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May 7, 1998

LOU WATERS, CNN ANCHOR: I understand we're now hearing from the prime minister of Israeli, Benjamin Netanyahu. Let's listen in to that.

(Joined in progress)

BENJAMIN NETANYAHU, PRIME MINISTER OF ISRAEL: We insisted on a very simple principle, it's called "compliance," that the Palestinian Authority indeed fight the terrorists, tear up the covenant of hate that is still on the books against us and calls for our destruction, and fulfill the commitments that they have undertaken. The Palestinians comply with their commitments; we will comply with our commitments.

And the second principle that guides us is security, that is the security of a tiny country, Israel, that needs -- that lives in a very, very tough neighborhood, a solitary democracy in a very large expanse that must have defensible -- secure, defensible borders. These two concerns that we have, compliance and security, are the things we have discussed in London and we will, presumably, very shortly discuss in Washington.

We are eager for peace. We're eager to move this process forward. We're eager to have a true peace, a peace of security, a peace of fulfilled obligations on both sides of the aisle, if you will, not just the Israeli side. And that is what guides our principles.

I think we're capable of delivering a better future for our children, my children, Mr. Arafat's daughter, and I believe the children of Israel and the children of the Palestinians. In fact, beyond that, I would say the children of the Middle East as a whole. That is what we're committed to.

We know it's a tough negotiation. I can save you a lot of questions. I am a tough negotiator when it comes to Israel's security and when it comes to compliance, but I think that if those basic principles are secured, we can move ahead and give a better tomorrow for everyone living in this troubled region.

JONATHAN MANN, CNN ANCHOR: Will you be negotiating toughly in Washington on Monday on the basis of the U.S. proposals that have been put you?

NETANYAHU: Well, I don't know if we'll get to Washington by Monday because there is a lot -- there are a lot of issues that are left open. Everybody focuses on this or that percentage. I wish that was the only issue, even though it's hard enough because every single percent counts. Every single percent is the size of Tel Aviv -- actually, bigger. Every single area controls the roads, the airports where our planes land or where our children travel or where our early warning stations are and so on.

All of these things are important to us, but before we even get there there are other questions that have to be answered. We insist on the Palestinians carrying out their obligations. We insist that they fight terrorism, not for a day, not for a month, every single day, 365 days a year. We insist that they convene their constitutional body, the Palestinian National Counsel, and tear up that covenant.

We want a peace where they take the letter that Mr. Arafat sent to President Clinton in which he promised to annul those provisions in their covenant that still call for Israel's destruction, we want that body to stand there and say, it's over. We ratify it. It's finished. So we need compliance. Without compliance we cannot move on even one percent. And we need security. And with security and compliance, let's go. In Washington, in London, anywhere. It could be here by the way. It could save a lot of trouble and a lot of expense.

MANN: Let's go to one of our microphones.

QUESTION: Tanya Mihana (ph) from Lebanon. Mr. Netanyahu, for the first time a few weeks ago, Israel recognized U.N. Resolution 425 and announced its willingness to withdraw from South Lebanon, but the Lebanese government considered that as a bluff. I have two questions: First, what can your government do to prove that this decision was a serious one? And, second, why doesn't Sahal (ph) start withdrawing simply without all these introductions?

NETANYAHU: There are no introductions. In fact, we moved all our previous conditions for moving out of Lebanon. We don't insist on having a peace treaty with Lebanon. We don't insist on all sorts of other things. We just want one thing: to know that the Lebanese army will take up the positions that we vacate in order to ensure that Hezbollah, the Hezbollah terrorists, don't attack Israeli towns, villages, civilians from the south of Lebanon.

Now, I find myself in an incredible position, frankly. Here is an Israeli prime minister who is saying that he wants to leave occupied Arab land, and I am being told that I shouldn't do it, that I am bluffing and so on. Why not test me? Why not have the government of Lebanon do a very simple thing -- meet with us or through an intermediary. I don't care. There are plenty available; and, of course, we all respect Kofi Annan of the United Nations. He's done an important work for peace recently.

Let him come or someone else -- anyone that they prefer -- and let's work out the simple security arrangements that will enable Israel to leave Lebanon after 20 years of being there. If people want to test out that -- the seriousness of our resolve, all they have to do is try me tomorrow.

QUESTION: Why don't you try it the other way around? You start withdrawing, and then we start negotiating?

NETANYAHU: Because the reason we're in Lebanon is that we didn't have any policing force there against the terrorists. And, in fact, there have been for 20 years now terrorists in the south of Lebanon, first Palestinian terrorists and, most recently, Hezbollah terrorists.

I find it inexplicable that there should be a refusal on the part of Lebanon and perhaps others that -- who are saying, look, we don't want to discuss with you how you could leave our country. We want to leave. you are telling us, don't leave. You're telling us, leave the terrorists where they are and go back to Israel. Well, you know what will happen? They'll follow us right to the border fence. They'll start shooting at buses of children just as they did 20 years ago.

Well, that is clearly something that no responsible government would do. But here's what a responsible government in Israel is saying to the people of Lebanon: We want peace with you. It's your option whether you want to sign a peace treaty today or some time in the future. But we're prepared to leave every last inch of Lebanese soil and in a very short order, if you're prepared to talk to us about the simple arrangements of security preventing terrorism from your territory into ours. It's a very simple and a very fair proposition, no bluffs.

QUESTION: Thank you.

MANN: Another question from the floor.

QUESTION: Tatyana Hoffman (ph), Channel 2 News, Israel, shalom.

