PM Olmert: In addition to the economic, we will focus this year on the Palestinian issue, and the comprehensive effort of the international community to stop the Iranian threat.

This evening, the Government of Israel gathered to appoint the new Minister of Justice, Prof. Daniel Friedmann. Prof. Daniel Friedmann is a member of the National Academy of Sciences, one of the greatest jurists and academics in the State of Israel, a man whose legal reputation precedes him in Israel and abroad, and who was found, after consultation with many people, to be the most deserving candidate to be the central and important spokesperson to lead the law enforcement and legal systems of the State of Israel as Minister of Justice. The Government’s decision, which was unanimous, is appropriate, and I have no doubt that Prof. Friedmann will lead the struggle against the increasing crime, act as Minister of Justice to protect civil rights in the State of Israel and to ensure the personal safety of its citizens, and will, in cooperation with the other factors in the law enforcement system in Israel, in order to bring about an acceleration and more efficient procedures in law enforcement. All this while maintaining the dignity and stature of all institutions relating to law enforcement, headed by the Supreme Court, of which there is nothing higher in the State of Israel…

Let me start my short comments today, talking not about politics, not about the basic or the most important political issues that are on the agenda. Let me start with a very great sense of pride in the achievements of the Israeli economy in the last year.

You used to come to Israel all the time in recent years, in previous years, to hear the concerns, the complaints, and the difficulties that we had to undergo and for many, many years the relations between American Jews and the State of Israel were largely influenced by the major charitable support of the Jewish communities to the State of Israel. The State of Israel today is doing quite well. Last year the growth of our economy was 5%, which is higher than any Western economy in the year 2006.

This should not be taken lightly. In the course of that year we had 33 days of fighting… At the beginning of the year, the forecast for the year 2006 was growth of 3.9% in the Israeli economy. Then when the fighting began, all the great experts of the Israeli economy said that, of course with this fighting, the economy will lose 1% of its growth which means that we will have only 2.9%. And at the end of the year, we found out that the growth of the Israeli economy last year was more than 5%.

And not only this, but you may be curious to know that the interest rate of the State of Israel today is one full percent below the prime in America, and that the inflation last year in Israel was below zero in spite of the fact that we had such high growth, which is quite unusual. Normally, when you don’t have growth, you have recession; you also have a low rate of inflation. But we had zero inflation, more precisely -0.7 inflation. And at the same time to have growth of more than 5% is remarkable. Not only this, last year we a historic record of foreign investments in the economy of Israel of more than 23.2 billion dollars in financial investments, but mostly also investments in properties and industries by foreign investors in the Israeli economy…

On top of everything, last year for the first time, we had a positive balance of payments in the Israeli economy even after we had set aside all the entire foreign aid we received from the United States of America. In other words, the exports from Israel were far higher than the imports, a difference of billions of dollars. The fact that all this happened during such a turbulent year, I think is a testament to the development which has taken place, and which continues and which gives us, for the first time, the opportunity to effectively come to terms with some of the social burdens which are threatening the social solidarity of Israeli society. This is one of our main objectives. Not only to cope with all the outside threats, which has been and will continue to be a major priority of the State of Israel, but, at the same time, to use new opportunities, the growth, the profits, than we have in order to bridge the social gap which has threatened the solidarity in our society.

Already this year we have increased the social budgets in our national budget tremendously. We have allocated billions of shekels to upgrade most part of the State of Israel and to repair all the damages which took place during the fighting, with the assistance of Jewish communities from all over the world, particularly of the American Jewish community, for which we are so grateful. But we have added and kept these billions of shekels from our own resources in order to cope with these damages, and also to help, support and defend the communities that live in the southern part of Israel which are and were exposed to the threats of the terrorist actions against them.

So this year will be a year with two major priorities. We will continue to develop the Israeli economy. We will continue to allocate funds, to cope with the social problems, we will particularly emphasize a tariff freeze in the north and in the south so that we will continue these efforts to bridge the social gap between those who have and those who have not in our society. This social gap was widened in previous years, and it is now our responsibility to try and narrow it.

At the same time, we will focus on two other major issues. One is the Palestinian issue, and the other naturally is the comprehensive effort of the international community which is required to stop the Iranian threat.

In a few days, on February 19, I hope to have a trilateral meeting with Secretary of State Condoleezza Rice, the Chairman of the Palestinian Authority Abu Mazen and myself. I hope that by then, we will not find that Abu Mazen has partnered with Hamas in a way which contradicts the basic principles of the Quartet and the international community which were only recently reinstated and reemphasized in the clearest possible manner during the meeting which place in Washington last Friday.

I hope that Abu Mazen will resist all temptations and pressures to cooperate with Hamas and establish a government that does not recognize these basic principles which were the guidelines for all the policies of the international community during the last couple of years. If the Palestinian government will adopt these principles, if a Palestinian government, no matter who is part of it, accept the basic principles of the Quartet, as was so clearly stipulated in the recent statement made by the Quartet in Washington, then it would pave the way for further negotiations with Israel and perhaps it will open up, for the first time in a long of time, the opportunity for major progress.

