FM Shimon Peres: I would like to welcome, on behalf of the Government of Israel, Mr. Amre Moussa – a colleague, the Foreign Minister of Egypt.

May I say that Israel appreciated and is appreciating very much the role that Egypt is playing in the peace momentum. We feel very strongly that the first peace in the Middle East, which was signdd between Egypt and Israel, serves as an example. And I think both of us are aware of the importance to make this example a successful one and a very attractive one.

In our meetings today, we have agreed to enrich the relations between Egypt and Israel, particularly in the domain of the economy. Then again, may I say that Egypt was fully in the picture about the negotiations, both in Washington and Oslo, and played a very important role whenever it was possible for Egypt to serve as a bridge-builder. I think also the Egyptians were in full coordination with the United States, Israel and the Palestinians, and I think each of the parties was aware that Egypt is in that position and can be of great service.

I think today we tried to go over on the ditch of negotiations between the Palestinians and ourselves. While looking at every possible detail, we remain very optimistic that these negotiations can be concluded in a rather short while, provided none of us will make unnecessary mistakes and none of us will return to the old suspicions and prejudices, and all of us will look ahead with trust and hope, as we should.

FM Amre Moussa: It is important for all of us now to follow closely and do whatever we can to help to consolidate this very important step that is being undertaken. We in Egypt – President Mubarak, the government of Egypt and the people of Egypt – are interested in and working for reaching a comprehensive settlement that would open a new era, lead to a new era in the region – an era marked with peace, cooperation and development. This requires a just settlement on all tracks, in accordance with the basics of the peace process.

The initiative underway is a very important one, as a step towards that goal. We do support it. We believe that it is the right step in the right direction, and in this we are ready to do everything we can in order to make a success out of it. I appreciate very much the role played by Foreign Minister Peres, appreciate very much the efforts that have been deployed in order for both parties to reach what they have reached. It remains a joint venture between Israelis and Palestinians, and for us, our role is to help whenever that help is needed, within the parameters of what I have outlines – that is, we have to reach a comprehensive settlements on the Syrian-Israeli track, Lebanese-Israeli track, Jordanian-Israeli track, Palestinian- Israeli track. But this Palestinian-Israeli step is an important one to give a push for the process that absolutely needed a success story. We hope that this will prove to be a very important success story that will lead to the consolidation of the process we are all involved in.

Q: You mentioned earlier the other tracks. The day before yesterday, Prime Minister Rabin said he preferred a partial withdrawal in Gaza to a full withdrawal in the Golan. I’d like to know, first, do you think is there going to be progress on the Syrian front, and secondly, do you believe the step-by-step approach shown in this process with the Palestinians will also be promising in the approach with the Syrians?

FM Moussa: I had a long discussion today with the Prime Minister. I conveyed to him a message from President Mubarak on the peace process. I am sure, and in the light of the several meetings I personally held with the Prime Minister, that he is very much interested in establishing peace, just peace, in the area. He supported very much the question we are involved in, that we are witnessing now. I don’t suggest to comment on all statements given on this or that occasion. But the process of peace started in Madrid is very clear, the terms of reference are clear, and I know that the Prime Minister and the government of Israel are committed to this platform. I have no doubt that in the end, a comprehensive settlement will be achieved.

You asked me about step-by-step approach. What I am interested in, or what we, all of us, should be interested in, is the steady progress towards the goal. Step-by-step or no step-by-step – those are details; but the steady progress towards the goal.

Q: Could you comment on a presidential press statement yesterday in Damascus, that both the Jordanian and the Syrian leaders had been completely left outside of the ring on this deal, they knew nothing about it, and indeed that King Hussein of Jordan is rather upset about the way that it’s been negotiated?

FM Moussa: I do not suggest to comment on presidential statements concerning the points of view of King Hussein and President Assad. The negotiations are being conducted between delegations representing their respective powers or respective countries. The declaration on principles and the annexes concerning Gaza/Jericho and others have been common knowledge since some time now. But since the presidential statement has mentioned what you have mentioned, I am not going to contradict that.

