Good evening.

At the beginning of my remarks, I would like to send my wishes for a speedy recovery to the IDF soldiers wounded today in Morag in the Gaza Strip. I hope they heal quickly.

I have made it a habit to attend this conference every year and I will happily attend it in the coming years as well. Two years ago, at the height of the war against Palestinian terror, I came here and heard more than a few pessimistic voices. When I expressed my confidence that we would overcome all our difficulties, I referred to a song from my childhood, which began with the words: "We face the rising sun". I remember encountering a great deal of cynicism and doubt. Even last year, when I said that we were at the brink of positive momentum in the economy, there were more than a few skeptics here.

Two years have passed and I can say with cautious satisfaction, that we are indeed facing the rising sun. Our problems have not ended and the difficulties are far from being over, but the State of Israel is in a much better situation and I would suggest that we all be less critical, nothing is collapsing, there are complex problems, but if we compare the situation in the State of Israel today to what it was previously then there is no doubt that there is progress in many fields. I believe that presenting the situation optimistically also contributes to investment in Israel, as well as to the feelings of Israeli citizens, and increases their self-confidence. I mentioned that the State of Israel is in a much better situation in terms of security, the economy and politically.

While our current situation is more encouraging, we must not become complacent. This reminds me of a scene from the War of Independence. And since it seems to me that I am the only here in this distinguished gathering who participated in the War of Independence, allow me to share a bitter memory. During the campaign, you oversee a ferocious battle to conquer a village. Once you have succeeded in conquering it, there is a period of quiet, sometimes brief, but quiet nevertheless, between the battles. At this point, the soldiers would start chasing chickens in the village, you know, in order to prepare lunch. Then, when everyone is busy chasing the chickens, the enemy strikes and then you suffer the harshest blows. And there were quite a few such incidents during the War of Independence. Rather than chasing chickens, we should have been drawing conclusions from the fight, reorganizing, treating our wounded, determining our next goals and how to achieve them and starting to move. This is the only way to win a campaign.

As I said, we are currently in a similar situation in the last few years, we have all been engaged in a difficult battle.

On the security level, we have been conducting daily warfare against Palestinian terror. The security forces have made truly extraordinary achievements in the battle against the terror organizations. However, this is an ongoing struggle. All this, while conducting a complex public relations campaign to defend Israel’s standing in the world. I wish to take this opportunity to thank them, on behalf of myself and all the citizens of Israel, for their great effort an effort to save human lives.

This effort has been very fruitful and I think that we all feel it. We have yet to achieve calm and tranquility, and difficult days are still ahead of us. But the Palestinian terror organizations are beginning to grasp that the State of Israel cannot be defeated.

The improvement in the security situation has had a significant impact on the economic arena as well. Here, we also conducted a tough battle. My government, the current one as well as the former one, has carried out a series of significant structural reforms. It is not that they did not recognize or understand the importance of things, rather, it seems to me that, from the point of view of willingness to take such steps, they were too difficult. They were less bold. These reforms include saving the pension funds from collapse, reducing the tax burden of those who work, reducing transfer payments and government expenditure and significantly lowering the number of foreign workers by over the past two years, in the framework of the reform which led, this year alone, to an increase in the participation of Israelis in the work market by more than half a percent.

I know that half a percent seems like a topic that can be taken not seriously, but I believe that this topic will rise. The field of construction has seen an increase of approximately 12,000 workers who did not work in the field previously, and we are seeing the beginning of a rebounding of the field.

These steps were not easy, and were implemented with ongoing consultations and my full backing. They demanded courage and the ability to confront harsh criticism. For this I wish to thank the Minister of Finance Benjamin Netanyahu, and the former Minister of Finance, Silvan Shalom, during whose term some of these activities had already begun. I intend to continue following this path in the future as well.

These measures join another series of steps the government has been carrying out in the economic sphere: the liquidation of monopolies and the privatization of government services; the opening of additional arenas for competition; and large investments in infrastructure, particularly the railway a field to which I attribute major economic and social significance in bringing the periphery closer to the center. Amir (Peretz)as neighbors, I hope we will ride together on the train on the line which is currently in the advanced planning stages, which will continue from Ashkelon to Shderot, Netivot, Ofakim and which will also connect to Beer Sheva. Imagine how the South will look in a few years, when the fast train and the Cross-Israel Highway reach the Negev crossroad.

All these steps put Israel in a better economic position, and present foreign investors with a more competitive, state-of-the-art, modern and advanced economy – a more fertile ground for foreign investment.

The direction the Government has been taking is the right one, and has already begun to produce results. These measures changed the prior course and put the economy on a path of growth. One must remember that ultimately, the answer to most of Israel’s problems is accelerated growth. Government policy must therefore be focused on growth.

