to
solve the problem that has arisen that banks are very reluctant to make
legitimate transfers between Israel and the territories because they fear
legal action in the US? As a result even Israeli businesses are losing out.

EO: It's not convenient when you have terrorists. You have to make all kinds
of adjustments and it's not always very, very convenient. What can we do?
You know, there could be a much simpler solution. Just get rid of the
terrorists and life will be simpler for everyone. So, you know, you asked me
about the problem we created. American banks are not prepared to make any
transfers or any legal transfers or any financial transfers through their
banks and they will not cooperate with any bank that makes such transfers
into what may turn out to be terrorist hands. And who am I to complain to
the American banks? I respect them because they don't want to provide any
opportunity to terrorists. Now, I talked to President Mubarak the other day,
also a very impressive man, and he said to me: how can the Egyptian banks
transfer money to Gaza? They will be blamed by the international banking
community for cooperating with terror. This is an Arab leader. So, look, you
know, the starting point is the Hamas is there. Let's get rid of what is
there rather than change the entire universe to adjust to that which from
the outset is totally unacceptable.

Q: Do you have any worries though that if the Palestinian Authority
institutions do start to collapse that actually Israel will have to start to
take responsibility again for providing services?

EO: Why, if the Palestinian administration will collapse as a result of
their own inadequacies and failures, why will it become almost automatic
that the responsibility of providing services will be Israeli? We want to
separate from them. We are out of Gaza. I mean, that will not happen in the
West Bank of course. It will happen in Gaza. But I remind you we pulled out
of Gaza completely, we are not there. We are only helping them because the
international community prefers these arrangements and we want to help them.
So we still maintain the customs envelope. I don't need the customs envelope
for Israel. They want that Israel will maintain the customs envelope because
if Israelis will not collect the monies that are due to them, these monies
will disappear in the private pockets of all the gangsters that control some
of their institutions. So, we are ready to assist, we are ready to
cooperate, we are ready to provide services, but we are not responsible for
the failures of the Palestinian government and the extremists that dominate
them to do what needs to be done for them.

Olmert's family

Q: Can I ask you a personal question that you're probably sick of being
asked..

EO: Do I look sick?

Q: .which is about your wife [left-wing writer Aliza Richter] and her
slightly different political outlook. How influential is she on you?

EO: First of all, it so happens, you know, I know it's not common, but it so
happens we have a happy marriage and I very much love my wife which is also
rare because I have been married to her already almost 36 years next coming
July. So, you know, when you have these two elements - you are married to
your wife for 36 years and you love her all these years - there is always a
danger that there will be some influence and there has been some influence
by her because she has her opinions and I have mine and so that in many
different ways I have influenced her also. But you guys don't care for what
influences I had on her. You're more interested on the influences that she
had on me.

So first of all, I admit, she did have a lot of influence on me and it
certainly also is reflected in some of my present positions and I'm very
proud about it. You know, to suggest that you live with a person for 36
years, you love him and he has no influence on you is to sound either
arrogant or dumb and I don't believe that I am either of these. So of course
she had influence on me and we discussed these issues and we discussed them
maybe more than they were in other families because this was all my life. I
mean I was involved, in 33 years of our 36 years of marriage I was a member
of parliament, I was a mayor of Jerusalem, I was a minister in the cabinet
and now I am prime minister of Israel. So obviously on the table of my
family was discussed more often than of the average family. And the exchange
was very lively and very open and very sincere. And it had influence and not
only that I won't deny it, I am proud to admit it.

Israeli economy

Q: If we could turn to the economy. There was great excitement over Warren
Buffett's acquisition of Iscar.

EO: Yeah. Sure.

Q: And clearly that was an indication Israel was a country worth investing
in. But in practical terms what did that particular deal mean?

EO: First of all, while I'm very proud of that deal and I was privy to the
information ahead of time and I was very helpful in providing a ruling about
the tax policy with regard to this deal, it is not the only major investment
that we have recently. It was exceptional because Warren Buffett never
invested outside of America. The first time he did it, he does it in Israel
with such a giant, Iscar. $4bn is one of the largest investments he ever
made any place. But, as you know, Intel invests in Israel at the present
time close to $5bn also. And Oracle is investing and Microsoft is investing
and IBM and Motorola and Lucent and Cisco and you name it. All of these
companies, I think what it is that brings them to Israel is first of all the
innovative, entrepreneurial spirit of Israeli business which is very
attractive and very stimulating and I think is a source of great interest
for many potential investors.