Q: You are in contact with the Syrians. Do you think it would be easy now to have the backing of the Syrians to the Israeli-Palestinian agreement?

FM Moussa: What you need is the Syrian position concerning the solution between Syria and Israel. That’s number one. Number two: I am sure that anything that would be considered as a first step in a consolidated approach towards the goal that we have agreed on and in accordance with the terms of reference of the Madrid process would be supported by everybody, including the Syrians.

(Departure of Foreign Minister Moussa)

Q: Can you state for us the different steps that will be taking place starting today?

FM Peres: The first step should be the signing of the declaration of principles between the Palestinian delegation and ourselves. If in the course of the coming few days we shall reach an agreement about the promised changes in the nature of the PLO, then there will also be an announcement by the government of Israel concerning that point. There is no linkage between the two. Each of them stands on its own legs.

Once the declaration of principles will be signed, we shall establish a joint commitee to complete the outstanding issues which still remain concerning the autonomy in Gaza and Jericho. For that, there is an allocation of two months time. We are sure that in two months time we can conclude all the necessary details. Then a third period of four months will be given to implement all the agreed details and overall projects.

Parallel to it, we shall continue to negotiate two issues: The early empowerment of the Palestinian delegation over the whole of the West Bank – because in Gaza we did it already – and the nature of the elections. We have given ourselves a period of nine months in order to try – this is the goal – to arrive at an agreement about the modalities of elections to the autonomy council. Once the elections will take place, we shall continue the negotiations to relate the autonomy over the rest of the territories. This is, by and large, the timetable ahead of us.

Q: Up until two weeks ago, the Jordanian option was very much alive. How does Jordan fit into this new emerging situation?

FM Peres: It depends totally upon the Jordanians. Actually we have agreed with the Jordanians, as was said already in the past, on the agenda of peace. In the last meetings, we were dealing with trivial issues, and that is from whom should the mosquitoes and the flies ask for a visa to fly over from Aqaba to Eilat or vice versa. We were left without subjects. The Jordanians can sign tomorrow morning. There is no reason why not. The Jordanians and the Egyptians are being invited to join in a coordination committee that will relate to the common issues between the four of us. Because let’s not forget that Gaza is bordering with Egypt, let’s not forget that the West Bank is bordering with Jordan.

The relations between the Jordanians and the Palestinians, or what is being called the Jordanian option, is in their hands. We, or I as an Israeli, can express my deep conviction that the best thing for all of us is to see a Jordanian-Palestinian confederation, and have an agreement before there will be a disagreement. And when you have one problem, let’s better have one solution. Because if you will adopt two solutions to a single problem, you will finally create two problems.

Q: What are the obstacles that are holding up the PLO declaration that would lead to mutual recognition?

FM Peres: I am not sure that I am the right address to answer the question. I think it is for them to decide, and I don’t want to comment. I think they have some consideration about the wording of it, and, like any coalition, apparently they want to keep the coalition intact.

Q: Can you give us an idea about how soon you expect to be able to sign the declaration of principles, who will sign it, and could you also tell us what you think the implications of a mutual recognition agreement would be?

FM Peres: From our standpoint, the agreement can be signed this afternoon. If it will be signed this afternoon or tomorrow morning, we believe that the best parties to sign it are the two delegations which are today in Washington. If the PLO will announce a departure from being an organization that has terror as its strategy, to have politics as its foundation, it may take another few days, and then we shall consider where and when and who should sign it.

Q: I was in Jericho this morning talking to people. When is somebody, either an Israeli or a representative of the Palestinian leadership, going to speak to the mayor and the people of Jericho about their fate? And secondly, I found quite a lot of apprehension about the internal security after the interim agreement comes into force. Is there any possibility that the Jordanians could play some role, at least in the transitional phase, in the maintaining of internal security in Jericho?

