Israel is going through enormous changes. Some of them originate in the global and regional shifts. Some are changes which we initiated and generated, since it is clear to us that the existing situation does not serve us anymore.

Address by Prime Minister Ariel Sharon to the Israel Democracy Institute Conference on Economic Policy – "Caesarea 2005"

First of all, I thank you for regularly holding this conference in Jerusalem. This type of conference, which examines the state of the economy and society from a broad view, is deserving of taking place in the capital of Israel, and nowhere else. I thank everyone who helped organize this Conference, and all the participants who took time out of their schedules and spent it in thinking about the future of the State of Israel.

We live in an era of great change. The entire world is being transfigured before our very eyes. The global economy is undergoing fundamental transformations.The Middle East is changing, and it is enough to mention the great shifts which occurred recently in Iraq and Lebanon.

Israel is also going through enormous changes. Some of them originate in the global and regional shifts. Some are changes which we initiated and generated, since it is clear to us that the existing situation does not serve us anymore.

Since my first day in office, it was clear to me that we must not be satisfied with the status quo. I am not ready to sit and only put out fires and solve crises. That is not why I was elected.

I took the responsibility of initiating changes in every field where they were necessary, in order to lead Israeli society to a better situation for the future. We are in the midst of doing so.

My government led, and continues to lead comprehensive reforms in nearly every sphere of economic activity. We acted on those matters which in the past were discussed at length, but with little action taken. However, I was never among those who do not value the great activities of the past, because much was accomplished.  We achieved great things under difficult circumstances. Some of them were issues that no one dared tackle since the establishment of the state.

We privatized El Al, Zim, Bank Discount and Bezeq. Yesterday, in a joint discussion with the Minister of Finance and the Governor of the Bank of Israel, we made a decision to concentrate our efforts on selling Bank Leumi, and to redirect the profit to reduce our national debt.

We initiated structural reforms in the water authority, ports, capital market and banking, pension funds and in the fields of energy, including a move to natural gas and the construction of desalination plants, which will become operational this year.

We made dramatic changes in the job market by reducing the number of foreign workers and encouraging the population capable of working to begin doing so.

We are altering the national economy from its very foundation, and transforming it into a modern economy in step with the conditions of the 21st century, and capable of integrating into the global economy.

We are at the height of our efforts to fundamentally change the education system, in accordance with the recommendations of the national task force headed by Shlomo Dovrat, a team which the Minister of Education and I appointed. The government is ready to allocate billions of shekels to fund this reform. Indeed, we have encountered difficulties in the struggle of the teachers organizations, however, this year we will implement the reform in the 32 authorities. Of course, we could have done much more, but we chose to begin on a smaller scale. We are starting the reforms, as I mentioned, and I promise you that they will be implemented in the coming years.

The greatest change we are implementing is the Disengagement Plan. We had to take the initiative. We faced a situation in which we could be either leaders or be led. And we decided to lead. We decided what our priorities were – we are withdrawing from the Gaza Strip – an area where there was no chance of establishing a Jewish majority, and which would clearly, in any final agreement, not be part of the State of Israel. At the same time, we are directing the majority of our efforts to areas which are most crucial to ensuring our existence – the Galilee, the Negev, Greater Jerusalem, the settlement blocs and the security zones.

I initiated the Disengagement, because it is the best tool to fundamentally change the national situation of the State of Israel. Withdrawing from Gaza will have a positive and decisive influence on every facet of life in Israel: security, the economy and the quality of life in the country. I say with confidence – the Disengagement places Israel in a better position in every possible scenario, and it will be carried out according to the timetable decided, beginning in seven weeks time.

The first challenge we face is the security challenge. Disengagement can assist us in curbing terror, and will certainly allow us to fight terror in a better and more effective way.

There is a real chance that disengagement will generate the Palestinian side to stop the terror offensive. For the first time the Palestinians will have to choose: Do they want to begin building, or continue destroying? Are they ready and able to change on their own, or do they want to continue to wallow in the swill of their hatred and incitement, which will lead their population to poverty and suffering? They truly have an opportunity. It would be regrettable if they miss it.

There exist in Palestinian society and its leadership moderate forces who want to make the right choice. Disengagement can help them, and constitutes a test of whether or not they can lead, whether we have or do not have a partner. If the Palestinians fail, and again choose the path of war and terror, the Disengagement will significantly improve our ability to deal efficiently with the terror.

The purpose of terror is, inter alia, to force the international community to actively intervene against Israel. Disengagement stopped this trend, and changed the political thought. Now it is clear to the world that Israel is ready to contribute its part by making genuinely painful concessions.  Now, the nations of the world have directed their demands to the Palestinians – to dismantle the terror organizations, stop the incitement, introduce law and order, and focus on bolstering Palestinian society rather than destroying the State of Israel.

Disengagement fortified the strategic alliance between Israel and the United States. There is understanding between us and the Americans vis-a-vis the immediate, necessary steps, regarding advancing according to the outline of the Roadmap, and regarding an uncompromising demand that the Palestinians fulfill all their obligations in order to move forward.