The Israeli economy is very stable. The growth last quarter was 6.6 percent,
which is higher than any western country. All the parameters, you know, the
reduction in the national debt is remarkable. The monetary discipline which
was imposed and which I religiously protected over the last year since I
became minister of finance has also been very impressive. So I think that
what Warren Buffett saw there, and I didn't talk to him but I'm sure that
when he will come to Israel and we will meet I'm sure he will admit when he
talks to me, he saw the innovative spirit, he saw the sophistication and the
modernity, he saw the stability of the Israeli economy in general and the
specific political circumstances at the present time. And he saw the
potential. Warren Buffett is interested first and foremost in making money
for his shareholders. He reached the inevitable conclusion that this is the
place where he can make big deals for his investors, shareholders. That's
why he invested. I wish I had some of his money to be able to invest also -
in Berkshire Hathaway when they invest in Israel because their share went up
all the time.

Q: You talk about bilateral issues with the UK that you would discuss with
Gordon Brown. What in particular?

EO: First of all we will discuss trade which is developing very rapidly and
very nicely and which I already discussed with him several times in the last
years. I particularly am interested in reaching an agreement with BG
[British Gas] about a supply of gas from the Mediterranean that BG is
involved with and which I think is the only possible practical option and I
want to extend the basis of trade between Great Britain and Israel. And I
think Gordon Brown can be very helpful about it.

Q: There have been some accusations by Israeli officials that they were
acting in bad faith.

EO: Who? The British.

Q: That British Gas were.

EO: Ah, I don't come with the spirit of accusations. I come with the spirit
of doing business. I will do business. I don't have time to fight, to accuse
and to defend. Why do we need it? I want to do business with BG. Israel is a
very big client. You have to understand we sell, I mean we buy from Great
Britain more than any other Middle Eastern country. By far more. We almost
buy like all of them together from the British market. The volume of trade
between Israel and Great Britain is in billions of dollars every year and we
buy from you unfortunately almost twice as much as you buy from us. So we
are good clients. You know, I'm not talking charity here, I'm talking
business, I'm talking investment. You know, hard currency. And I think that
we can build it more and more and Britain is a great partner and it's a
great economy. I don't have to tell you that many of Israeli companies are
registered in the stock exchange in London, more and more now than ever
before.

UK academic boycott

There is one issue that concerns me very much which I will certainly use
this opportunity of my visit to appeal to the public opinion in your country
and also to some of your leaders. This is the threat of some association of
academics to boycott Israeli academics. I don't think that there can be a
more explicit manifestation of intolerance and hypocrisy than that proposed
of a boycott. There can be legitimate political discussions and differences
between different organisations. But an academic organisation whose entire
basis is established on academic freedom, they can't threaten boycott of
academics regardless even of what their political traditions can be because
of some political differences. It's the highest degree of hypocrisy,
narrow-mindedness and maybe even worse. I don't know that they would have
done it in another country. The fact that they are doing it against the
state of Israel, against us, I think smells of something that I prefer even
not to call by its accurate name.

European reservations

Q: Returning to the Palestinian issue, I guess there is one suspicion in
Europe, if I can put it that way, is that you once implied that
unilateralism might bring greater territorial gains than negotiations are
ever likely to do. And you also said that 25 years is the period after a
unilateral withdrawal - the sort of thing you are envisaging - before..

EO: Don't fall in love with everything that you may have read and everything
that you may have heard from any political leader, including myself. I don't
know, I don't want to argue even whether I said it or not. The point is very
simple. The choice that we have, coming very soon, is either to negotiate
with someone that doesn't want to negotiate with you or to protect the
status quo for an indefinite period of time. I think there is a third option
and this option is to move forward, to change the realities, to create a
movement that in itself will be a trigger for positive developments. And
that's basically what I propose.

Now, if I would have withdrawn from 90 per cent or 91 per cent or 88 per
cent of the territories, that it something that ought to be left for that
stage when it will happen. The fact is that I am ready to pull out from most
of the territories. I'm ready to change the demography, the Jewish
demography in those territories to allow the establishment of an independent
Palestinian state in contiguous territory. Why wait? Why postpone it forever
instead of doing it right now? Why yield to the ultimatum of Hamas rather
than face it with vigour and determination and change the realities. And
that is what I propose.

Q: Some Europeans will feel that what you are doing west of the fence,
around Jerusalem, will have a negative effect that somewhat offsets the
positive effect of what would happen east of it.

EO: Listen, I could argue with these Europeans with effective arguments.
They say why do we have to waste our energies now? What do you propose? Sit
down and do nothing? What do you propose? That I sit with these terrorist
killers and negotiate with them against the basic principles that you
Europeans have outlined for us? What do you want me to do? I think we can
leave on this question mark. Alright?