FM Peres: According to the Camp David agreement, policemen can be mobilized from Jordan as well. It depends basically upon the Palestinians. We have two months to talk, we have four months to implement. After the signature of the declaration of principles, talks will begin, and then I think that the Palestinians will have to talk with their own compatriots. From our point of view, the internal security of Jericho will be in the hands of the Palestinian council.

Q: You are going to see European leaders tomorrow in Brussels. What do you expect now from Europe, politically and economically, and are you bringing already some concrete proposals, economic plans?

FM Peres: I think that Europe has several major contributions to add to the Middle East.

1) Their experience as a region that is trying to unite itself. While every nation is keeping its identity and tradition, all nations are creating an economic cooperation and an air of understanding and goodwill. We would like very much to adopt the European experience to the Middle East.

2) The European capacity for construction in the way of infrastructure, of power plant, of desalinization, and the fact that Europe has an excess capacity to invest, we suggest that Europe will be invited to contribute to the building of the new Middle East. Europe became so productive, that the only thing that it cani really produce is unemployment. And we suggest the Europeans that instead of paying the fee of unemployment, let them use the extra capacity and invest in the construction of a new Middle East.

We believe that Europe should play a role in the economic buildup of the Middle East, because we are convinced that if the whole story will be just a political agreement without economic support, it may fail. You cannot offer the people for breakfast to have flags of nationalities. You have to offer them real food. I think that, on the one hand, by getting rid of the cost of the negative relations in the Middle East – like for example the arms race – and on the other hand to introduce the positive options in the Middle East – like planned irrigation or regional tourism – can really serve the purpose. Europe is invited to build in the Middle East a Europe-like situation, and not a Balkanization which exists somewhere in Europe.

Q: Regarding what is termed ‘the Palestinian right of return’, how serious a change has there been in the Israeli position on this, and what sort of figures are we talking about, without what sort of framework?

FM Peres: The issue is not at all on the agenda. That belongs maybe to the permanent negotiations. Right now the issue of the right of return wasn’t raised at all. I simply want to remind you that over the last 20-25 years, over 100,000 Palestinians got the right to return, on the basis of family relations.

Q: If the mutual recognition of the PLO and Israel goes through, under what conditions will Israel allow Yasser Arafat to come to Gaza or Jericho and build his headquarters there?

FM Peres: I don’t want to go into any personal dramas. I am not dealing with personalities. I am not even dealing with organizations. What we are trying is to build a rapprochement, an accommodation between two people – the Israelis and the Palestinians. The rest is secondary. I am not ready and I am unwilling to go into any personal promises or taboos. I don’t think it is necessary at this moment.

Q: Could you go into how difficult you think it may or may not be to sell this program now to the Israeli people, both in Parliament, both on the streets, both in terms of getting them to accept a situation that they may not be prepared for completely?

FM Peres: Many observers think that the Israeli people are divided half and half. I think that every Israeli is divided. And if the Israeli person will be convinced that there is a fair answer to the issue of security, I imagine that the majority of every Israeli, and for that reason the majority of the Israelis, will strongly support the solution. Because the Israelis seek two things, which are understandable: peace on one hand, and security on the other hand. We have to make it clear that while we are really heading in the direction of peace, we are not ignoring the basic necessities for security. All told, if you ask me, I see a clear majority for the proposals that we have suggested to our people.

Q: Mr. Yasser Abed Rabbo of the PNC says today that in the agreement that is going to be signed with Israel, 800,000 Palestinians will be allowed to come back. Is that true?

FM Peres: In the agreement I read, there is no mention of it.

Q: Earlier you referred to promised changes about an agreement to change the PLO Covenant. Can you tell us anything more about what assurances you have recieved that those changes will be made?

FM Peres: 1) The PLO has a covenant made of 33 items. The majority of them are calling directly or indirectly for the destruction of Israel. We expect the PLO to issue a general commitment that all those items or articles which call for the destruction of Israel will become invalid.

2) The PLO never announced clearly that it is ready to denounce terror and violence as a means to achieve political goals. We expect the PLO to denounce terror right away, and the declare that in future disputes the way to settle them will be political and peaceful.