Now that we have achieved improvement in the security and economic situation, the gravest mistake would be to let go of the leash, halt all the economic measures which we have been implementing and start celebrating. If I may return to the chickens then we can start chasing the chickens. Our situation does not allow it, and it is hard to believe that it will in the near future. The Israeli GDP is still 30 percent lower than the OECD average. We are still in the midst of this campaign and we must not rest on our laurels. We must move forward.

We must first of all treat our wounded. The economic steps which we took were drastic and wide-ranging. We had to maintain Israel’s credibility in the eyes of foreign investors and Israeli citizens alike, and we have succeeded. But, like in any other battle, there were those who were adversel y affected.

It is important that the growth be felt in more sectors of Israeli society. We must not allow a situation whereby the strong in this country enjoy the fruits of growth, while the weaker do not.

In the upcoming budget, we will further sharpen the distinction between those who can work and those who cannot. To those who cannot work, the weakest strata in Israeli society the elderly, the severely handicapped, children at risk we will grant all the necessary aid. We will have to be sensitive and lend a helping hand to the weaker among us.

And I say all of this without changing the policies. I am glad that the Minister of Finance mentioned these things now, in his closing remarks, and he must have mentioned them during this important Conference as well. We already met two or three days ago, and I certainly brought up this topic. Here we must make some move.

While treating the injured, we must also set further goals. We must use the current situation to determine the national goals in which to invest and the best economic way to achieve them. In talks I held with the Minister of Finance and his staff, I outlined, in addition to our economic goals growth and employment three central national goals which must be reflected in our economic policy: ensuring the quality of our future generation, encouraging and absorbing Aliyah, and advancing the minority sectors in Israel.

The primary tool for the reduction of social gaps is education, particularly in our country, which takes such pride in its human capital. I have spoken more than once of the need for a revolution in the field of education, and I meant every word. The Minister of Education and I appointed a public committee, headed by businessman Shlomo Dovrat. I am pleased he appeared here yesterday to present his plan. Shlomo Dovrat enlisted and presented a comprehensive work plan to change the face of the education system in Israel. This year we will start implementing the Dovrat Report, which will place education at the top of our national agenda.

Concurrent to the implementation of the Dovrat Report, this year we will start a nutrition program for school children in several communities throughout the country. The Prime Minister?s Office continues to promote the Computer for Every Child program which has already brought about the distribution of 14,000 computers for underprivileged children and the Government will soon announce the Yaniv Project, aimed at accompanying and supporting children at risk.. Our policy is aimed at guaranteeing that we are providing the next generation with the best and most equitable springboard to confront the challenges of tomorrow.

As I mentioned, today we mark 100 years to the death of Herzl. We must continue the consolidation of the State of Israel as a Jewish State, in the spirit of his vision. In order to strengthen the Jewish character of our State, we must first encourage Aliyah. Aliyah must be the central goal of the government. In the past few years, there has been an increase in Aliyah from the most developed and advanced western countries, because in these countries as well, Jews understand that their home is here, with us. People are asking themselves: do they want their grandchildren to be Jewish? They are beginning to understand that to live as Jew, one can only live here. I would like you to know that in the past year, approximately 25,000 Jews were lost to us in the Diaspora due to negative demographic trends. At the same time, over 70,000 Jews were added to the State of Israel due to natural growth and Aliyah. Therefore, Aliyah does not only guarantee Israel’s future; it also guarantees the future of the Jewish people.

This is a subject which is, in my opinion, one that every one of us everyone as a Jew, and I am first and foremost a Jew must feel the responsibility for the continued existence of the Jewish people and the continued existence of the Jewish people is here in Israel. The consequences are not only here. The strength of the State of Israel affects the situations of Jews around the world. And if, G-d forbid Israel becomes weakened, the Jews around the world will not be able to live the lives they live now. We have witnessed periods like this in the past. Therefore, this is a primary mission, and also here we are looking for other paths beyond the regular ones to increase Aliyah to Israel. Our goal is to give them the feeling of a warm home in their old-new homeland.

Allow me to clarify: a Jewish State in no way implies undermining our partnership with non-Jewish Israeli citizens. On the contrary. All the recent statements against Israeli Arabs must stop. I do not accept the term "demographic problem". Since when are citizens of this country a problem? I have never considered a situation whereby the Arabs and we will not be living together, in cooperation, in this country. The advancement of all minority sectors is a vital interest of this country. We are making great efforts in this regard, and will invest more in this arena as well.

One must understand. We must continue living with the Arabs. Here, Jews and Arabs will live. This is a Jewish state, but it has non-Jewish citizens, Arab citizens, and we must create the conditions that is not to say that we do not have problems in this area but we must create the conditions and try to create a more comfortable atmosphere for our joint lives.