I hope, however, that Chairman Abu Mazen whom I had the honor of hosting in my home recently, will resist all the pressures to compromise on these principles. It will be unacceptable. It will be unacceptable to the United States. I’m certain about it because I know what the President thinks, I know what Secretary Rice thinks and I know what the majority of American people think. I think it will be totally unacceptable to the Europeans and certainly it will be not be acceptable to us. We will not accept any departure from these principles.

We will cooperate, however with every government in the Palestinian Authority that will accept these principles and will be ready to act on the basis of these principles in order to establish a credible process of negotiations between Israel and themselves.

The meeting will take place on the 19th. The trilateral meeting initiated by Secretary Rice is significant. I have enormous respect for the desires and energies that Secretary Rice invests in pushing the process of negotiations between us and the Palestinians. Ultimately, it will have to be a bilateral process. There will not be an international conference. There will not be a trilateral process. It will have to be a bilateral process because we believe that the only way to finally achieve something of value between us and the Palestinians is for them to come to terms with reality. They will draw conclusions from the suffering caused to them by the extremists, by fundamentalists, by the terrorist groups and that they will rid themselves of any partnership with those elements and will impose national discipline and will create the necessary environment that will allow them and us to negotiate within the framework of these basic principles that we supported, that America supported, but I hope also the government will support.

Until then, we will try to do everything possible in order to reduce the threat of terror. Let me be very clear. For the last few months, Israel has shown an enormous degree of restraint. There is formally a ceasefire. This ceasefire has not been observed one day by the Palestinians. Every single day, since November when this ceasefire was adopted, we had the full right, by the normal international standards, to react with our military in order to stop these Kassam rockets from falling on the heads of people in the southern part of the country. We decided to restrain ourselves because Israel is powerful enough and strong enough to sometimes show restraint and not to play into the hands of the extremists within the Palestinian community, and to create the necessary environment that will allow the more moderate forces to ultimately assume the kind of responsibility which is expected by the international community that they will manifest in order to overcome the extremists. We saw some signs lately of such determination and we respect these efforts, but they will have to prove a lot more before we, or any of the other sides like America and the Europeans, can say that the moderate forces within the Palestinian community have taken over from the extremists. And we will be on the sidelines when they are arguing against each other. But we will not be able to stretch our patience beyond a certain limit and they will have to understand that.

Iran – I must say something which may sound surprising to some of you. I think that there is a way to stop the Iranians from moving forward on their nuclear program without violent actions. I believe that the measures that were taken by the international community recently are more effective than nothing. They are not enough. It is not sufficient. There must be more, but there is a genuine chance that if all the international community joins forces and applies the necessary, restrictive measures on the economy of Iran, that it will have such an impact that, at the end of the day, it will force them to reconsider their position.

Israel never pushed anyone for any extreme action. However, Israel will not hesitate and will act relentlessly everywhere, in order to remind the world of its responsibility to take the necessary measures that will stop the Iranians from moving forward on their nuclear program. As I said, I think it is not impossible if the Europeans, rather than occasionally making comments which are inappropriate to put it mildly, would join forces in a most determined and the firmest possible manner with the United States, and if Russia and China would join in, then all of them together can create enough pressure that it would cause such damage to the Iranian economy, and we see some signs already that it will force them to reconsider.

We are very concerned, although we don’t think that we are as near to the realization of the threat as the Iranians sometimes want us to think they are. They have a reason. They believe that if they will convince the international community that they are so close that they actually crossed the technological threshold, then everyone will raise their hands and will say, “Okay now, we have lost this battle, so let’s try and accommodate the Iranians.” They are not there. They are not as close to the threshold as they pretend to be. Therefore, there is still time to fight in a responsible, comprehensive and powerful manner, and we expect the international community to do it, and we will not hesitate to remind everyone of their responsibility.

What concerns us as Jews is, first and foremost, the reality in which a leader of a nation of over 70 million people can stand up openly and publicly, and threaten that he or his country will annihilate another nation, a member of the United Nations. This is totally intolerable and unacceptable. It is, first and foremost, a fundamental moral issue of the highest order. And no country which is a member of the United Nations can pretend to consider what its position should be. There can be only one position which is totally against these kinds of declarations, these kinds of policies and these kinds of efforts made by any country in the world.

I feel that I am obliged to say these words, particularly at this time. Just last week, the Cabinet had a very comprehensive presentation on anti-Semitism in the world. Now, some people may say that the Iranians’ position or attitude towards the State of Israel is not the typical, historical, traditional anti-Semitism. What I want to know is what exactly is traditional, typical anti-Semitism? I’m not certain that I know. I know only one thing, that all the anti-Semites, during all the history of our people, in every corner of the world, always wanted to kill us, always wanted to destroy us and always didn’t hesitate to use violent measures in order to achieve it. What the exact background of each one of them was – they may have been different in many different cases – but the threat was always the same, the measures were very similar, and the outcome for the Jewish people was always very bad. We are determined. We will not allow it to continue. We will do everything in our power to stop it, and we are certain that we have many great friends in the world who feel committed, who share with us this concern and who will do everything in their power together with us in order to change things so that the threats that are expressed against the very existence of the State of Israel are removed.