However, more important than anything else is the understanding we reached with the Americans that, in negotiations for the final agreement, they will support our stand on two essential issues for ensuring our future – keeping the settlement blocs in Israeli territory and preventing the entry of Palestinian refugees into the State of Israel. And this, of course, in addition to a series of other topics which appear in the agreement between President Bush and me. No previous government was successful in obtaining such commitments from the American administration in the past.

These understandings, written commitments signed by the President of the United States, and later overwhelmingly endorsed by both Houses of Congress, are the best guarantee of ensuring the character of the State of Israel as a Jewish and democratic nation.

The Disengagement Plan is the basis for strategic change in the situation of the State of Israel, parallel with the changes taking place in the Middle East. We are already able to see a shift in our relations with Egypt, the most important of Arab nations. We saw a good example for that today, at the signing of the natural gas agreement.

Despite not being an essentially economic event, the Disengagement clearly has a large economic and social influence. I have heard claims that the money invested in the Disengagement Plan could have been invested in social issues. We should probably remind those who forgot that we, in the government and in the Knesset, decided to deviate from the budgeted deficit and government expenditure to fund the Disengagement because of its special character, and the fact that it is a one-time event. Therefore, I do not feel I need to explain here that investment in Disengagement could not be allocated to any other target. It is the realization of the Disengagement Plan which will allow for diverting resources which are currently earmarked for ongoing security, to be used in building Israeli society and narrowing the gaps in it. This is the right economic and social path.

I believe that Disengagement will be one of the most successful, economically influential steps carried out in Israel. It is sufficient to examine the influence which the Disengagement has had on the growth of the Israeli economy even before it is carried out. I believe that your experts estimated the benefits of Disengagement at 2% GNP per annum.  here is no doubt that the dramatic increase in tourism, foreign investment and consumption originate primarily in optimism in the political arena. It is no accident that in the past two years we have seen renewed growth and a return of foreign investors.

All this is even before we address your analysis of the nightmare of non-implementation of the Disengagement Plan, with all the consequences that this will have on our political position and how we are treated in the global markets.

The change we are spearheading is not easy to implement – neither the Disengagement nor the economic and social reforms.  In general, change is never easy. It is not easy to change, and even harder to lead such dramatic and fundamental changes. However, we do not have the privilege of ignoring the changing reality.

Every change has its opponents. There are those who do not understand the need for change, and who wish to cling to what already exists and is familiar, even if it is bad, over the uncertainty of the future. There are those who cling to a naive faith that, in the end, everything will work out as they wanted.

There are also always those who object to change out of self-interest and political motivation. This is a familiar human weakness. It is easy to favor self-interest over the good of the many. I do not believe that we need to concern ourselves with this overmuch, or give it weight in determining national policy.

And there are those, of course, who are directly hurt by change – any change. Such are the original residents of the Gaza Strip and northern Samaria, most of whom are wonderful people, the best of Israeli society. I feel their pain and respect their objections, even when they are extremely severe. I tell you that I love these people; I also love them when I hear the voices of pain and protest which are directed at me personally.

However, with all the pain and understanding, we must not be deterred from this crucial change. The fate of the entire state is at stake. We must withdraw from Gaza in order to build Israel.

I can tell you that a tremendous amount of work is being done to ensure that every resident who so wishes will find a solution which suits their needs, whether it be through financial compensation if that is what they wish, or by arranging temporary housing, or renting an apartment, or by preparing places for permanent settlement and land for agricultural cultivation.

There is a solution for all who wish it. There is a place for every evacuee – a place in Israel and a place in our hearts.

I make a complete distinction between them and the extremist gangs who are trying to terrorize Israeli society and tear it to pieces through violence against Jews and Arabs, and offending Muslims and violating their symbols, by thuggery and disobedience. It is not the path of Judaism. It is not the path of the settlers. It is not the path of Israel.

We will deal with these phenomena with a heavy hand since they threaten our very existence here, as a Jewish and democratic country. This is how we acted yesterday, and today at the hotel in Gush Katif which we evacuated. I wish to commend the Israel Police forces and IDF soldiers who carry out this difficult and important task. We will not let anyone raise a hand against an IDF soldier or a policeman in the Israel Police. Everyone who cares about this country – and who has public influence – must stand up and make a clear statement against these phenomena.

I promise you that I will not be deterred from implementing the evacuation from Gaza because of threats and intimidation from political opponents. I hear how they are planning my political deposition and the collapse of the Government. I do not take them very seriously. However, I regret that this is the nature of our political life. I have previously withstood difficult trials, even more difficult than these. At these times, one must act calmly, and determinedly carry out what one believes. And so I will.

We face a difficult period of great internal pain. I am convinced that these are the labor pains of better times, in which we will stand, strong, united, and build a prosperous economy, a healthy, civilized and more just society, and most importantly, in which we ensure the people of Israel a future of tranquility, security and peace.

I am certain that, with God’s help, we will succeed.

Thank you very much.