67 New Atlantic Initiative- address by Prime Minister Netanyahu- 1 September 1998

I've been accused of being a Reaganite, and I've been accused of being a Thatcherite, and of the myriad of charges leveled at me, these I accept readily.

First, on the economic front, we are in the midst of a revolution in Israel. It is a formidable revolution in which the economy is restructuring itself faster than any other economy in the world. It is rapidly becoming a hi-tech economy, and the reason is that we have added the key ingredient of freedom. The key to economic prosperity is freedom. This is the main lesson of the modern period. It is what has allowed certain nations to rise.

I am reading a wonderful book by Professor Landis of Harvard called "The Wealth and Poverty of Nations". After a tremendously erudite, brilliant exposition, it gets to this simple point: societies that give internal freedom flourish. It is as simple as that. And, equally, those societies that don't have freedom shrivel or fail to develop.

The main purpose of our economic policy is to increase the degrees of freedom in the economy, and, to the extent we have anything to do with our neighbors - such as Jordan or the Palestinians or the Egyptians - increase the degrees of freedom across our borders.

We have doubled trade with Jordan in one year. We have enormously increased trade with the Palestinians by essentially insisting on security, thereby reducing the need for closure. We have not had a single day of closure in 1998. In 1996, we had 90, most of them under the previous government.

The key to economic prosperity is freedom. Freedom means that the government reduces its involvement in the economy, and those who engage in productive economic activity, the private sector, make its decisions. We cut the budget by one-half; in 18 months the budget deficit became 2.2 percent of the GDP, thereby contributing enormously to our stability.

We were at a very dangerous point, our deficit approaching five percent. The Maastricht alarm bells start ringing at four percent. If you get to five, you are in deep trouble. You can get to Russia's figures, 12 percent now, but you know where that is.

The same is true of inflation. We were at 15 percent. You get to the double digit, and you don't know how many digits you are going to get to. We brought it down from 15 percent to four percent in 18 months. We also privatized 30 times the rate of the previous government. You take the textbook, and you do it, and foreign investment follows. Last year, we had the greatest inflow of foreign investment into Israel in Israel's history, 70 percent higher than 1995.

We are continuing to exercise fiscal responsibility. I have just announced today that we are going to cut and freeze the salaries of the Prime Minister, the Ministers, the Knesset Members, and the Directors-General of the government agencies for the next two years. It has to be done. We have to show that the public sector takes responsibility and leads by reducing the extent of government involvement. This is indispensable for economic growth.

There is nothing we can do regarding the internal management of the economy of our neighbors, nothing whatsoever. It is their decision, as it is ours, whether to create these degrees of freedom that are the key to the creation of wealth.

Israel is undergoing this difficult thing, but it is now one of the islands of relative stability. There is an economic storm, which also has political implications, now rocking many lands, and those economies that did not exercise fiscal responsibility, did not reduce their deficits, did not reduce their inflation, have a hard time paying salaries, meeting their basic debt, and mustering more credit on the international markets. But those societies - and I am proud to call Israel one of them - who have made these necessary decisions can weather the storm and emerge stronger.

If the key to economic growth is freedom, the key to peace in our part of the world is security. We have a peculiar neighborhood, a difficult one, and it is clear to me that the achievement of peace in our part of the world depends on the ability not only to stabilize our borders, but to increase the degree of security in our region. The quest for peace is the first and most important mandate we have from our people. We ran on a platform of achieving peace with security. You cannot separate these two terms.

It is impossible to have an insecure peace. It collapses. It is impossible to have peace with terrorism. They are incompatible. Three of the five major wars of Israel occurred because of terrorism, which is not a tactical threat but a strategic threat.

So the pursuit of a secure peace is the essence of our policy. This is why we are here. This is why I am here, speaking to you as the Prime Minister. It was a mere 2,700 years ago that one of our ancestors, on a hill not far away, a few kilometers from here, prophesied, "They shall beat their swords into plowshares, and nations shall not make war on other nations." That is a bad translation of Hebrew. "Nation shall not lift up sword against nation", is a more precise translation of Isaiah.

It has been not only our ideal, but the ideal of mankind ever since. This most important ideal can be realized sooner than people expect. But we are not going to be able to achieve this unless we first view our situation with courage, with realism and with fairness. Those who truly believe in peace and want to contribute to the progress of peace in our region must view peace as the only option. It is not one of many options. It is the sole exclusive object of genuine diplomacy; that is, peace is not a means, but an end in itself.

This view is not necessarily shared by everyone in our neighborhood. The view that must prevail is that peace is its own reward. It is, in fact, mankind's most coveted reward, because peace means that all the extraordinary energies of mankind, its infinite imagination, the resources of the mind and the heart can be exclusively engaged in nation-building and improving the quality of life, developing art and literature, uncovering and exploiting the miracles of science and medicine, furthering technology and communications, and eliminating hunger, disease and pestilence. This is what peace is about. It is an end to itself, in itself. It needs no bonuses, and it needs no dividends, except those that are embodied and unfolded in peace itself.

Peace cannot be achieved without placing it as the object in itself, and without having the resolve, the internal decision, and the goodwill to achieve it by negotiating, negotiating, and negotiating once more.

Negotiations cannot be at the mercy of caprice or frustration of purported provocations. Those can be produced at will by either side. The negotiations must go on. This paraphrases, I think, Ethel Merman. They have to go on, and they have to go on with a purpose of achieving peace. Through negotiations, everything can be achieved. There can be, I believe, peaceful coexistence between Israelis and Palestinians, and the killing fields of Lebanon can be converted into a tourist paradise on both sides of the divide.