3) We expect the PLO to recognize, clear and loud, the right of the State of Israel to exist in peace and security.

4) We expect the PLO to announce, something that they did in the past, that they accept 242 and 338 as the basis for the negotiations.

Q: But you can sign the declaration of principles –

FM Peres: Independently, yes.

Q: If the declaration of principles, in your opinion, could be signed this afternoon, why is it being held up?

FM Peres: We think that the first week of meeting in Washington should be spent on exchanging general views – where do we stand, where are we heading – and the real story, I hope, will begin next week.

Q: Can you tell us something about the financial underwriting of the agreement you achieved in Oslo? Everybody has been hearing about the PLO’s financial difficulties. And can you also tell us where you think the six months of projected discussions and negotiations are going to take place? Will they take place in Washington or in the region?

FM Peres: On the financial side, there is no commitment. There is a declaration of good faith. And, as I have said already, we feel as Israelis that it is not enough just to arrive at a political agreement, but also to create an economic foundation which will enable the Palestinians to live under reasonable economic conditions and to strive to a better life. Israel, on her part, will contribute whatever she can, namely to create jobs in the West Bank and the Gaza Strip, to enable at least 50,000 workers from the West Bank and the Gaza Strip to work in Israel – and if the situation will calm down this figure may be raised – and to build as much as we can infrastructure and help the Palestinians in building infrastructure.

May I give an example to explain what I mean by it. We know that the Gaza Strip is short of water. The Gaza Strip needs immediately a power plant and a desalinization plant to produce water. Israel will be ready, if the Palestinians will ask, to guarantee to buy excess of power and excess of water in order to make those plants rentable.

On top of it, we have approached the Nordic countries, who have a substantial amount of money devoted for foreign aid, to give priority from the existing budgets to invest in the West Bank and the Gaza Strip. We have suggested that at least 5 percent of the foreign aid allocations in their budget will be directed to the Middle East. Some of the Nordic countries have between 1-1.5 percent of their GNP, which is very generous, devoted to foreign aid. I must say that in my visits to the five countries, they have accepted the idea, and this afternoon the five ministers of the Nordic countries are going to meet and take a decision. From what I heard already over the radio, they are very serious in implementing it. That may be the first money coming to the Palestinians.

I am going on Thursday to meet Mr. Jacques Delors, who as you know is heading the European Community. I shall have very serious discussions with him. I talked with many of the foreign ministers over the telephone, and we are sincerely interested to see the Palestinians succeed in the economic field as well. We want to have respectful, honest and positive relations. It is to our interest, in our judgment, to see the Palestinian trial becoming a success, to bring an end to their suffering – economically, politically, psychologically – and there is nothing better for Israel than a good neighbor.

Q: Earlier you spoke about the Covenant. Is Israel holding out for a full abregation at the PNC of the 15 of 33 articles in the Covenant that are problematic or just a statement?

FM Peres: If the leadership will take it upon itself to go through the motions, we shall respect it.

Q: In face of the last developments, do you see that there are prospects of diplomatic relations in the near future with at least a part of the Arab countries, and what is your opinion about the prospects of ending the Arab economic boycott?

FM Peres: The reason why many of the Arab countries refused to have diplomatic relations with Israel was because of the Palestinian issue. If this issue is being resolved, there is no reason in the world why they shouldn’t, right away and in the open, normalize their relations with us. We have nothing against them, they have nothing against us. We don’t have any claims, political or territorial, as far as they are concerned. They don’t have any claims, political or territorial, as far as we are concerned. And the sooner they will create the necessary psychological environment, I think the greater will be the contribution for a new, hopeful Middle East.

The Arab boycott is a function of the lack of relations. So let’s see the larger picture, that includes inside it the issue of the Arab boycott as well. Clearly the time has come to put an end to the Arab boycott. By the way, whoever declares a boycott against somebody else indirectly, is boycotting his own economy. We live in a world where you have a market economy, free trade, open borders, fair relations, and whoever is swimming against the stream is creating shortcomings in his own economy.

