The accomplishments of the past two years provide the appropriate foundation for the Government’s next step, which is a combined socio-economic one.

Good afternoon,

As with every year, I am pleased to be with you this year as well. I think you will all agree with me that after several difficult years – of severe economic crisis, the financial instability of deep recession – our economy has returned to realizing its potential. This is thanks to a series of courageous and painful steps which were taken, and which brought about a true revolution in Israel’s economy. The steps we took altered the structure of our economy from its very foundation, and transformed it into a modern economy, capable of integrating into the global economy.

At the same time, we faced one of the most difficult and painful steps which society and democracy in Israel has ever withstood – the Disengagement Plan. The Plan was, of course, not an economic plan, but its economic repercussions were immediate and far-reaching.

The Disengagement Plan brought about a dramatic change in Israel’s standing in the world, and was enthusiastically embraced by the international markets. They view it as a first, significant step towards renewing the political process in the region, according to the Roadmap, thereby contributing to stability and a calm in the security situation, which are vital to creating economic growth.

As I said, we view this step as the first towards entering the Roadmap. I said I would do this, and I intend to do so. I know that there were those who thought that I would be unsuccessful in implementing the Disengagement Plan. I said I would do it, and I did. I intend to continue the political process in order to advance Israel’s interests.

The optimistic view of the new reality created in Israel following the disengagement, was immediately apparent in the increasing flow of foreign investment in the Israeli economy and in the entire region. That same optimistic view is the reason for the sharp increase in the number of tourists to this country, a growth which also contributes to a continued improvement in the Israeli economy.

Today, Israeli companies are not afraid to enter the global market. Israeli executives dare to design bold strategies and become leading players in their fields. We are familiar with this phenomenon in hi-tech, but lately we also see it in more traditional industries. This is testimony to the courage of the Israeli executive.

The accomplishments of the past two years provide the appropriate foundation for the Government’s next step, which is a combined socio-economic one.

On the economic side, we will continue our growth-generating policy of liberalization and privatization. Our goal is a 4 to 5% annual growth rate for the next decade. The significance of this kind of growth is an increase of $70 billion to the GNP – a difficult goal, but not impossible. We intend to place special emphasis on the development of strategic industries in Israel – those same industries which take advantage of the fields in which Israel enjoys a relative advantage, and which allow it to successfully integrate in international globalization processes. In order to develop the strategic industries in Israel, funds have already been allocated in the 2006 budget, while one of our goals is the development of the water technology industry in Israel, an which industry already enjoysgreat momentum, and which has the potential to lead in international markets.

However, alongside economic progress, we must not ignore the genuine distress of broad sectors of society. Therefore, we intend to wage war on the dimensions of poverty in Israel.

Poverty is not predestined by fate. In large part, it is a result of fundamental problems in Israeli society, which were not properly dealt with over the years – and with the lack of treatment they only grew worse. Problems such as the gaps between the periphery and the center of the country, the lack of equal opportunities for different sectors, and also a culture of welfare allowances and the fact that a large portion of Israeli society does not work. In the past we proved that we do not recoil from dealing with issues which were thought insolvable – and we will do the same here.

At the same time, we are taking care of the first victims of poverty – children and the aged. The Government initiated a significant increase in the number of children who benefit from the nutrition project in various educational facilities around the country where there is a long day. As of today, approximately 165,000 students receive meals in the framework of the nutrition project, and in the coming weeks, the number will reach 200,000.

In 2005, we increased allowances for the elderly who receive income supplements by approximately NIS 200 for single people, and up to NIS 250 per couple. There are people for whom NIS 200 to NIS 250 is meaningless – but for the 200,000 elderly people who receive these amounts, they make all the difference: these sums raise them above the poverty line.

My Government will act in these two spheres simultaneously – in a combined socio-economic move. The goal is to establish the Israeli economy, and ensure its continued growth, while providing appropriate solutions for the distress of the weaker sectors.

I know you played an important role in the recovery of Israel’s economy over the last year – and I know you will continue to do so. I call on you to mobilize to our social effort, so that, together, in a joint socio-economic move, we can create a just, developing and prosperous society here.

Thank you.