It is important to remember that no nation has suffered from violence and from war more than our nation and more than our people. None. Not in modern times, not in any time, through the course of the last 3,000 years, and, therefore, no nation wants peace more than we do.

Nor are we the only ones who have suffered. The Palestinians, too, have endured terrible hardships as a result of the Arab war against Israel. Their decision, the Arab decision, to reject the compromise offered by the UN in 1948 caused unspeakable suffering to both Arab and Jew. I believe too, that the Syrians and the Lebanese have also suffered from the repeated wars this tragic mistake has caused. Well, I think it is time to change this pattern of violence. It is time to find a solution which would replace the threat of war with a promise of peace.

Now, again, make the decision that peace is an end in itself, and negotiate to achieve that end. What do you negotiate about? You negotiate about the one foundation that keeps everything else, on which everything else rests, and that is security.

Normalization of relations and the warmth of relations and the scope of relations are all desirable and helpful, but neither trade nor tourism nor cultural exchange nor frequent summits and ceremonies can guarantee peace. If I had to cite one of the years in which cultural exchanges, the visits of artists, trade delegations, and generals visiting each other's armies was at its height, I would name the year 1938 and the exchanges between Germany and France.

Normalization in itself is desirable, but it is insufficient in an unstable environment, one that has undemocratic regimes. That is where we are located. Some of the surrounding regimes are less democratic. Some are much more open in seeking pluralism and involvement, as in the case of Jordan. But the one bastion of peace between us and our neighbors is security. The best example I can adduce is Egypt.

Normalization in the 20 years or so since we have signed the peace treaty has gone up and down. I remember previous prime ministers bitterly complaining about the cold peace and my response to Yitzhak Rabin when he mentioned that. In our conversations, it was, "A cold peace is a hell of a lot better than a hot war, but it is a cold peace." But what has maintained this cold peace are the sound security arrangements in the Sinai, which have tremendously reduced the prospect of war. That is what we seek in our negotiations with the Palestinians, and with the Syrians once they resume. We have to have a peace that can be defended.

In the case of the Palestinians, that means not only redeployment into areas that we can defend. The issue of human rights of the Palestinians has been done away with, although most people haven't noticed. Ninety-eight percent of the Palestinians in Judea-Samaria, and 100 percent in Gaza live completely under Palestinian rule. We don't govern them. The problem of human rights, press freedom, freedom of speech, are problems the Palestinians have to take up with their own leadership, not with us.

Ninety-eight percent of the Palestinians in the West Bank are ruled by Palestinians. The lands we are talking about are empty of Palestinians. Most of the Jews who live in Judea and Samaria reside in these areas.

Their significance to us is historical and national. They are part of our ancient homeland, but equally, in a very current sense, they are the barricades, the bastions of our territorial security. Not against in-flying missiles. Those can overshoot but can't conquer. They are there against tanks that could invade one day, against the Middle East that could, and does, change overnight. To survive, you have to have the bastions of deterrence, and the bastions of defense, that these small territories, small but infinitely important, offer.

So achieving in these negotiations secure and defensible boundaries is the first principle of security that we see. The second is the compliance of the Palestinians with the principles of security that they themselves promised, first to Yitzhak Rabin and then to Shimon Peres and then to me.

The first Oslo agreement and the second Oslo agreement, the Hebron agreement - it is time to make good on those promises. That means that the territories that have been handed over to the Palestinians do not serve as the launching ground for terrorism. It means that the Palestinians must take action against killers of Jews as energetically as they sometimes take against killers of Arabs. I am not necessarily in favor of capital punishment. That is a matter to be taken up among the Palestinians themselves. But it cannot be that there is a tacit sanctioning of a killing in Tel Aviv, or that the murder of a rabbi in the middle of Hebron - a rabbi who was widely appreciated by both his Jewish and Arab neighbors alike, just cut down, cut to ribbons, to pieces - that that is sanctioned.

We expect action against terrorism, action in words and in deeds. Words also count because they signal to the Palestinian population where the real values of Palestinian society are. Is there a recommitment to peace, to peace in itself, and is there the willingness to take action against those who destroy the peace and would seek to destroy Israel and Israelis? This is what we seek from the Palestinians.

Principle one is secure and defensible boundaries. Principal two is Palestinian compliance with the battle against terrorism. This is what is meant by security in the case of the Palestinian negotiations.

We were very close to moving on the negotiations with the Palestinians a few days ago. There has been a retreat on the Palestinian side, and I think it is important that the Palestinians come back to the table and restore understandings that were achieved in the negotiations.

It is not only the Palestinians who need peace, not only they and we who need peace, it is also the Syrians. And I call on President Assad and on Mr. Arafat to resume negotiations for peace with security, with the one government of Israel that can deliver a peace that will be backed by the entire people of Israel. They cannot afford to miss this opportunity, not only for our sake, but for their sake and the sake of peace.

I believe that if goodwill is summoned, and hard thinking, and a real willingness to comply with the dual requirements of peace and security, if there is that desire on the Arab side of the negotiation table, we shall achieve peace to the benefit of everyone and much faster than everyone thinks.

It is my hope that the next time we meet will be in Jerusalem, which will under any peace agreement remain united forever as one city under Israel.