Many of you who have visited Israel have remarked on the similarity of the scenery and of the climate [to that of California]. Now, that actually may be a myopic view, because there is one small difference between California and Israel: the neighborhood. It is a different neighborhood. Now I know of some tough neighborhoods here, but ours are tougher, and you have a reminder these days of exactly what kind of neighborhood we live in and what kind of neighbors adjoin us.

We know that to secure peace in this kind of area requires the ability, first, to deter war. What I have just said ought to be absolutely obvious because it is, after all, the central lesson of the century. The central lesson of the century is that if you live in a nice neighborhood, you need not do anything to keep the peace--peace is kept by itself. In North America you have disputes between America and Canada, and the United States and Mexico. I understand that you have problems with your southern neighbor and I gather that you are not happy about a few things that cross the border, but I understand that the reason you do not go to war against Mexico is because you are afraid of Mexico's military might. Of course [this is not the case]. The reason you do not go to war with Mexico or Canada is not a balance of power, not deterrence, not military prevention. It is that you are democracies and democracies--at least in the post-colonial period, which is almost a century now--do not go to war. They do not initiate. They might respond, if attacked, and sometime you must attack them (like Pearl Harbor) and really poke them in the eye to get them to go to war. Democracies respond to attacks; they generally do not initiate them.

Not true of dictatorships. For example, Saddam Hussein. You remember him? He did not exactly take a poll in Baghdad before he decided to devour Kuwait, and when Kuwait was extricated from Iraq's gullet and he was defeated, he did not settle for peace. He waited for the next opportunity--now--and he is trying again. We support fully the position taken by President Clinton and the United States and much of the international community to face Saddam down because he is in fact engaging in an attempt to build weapons of aggression contrary to his solemn obligations.

But the main point that I want to make to you today is that in order to secure the peace in an area where there are no democracies, where peace is not inherent, where there is no check of public opinion of the voting booth against an aggressive regime, there is only one check. That is an external check. Peace through deterrence, or if I can borrow a phrase from somebody who used to be a governor of California, "Peace through strength." That is the central lesson of the twentieth century. In the first half of the century, democracies forgot this lesson and all of humanity, especially the Jewish people, paid the worst prices for it. The second half of this century, opposite a greater dictatorship than Nazi Germany, they remembered this lesson and created peace in Europe through the deterrence of NATO. We received half a century of global peace and now that the Soviet Union is gone, Central Europe is democratizing, and indeed Eastern Europe is democratizing, there is a different kind of peace. You are not exactly afraid that the former Warsaw Pact countries will invade Western Europe. It is becoming the peace of democracies.

The main problem that we face in achieving peace in the Middle East is that we are not ringed with democracies. We are the only democracy. Therefore the basis of any peace that we can make with our neighbors, and they are not all uniform--some of them have gone further to pluralism and modernism than others--but when we think of the principles that guide us in peace-making, the central point that must be understood is that it is not enough to want peace. That peace must be buttressed on the ability to secure the peace and prevent its violation. That is, that peace must be built on a solid foundation of security.

For example, our peace with Egypt. That peace has had its ups and down for the last twenty years. I remember the late Yitzhak Rabin and Shimon Peres complaining bitterly to me, when I was the opposition leader, about the vagaries of Egyptian normalization. But what has held fast and strong in the last two decades since the signing of the Camp David Accords are the security arrangements that we built into the peace in the form of a vast demilitarized Sinai Desert, early warning, other forms of deterrence, other forms of insuring Israel's security against any potential violation of the peace. That has not changed one bit in two decades.

This is the kind of principle that we must build in to our future peace agreements, whether it be with Syria or Lebanon or with the Palestinians. This is the main promise of the Oslo Accords. When Yitzhak Rabin presented the Oslo Accords to the Israeli people, he said, "It is a very simple deal. We give them territory, they give us a pledge to fight the terrorists from within their territory." That deal has not been kept. It was not kept in the first two and one-half years of Oslo, when we experienced terror on the scale of which we had never seen before in Israel. We had the equivalent of ten thousand Americans, in Israeli terms, dying in our streets and our cities. The people of Israel said, Wait a minute, where is the deal? Because surely if we are going to have peace it must be based on security. Surely when we had peace with Egypt, we had terror from Egypt, but those bases were wiped out well before we signed the peace. We had terrorist bases in Jordan--those were wiped out before we had peace. We have terror bases now in Lebanon, but truly everybody understand that if we have peace with Lebanon, those basis will be wiped out. It is inconceivable to have peace with Lebanon and terror attacks from Lebanon. There may be a solitary terror attack here or there, but there are no terror bases inside Egypt operating against Israel. That is a thing of the past and it is not possible to co-exist with peace, it is not consummate with peace.

