MR. SCHIEFFER: We begin this morning, with us from Jerusalem, Israeli Prime Minister Benjamin Netanyahu. Joining in the questioning, Elaine Sciolino of the New York Times.

Mr. Prime Minister, you arrested 35 Palestinians this morning, as I understand it. You have reinforced security in the major cities. Is there some reason to believe that there may be another wave of these bombings?

PM NETANYAHU: We’re working under that assumption, not that we have fully concrete information, but we have indications that there will be more attempts at terrorism. Hence we have to take these special precautions, and hence we expect the Palestinian Authority to do what it hasn’t done so far, and that is to take an all-out effort, an all-out sweep, to round up the terrorists, their leaders, interrogate them, and, of course, cooperate with us in the sharing of information that may prevent additional tragedies, additional blows to peace.

MR. SCHIEFFER: What indications have you had? Can you share that with us, that there might be new bombings?

PM NETANYAHU: Well, we have some information. I can’t say more than that because, first of all, it’s not a great deal more specific than that. We also have received what could be bogus or real threats by the Hamas movement to have more bombings if certain extortionist demands from them are not met by us. We take everything seriously, and we are unfortunately prepared for the worst.

MR. SCHIEFFER: Have you at this point been able to determine exactly who these people are and who they’re working for?

PM NETANYAHU: We think they’re coming from Hamas, but I can’t say conclusively at this point. We’re working to find out. It’s very clear that whatever the origin of these people, from every indication that we have, they evidently received the explosives, in all likelihood in the areas here. Even if they came from abroad, which we cannot confirm, they would have had to have a local organizational liaison. And with great probability, that came somewhere either from Gaza or the West Bank.

MS. SCIOLINO: Mr. Prime Minister, clearly the Palestinians are responsible for last week’s terror. But you inherited an extraordinary legacy of peace three agreements with the Palestinians, peace with Jordan, ties with other Arab states. Now the entire peace is on the verge of collapse. What is your responsibility to salvage this peace? Share with us one concrete step you can take to salvage peace.

PM NETANYAHU: I think that you have to be a little more precise in your premises, Elaine. Remember that I inherited an exceptional spree of bombings, suicide bombings, that claimed the lives of hundreds of Israelis over two and a half years, culminating in savage killings that claimed the lives of 60 Israelis in two days. That is in many ways the backdrop for the disappointment with the Palestinian Authority that led to my election and the request for me to ensure that the Palestinian Authority live up to its demands.

Before I ask them to live up to the demands of the Oslo agreements, which they signed alongside with Israel, I’ve said two things. Number one, I recognize my obligations under the agreement signed by the previous government. I redeployed from Hebron. I released women terrorist prisoners. I didn’t like doing it, but I did it. I handed over substantial funds to the Palestinian Authority, something that wasn’t done by the previous government. I did all that in compliance with the agreement.

But we have a right and that’s the second thing to demand of the Palestinian Authority to do their fair share in the agreement, beginning with security compliance. Now, the Palestinian Authority has to decide whether it wants to behave like a terror- sponsoring entity or state, in this case Libya or Syria or Iraq or other countries that allow terrorists to operate from their midst and do nothing about them, or even encourage them. Or they can act like other countries for example, like Egypt or like Jordan that actively fight the terrorists.

So far they’ve been behaving more like the former rather than the latter. And we expect them to take very tough action against the terrorists, to jail the leaders, to stop the incitement towards violence and terror, to collect the weapons and explosives. All of that has not been done, despite solemn pledges by Arafat to do so. And I hope that this will change, and change rapidly, for all our sakes.

MS. SCIOLINO: So you are saying essentially you don’t have any responsibility to move this forward; it’s all their fault.

PM NETANYAHU: I think that we have an agreement. Agreements have to be kept. I’ve kept my side. The grievances that the Palestinians have towards me are not related in any way to things that are incorporated in the agreement. And I think that the first thing to do is keep contracts. I think that the first premise of Oslo, as the late Yitzhak Rabin said, was we give them territory; they give us a pledge to fight terrorism from within those territories. That has not happened.

And we can talk from here till eternity about progress towards peace. You can understand very well that if we have more such savage attacks and more people blown to bits, peace isn’t going to go anywhere. Since I want peace to progress and since I believe it can progress, I’m asking the Palestinian Authority to make a choice: Fight terrorism in order to have peace or do the contrary and we won’t have peace. I prefer that they fight terrorism. I prefer that we move towards peace.

MR. SCHIEFFER: Mr. Prime Minister, let me ask you quickly, do you see any connection between what’s going on there and the arrest of these two men in New York last week who were apparently plotting to blow up the subways in New York?

PM NETANYAHU: I can’t say, Bob. We’re cooperating with the United States. We always do on the battle for terrorism. I think it’s very clear that we have here a worldwide plague. Some of it, a great deal of it, emanates in our areas. But this is a multiheaded hydra. The Islamic fundamentalist or radical terrorism is aimed at all of us. It’s aimed at Israel. It’s aimed at the United States. It’s aimed at Egypt. It’s aimed at Jordan.

In my opinion, it’s also aimed at the Palestinian Authority. If we recognize that this is a common enemy and that you can’t make deals with this enemy, and if the Palestinian Authority made a bold decision that is, to move with the side of peace and with the side of the difficult, but necessary, and I would say extremely important negotiations for peace with Israel, rather than trying to curry favor with the terrorists, they will have made the right choice and the choice that we all have a right to expect.

It’s not only the lives of innocent women and children that are at stake. And believe me, when you stand at the bedside of some of these people, you understand what’s at stake. It is that I believe that the whole peace is at stake. Arafat must make a choice. He must make it now.

MR. SCHIEFFER: All right. Mr. Prime Minister, thank you very much for joining us. Thank you so much.

PM NETANYAHU: Thank you.