I would like to especially mention to you that I have recently been witnessing the enlistment of businesspeople for the advancement of national goals. I attribute great importance to the mobilization of the business community for the benefit of national goals. The Dovrat Committee is, in my opinion, a shining example, as is the task force for the encouragement of Aliyah, headed by Mr. Didi Arazi, who presented his conclusions to me several months ago. I must say this is one of the most surprising things, to see people who are businesspeople, who are established, talented in their fields and have every door open to them and there are many like this who have mobilized to take care of the problems which exist in Israel, especially in the field of education. All three projects which I mentioned of investing in the young generation, are based on cooperation between the Government and the business sector. Another example is the decision by the Director General of Cellcom to adopt the Sachnin soccer team, which will be representing Israel in Europe next year. We have decided to build them a stadium. I told them that this was, of course, conditional on the fact that I attend the opening game. And I would like to invite you as well (to Benjamin Netanyahu). If one wants to see the range of the relations between them and us between Israeli Arabs, who we must live with, then I would say the cost is cheap. In any event, I would be pleased to attend with you.

The involvement of the business sector in social issues is an asset, and I call upon all of you to follow this path. It is correct and important to every citizen. The more I see this activity, the more I feel that it is not only those who give who do this. I believe there is full mutuality givers and receivers. I do not know what contribute more, giving or receiving. This thing has great importance, and I hope you will continue and widen your activity.

I understand that suggestions were made here and willingness was expressed to enlist in order to assist in additional spheres as well. I accept this challenge, and I intend to sit with you, to hear and assign tasks. Once, I met with you more to be honest. However, I begin my workday at 5:30 a.m. and finish around midnight or one a.m., and the number of problems there are here, and the decisions and the need to maneuver all the time take up a lot of time. I certainly would like to increase the number of meetings I hold, I learned a great deal from them. Most of the things I learned in these fields, I learned from you. I accept this challenge and intend to sit with you to assign tasks. Some of you are too old for reserve duty. I would like to tell you I was very upset when they took from me my position as armored corps recruitment commander in the reserves. I felt uncomfortable that they suddenly took it from me, and I would be willing to accept it even now. But, I would like to tell you there are other ways to mobilize for the country.

We are faced with a wide spectrum of goals which should be achieved and problems which demand a solution. But one must understand that we cannot invest all our efforts in all fields. Therefore, now it is important to direct our resources toward the achievement of our most important goals. Only then can we accomplish things. The choice we face is not between the important and the less important, but between the important and the very important. This understanding of priorities should guide us in the socio-economic sphere, as it is the basis of our political plan ? the Disengagement Plan.

The Disengagement Plan which I brought to the Government was coordinated with the American administration, headed by President Bush a true friend of Israel. Our relationship with the American administration is a strategic asset for Israel in every aspect security, political and economic. We are currently dealing with the staff work, preparing the legislation, and processing the implications of the plan. As I have said in the past, it is our intention to fund this plan and implement it in 2005. The disengagement from the Gaza Strip and four settlements in Northern Samaria will be carried out during 2005. I have not changed by position or my attitude on this matter.

I, of course, am very please with the current Government. However, let me be
clear: if it becomes obvious that it is impossible, then I will be forced to put together a different coalition. So that you will not be surprised, I would like to tell you that at the ceremony at Herzl?s grave, at the ceremony, I scheduled a meeting with Shimon Peres for Sunday in order to discuss the possibility of widening the coalition. Since there are no secrets, maybe someone overheard it, so I am simply telling you so that you know this. I would like to add, since I believe it is important I did not change my position or my mind. This in no way must damage the economic plan or the path the Government is taking in this matter.

One must remember what happened two years ago, when terror was rampant, Israel was suffering an economic slump, I am still speaking of the strategic asset in the special relations which exist today with the United States. At that time, Israel was in an economic slump, and the rating agencies were on the verge of reducing Israel’s credit rating. I must say that, at that time, I was in Washington on one of my many visits there. When we saw this, I give this as an example of the friendship and understanding of problems I approached the President since they were going to hurt us on the rating, and I asked the White House to express its support and estimation of Israel’s economic capability. I would like to tell you, just to emphasize, 12 hours later, the President announced his confidence in the Israeli economy. This relationship must not be dismissed and must be maintained. These guarantees rescued us from the threat of deteriorating into financial crisis, calmed the markets and enabled the Bank of Israel to reduce the interest rates.

I have no doubt that in the near future, we will begin to feel the positive effects of the Disengagement Plan in the economic sphere as well. Clearly, in the absence of a political initiative and a political horizon, the economy will not be able to improve. We cannot have it both ways. We cannot encourage foreign investors to come here, while at the same time presenting Israel as a rejecter of peace with all the international implications. This simply does not work. Those who think this is possible are fooling themselves.

I mentioned at the beginning of my speech the grim atmosphere prevailing at the Conference two years ago. I said then that we would overcome the difficulties and move this country forward. Today we speak from a position of an improving economic and security situation. The Government will continue its path of credible socio-economic policy aimed at growth. This we will do while preserving our social unity and achieving the vital national goals necessary to ensuring our future. If there are still skeptics among you, I am certain that when I come here in two more years, we will have achieved the goals set here.

Then – once we have succeeded in this campaign there will be time to chase the chickens.