This is the central demand that we put before the Palestinian Authority. It was not easy for me before the elections to say, "Yes, we will accept the Oslo Accords." But we did it--we said that we would follow the Oslo Accords provided that [the Palestinians] follow. This means, in the first instance, fight terrorism, capture the leaders, put them in jail. Capture the operatives, put them in jail. Confiscate the firearms, they are all illegal. Extradite the murderers, there are thirty-six pending under the agreement to be extradited to Israel. Stop the incitement for violence in the Palestinian-controlled media. (By the way, the Palestinian media is controlled, while the Israeli media is not exactly under my control.) All of that was solemnly pledged by the Palestinian Authority and not kept. Terrorists are being released in what is called "the revolving door": they come in and sit for two days, then are out the door. This includes, for example, the mastermind of the Tel Aviv bombings two years ago that claimed the lives of dozens of innocent people in Israel. The incitement continues, the firearms have not been collected. The institutions, the infrastructure, those organizations that give money to support and logistics to the Hamas and the Islamic Jihad terrorist organizations continue to work unabated. This is what we have demanded to be corrected. It is not easy to do this. If you are nice and you do not demand, people will be nice to you--they will pat you on the back. If you give rather than demand to receive, everybody will love you. But the minute you stop giving, they won't like you and they say, "give more." We stopped giving and said, "We will give only when we receive. We will advance only when you advance." And we insist on the foundation of peace, which is security. This obviously is tougher than to continue unilateral concessions that are not reciprocated.

Here is a paradox built into what I have said, and some of you may have already discerned it: it is called the Oslo Paradox. Israel, which keeps the Oslo Accords, is accused of violating it, while the Palestinian Authority, which violates the Oslo Accords, is credited with keeping it. I described to you their violations; I did not describe to you how we kept it. We did the Hebron Accords. The previous government could not do it, or would not do it, but we did. We handed over eighty percent of that ancient city to the Palestinian Authority. We released women prisoners, terrorists with blood on their hands, because this was part of the Hebron accords. I did not like it, I did not sign that agreement, but I honored it. We lifted the closure on Palestinian cities and allowed a record number (160,000) of Palestinian workers to work in our cities, up from 25,000 that we received. We fulfilled our part of the deal.

So the question you must ask yourself is this: how is it possible that Israel, that keeps the accords, is accused of violating it and vice-versa vis-a-vis the Palestinians? The answer immediately comes to mind: [Israel] builds settlements. Yes, we do. But it so happens that that is within the Accords. The late Yitzhak Rabin stood before the Knesset and said very proudly, "We can build new settlements and we can continue to build in the existing communities." We have not built new settlements, but people get married and they have children. People move in and move out--we do not bus anyone and there is no public housing. Private contractors build and if there is demand people go there. People live [because] communities are living organisms. Oslo stipulated very clearly that Israel has the right to continue and under no circumstances did it abridge that right. So Israel now is asked to undertake limitations outside the agreement in order to secure Palestinian fulfillment of provisions inside the agreement. The question is, why is that? People say that it may not be in the agreement, but you are preempting a final settlement because you are gobbling up the land.

A question for you: how much do all the settlements constitute out of the whole West Bank? All the Palestinian cities together, absent Hebron, account for 2.8 percent of the total territory of the West Bank. The settlements probably only account for one to one and one-half percent. The incremental housing is one-tenth of one percent, and was greatest under the Labor government who increased the population of the territories by fifty percent.

The important thing is that this issue by itself is not an issue. It certainly is not in the contracts and it certainly is not that significant a factor on the ground and if it is, it should be a factor of symmetry on both sides. The reason this is not mentioned is because many people think they should not be here in the first place. [Israel] may be right in keeping the agreement. We may be right in demanding security. We may be right that the settlements do not amount to much. But we should not be there in the first place and therefore, we are in the wrong.