Q: Can you tell us how you foresee this agreement or these developments, including mutual recognition, affecting the negotiations with Syria, and are you or anyone else on behalf of the Israeli government negotiating any back channel arrangement with Syria?

FM Peres: With Syria, we are in the special situation that everything we have is a frontal relationship. The negotiations are on two channels – one is in Washington, directly, between the Syrian delegation and our own; and the United States, which is all the time serving as a bridge-builder between all parties, including the Syrian-Israeli.

Q: The PLO Charter provides the possibility of change itself only with two-thirds of the PNC. Do you expect that the PNC will convene in order to change this documenjt?

FM Peres: Mr. Yoel Singer, who is the legal adviser of the Foreign Ministry, was really the one who negotiated the legal part of it, and maybe he would like to take this question.

Mr. Singer: We expect the PLO both to declare that everything in the Palestinian charter that is inconsistent with the peace process, with the recognition of Israel, with the declaration of principles, and everything else that we are doing now, will become invalid, and to amend the charter in this regard.

Q: Have you considered asking the U.S. government to divert some of the financial aid provided to Israel to the Palestinians, or do you think it would better for the United States to provide more money specifically for the Palestinians, in addition?

FM Peres: I don’t think that the U.S. government is in need of our advice. I know that they are fully aware of all the details, and as far as we are concerned we are also aware of the very delicate financial situation the United States is going through.

I think what the Middle East needs is not more money, but a different structure. We are spending 50 billion dollars a year for the arms race. What for? How can we dare go and ask other nations to contribute to the Middle East before we ourselves shall take our own affairs seriously? If we shall spend 25 billion dolllars on arms race, if we go for peace, and invest 25 billion dollars in the schools, in the factories, in tourism? There are some immediate industries that can create hundreds of thousands of jobs in the Middle East, like tourism for example. Why not take advantage of it? Our forefathers were farsighted. They created some attractions for tourists: pyramids, holy places. Why should we be blind?

The land of the Middle East that all of us are fighting for is losing its fertility. Finallly we shall have deserts, and not land. 89 percent of the land that Arabs are possessing is already desert. Fighting the desertification is more important than fighting for land. The instruments to confront desertification are water and science, and both of them are available. We cannot all the time go and try and make a living on our mistakes. We have to correct them. And once we shall correct them, I am sure the rest of the world will support gladly the creation of a productive, serious and peaceful Middle East.

Q: What kind of security assurances or assistance could you give members of the PLO in the delicate months and weeks that lie ahead? Would you consider sharing intelligence, for example, with the PLO?

FM Peres: I wouldn’t exclude it, because today the Middle East is divided into two parts: more than Arabs and Israelis, it is between people who support peace and people who want to kill peace. I think the time has come to make a coalition of all the parties who are supportive of peace, in order to prevent and combat those forces that want to assassinate peace.

Until now, Israel was in a very absurb situation. Among the Palestinians, there is a majority which is for peace but doesn’t have arms. There is a minority which is against peace, has arms, and uses arms. What should Israel do? Protect the majority and fight the minority with arms? Let the majority have their own means of self-defense, have all of the people have the opportunity to elect properly and democratically their own leaders. This is the real solution.

Q: What was the role vaguely mentioned lately of Saudi Arabia in the secret contacts to reach the Israel-Palestinian agreement? And to what extent are you worried, if you are at all, about the calls we have been hearing lately of some sectors among the Jewish population of the territories about civil war?

FM Peres: On the first, I do not believe that the Saudis played a prominent role in those negotiations – but for prayers, I hope so.

On the second question, Israel is a democratic country, and none of us is afraid the slightest way of people who do not respect the democratic system. Israel is not only defending a land, but also a philosophy, and nobody will get the slightest permission, none of us will show the slightest fear to defend our freedom, our democracy, as we are defending our land and our people. It is out of the question.