So there is this distinction between what I call the lower truth and the higher truth. The lower truth is the day-to-day facts; the higher truth is "Justice is not on your side, so therefore do not bother us with the facts." We are supposed to be in a strange land, much like the British in India. That is what they say about Judea. The word Jew comes from Judea! Our ancestors came from Judea. Mark Twain was [in Judea] and said, "Nothing is here. When will the Jew return so this land will come back alive?" Or Arthur P. Stanley, the greatest British cartographer of the nineteenth century, who was there in 1881, the year that Yassar Arafat says the Zionist invasion began. And he says, "Not a soul in Judea." Note the word "Judea." Miles and miles and miles and not a soul. It is the Zionist restoration that restored this land. It is the Zionist restoration that produced Jewish immigration and a great deal of Arab immigration, all of whom are welcome in this land.

I am not going to get into a detailed polemic of the perversion of history that has taken place by the oft-repeated falsehoods about Israel and our right to live in Judea in the hills around Jerusalem. I will charitably say it is an issue in dispute--and that dispute has not been decided. And if it has not been decided, how can anyone ask us--against the facts of history, against the facts of international law, against the British mandate, against the League of Nations, against even the U.N. Resolutions up to 1947--to prejudge this? They should not. So what should we do? How do we resolve this? Mind you, I am only talking about a small part of the Middle East.

I think there are basically two principles that should guide us, and then a third: the first principle is security. Everything I talk about is meaningless unless security is maintained. If we move into a peace process and bombs explode, then peace will collapse. That has happened before and it would happen again unless the Palestinians discharge their responsibility. We fight terrorists whenever and wherever we can find them. We expect our neighbors and our partners for peace to do the same. Principle one: security.

Principle two: move rapidly to fast-track negotiations on a permanent peace agreement between us and the Palestinians. It is easier to negotiate all the issues around a comprehensive deal rather than to try to engage each of them one at a time and have that erode confidence and cause a point of friction.

Third principle: whatever the shape of that agreement, Israel must retain those elements of territory and function that are necessary for our future to secure our vital interests. This means broad and continual security zones, the best example of which is the Jordan Valley. This gives us a protective buffer against any potential developments from the East. And, of course, other security zones alongside Palestinian areas that will be fully administered by the Palestinians themselves. They can govern themselves, as we have no interest in doing it whatsoever. But those things that are important for us, other than the territorial question, to be negotiated include: who will control the airspace above our cities and above our airfields? We must. Who will control the water table on which our lives depend? That must be jointly shared. Will the Palestinian Authority have the right to make military pacts with such regimes as Iran and Iraq? No. Will it have the right to import weapons, missiles, rockets, and artillery? The answer is no. There must be limitations on the few powers that determine whether Israel can live in peace and security. We envision, in addition to the territorial negotiations, a functional negotiation where all the powers needed to govern the Palestinian areas for internal government will accrue to the Palestinians. Some powers, such as those relating to the environment or to water, will be shared by Israel and the Palestinians. And those powers necessary for the protection of Israel's vital interests, the foremost of which is security, will be maintained by Israel. This is the configuration that we see for a final settlement. We believe it is achievable. I believe that only our government is capable of delivering such an agreement because only our government can secure the internal consensus that is required to make not only peace with our neighbors, but peace with ourselves.

I have said everything, and I omitted one thing that almost needs not be said at all: Jerusalem. Jerusalem was and will continue to be the single undivided capital of the Jewish people and of the State of Israel. A final settlement will allow--must allow--the formalization of free access and unfettered worship that we facilitate for all three faiths. We want to do it and we are prepared to do it. But the sovereign status of the city will remain as an undivided city. We will not rebuild the Berlin Wall, barbed wire and barricades, inside the city of Jerusalem.

These are the principles that guide us. We know that at times it is difficult to stand alone in the face of very sharp and biting criticism. But we stand, because we are convinced that this is the right path. We are persevering in it. I believe that with God's help, with the help of friends such as yourselves, and with the determination of the people of Israel who uniformly want peace regardless of their political affiliation, we shall achieve this peace.