We just heard that you're planning to go maybe again to Washington, actually. What kind of compromise are you ready to make? We never heard a single word if the Palestinians are ready to comply with the agreements, what kind of things are you ready to make? The second question is, actually, we hear here that next year we're going to have a Palestinian state. I would like to see if you can say to people here and to the Israeli peoples, how are we going to have a Palestinian state. I would like to see if you can say to people here, and to the Israeli peoples, how are we going to react to the situation that maybe next year maybe there is a Palestinian state?

NETANYAHU: Well, I think that we can -- we have stretched ourselves enormously in what we're prepared to offer, and I am prepared to be flexible wherever I can. There's one thing I won't be flexible on. There's one thing I won't compromise on, and that is Israel's security.

Our people have suffered enough, so have others in this area, including the Palestinians, including the Lebanese that we discussed a minute ago. But I know that the basis of a durable peace is compliance and security, and that remains a very clear position.

On our side, of course, we're prepared to offer that territory that we can withdraw from without compromising our security. On our side, we're prepared to offer a number of other things that we have discussed; things that, actually, I have been calling to do for many months, including opening up the Palestinian airport, the industrial park. We're prepared to do that in short order. And we have thrown in, frankly, other things as well as the release of Palestinian prisoners. I may add: not killers, not terrorists, not people with blood on their hands. We don't do that.

But we are prepared, as a gesture -- as humanitarian gesture of goodwill -- to put that, as well, into a good package that I think would serve all of us well.

You asked about would happen in a year from now, given that the Palestinians say that they will declare a Palestinian state unilaterally. I have two comments. First, that's a clear violation of the agreement. Nobody can ask us to keep the agreements, while openly and brazenly violating it with such a declaration.

Secondly, any unilateral act on the part of the Palestinians will induce unilateral acts on the part of the Israel. And that would be unfortunate, because I have been calling for more than a year now to engage in permanent peace settlement talks between us and the Palestinians; seriously, continuously, in order to achieve a resolution to the Israeli-Palestinian conflict through negotiation.

It is no secret that I oppose a Palestinian state for the simple reason that we cannot be sure that it will not be another Iran or another Iraq. And I don't believe any of the people listening to us right now would want another Iraq or another Iran on their doorstep, a mile from downtown Jerusalem and a few miles from downtown Tel Aviv.

I think that there are other arrangements that are possible, that would allow the Palestinians to run every aspect of their lives, to effectively govern themselves without threatening our lives, to run their lives without threatening our lives. And I believe such an arrangement in which all of the powers needed for the day-to-day living of the Palestinians, with their own legislature, with their own executive, with their own judiciary, with their own flag, with their own passport -- by the way they have got all that now. And as they do now control 98 percent of the Palestinians, they don't anymore live under Israeli occupation. They live under Palestinians.

We're now negotiating about open land; land that has immense security implications for Israel, but land that is virtually empty of Palestinians. Well, when we decide, through negotiations, the disposition of the land, we should also decide the disposition of the powers of the Palestinian entity. It should have all the powers to run Palestinian lives, none of the powers to ruin Israeli lives or endanger Israel.

And there are only a few constraints that I am thinking of, such as the power to make military pacts with Iran or Iraq, or to import weaponry that could threaten the life of Israel or the planes that fly into Israel and out of Israel, and so on. I think that that balance of the desire of the Palestinians to run their own affairs and our desire to have security is the right balance that will ensure a durable peace between us and our Palestinian neighbors.

QUESTION: Mr. Prime minister, while the disposition of the land is still being discussed and we come back to the famous percentages that are being put before you, our Jerusalem bureau chief Walter Rodgers reports that sources high in your government say that a very influential man in your cabinet -- the infrastructure minister, Ariel Sharon -- has said flatly that there can be no withdrawal, no transfer of more than nine percent of the land and that that is the cabinet's number. Is that true?

NETANYAHU: Well, I am a very high source in Jerusalem, and you can use me directly; you don't need leaks or unattributed reports. So here's the position: We have never publicized the number, for good reason. We wanted to leave ourself some margin, some flexibility; precisely that flexibility that you asked me about in an earlier question. But we also know our limits, the limits to our flexibility. And we know that there comes a certain range in which the percentage stops; that is, that we cannot defend ourselves in an interim settlement. We cannot do so handing over very large tracts of land now without having bypass roads, bridges, tunnels, relocations of military camps. These are huge expenditures that are not possible beyond a certain percentage.

So we're willing to be flexible, but there are limits, and I am certainly -- and with all due respect to this very important broadcast, I am not going to engage in discussing those numbers here. I will say that it is our decision to make not only because I say it here, but because it's agreed upon between Israel and the United States, in writing, in words, verbally, as the leaders of the United States -- I believe President Clinton himself and Secretary Albright herself have said repeatedly, "Israel must make the decisions about her security. Therefore, Israel, and Israel alone, must make the decisions about redeployment.

MANN: Let's go to our next guest.

QUESTION: Mr. Prime Minister, you mentioned two main conditions for breaking the deadlock: Israeli security and Palestinian compliance. My question is: How vital is two or four percent troop withdrawal for Israel's security? And as for Palestinian compliance, violent attacks against Israelis have almost disappeared the past few months, and even the U.S. secretary of state has praised Palestinian efforts in curbing violence. What have you got to say about that?

NETANYAHU: Well, first of all, let me answer the second part of your question and then come back to the first. There has been some action, especially in the last month in view of the death of Muhyideed al-Sharif, a Hamas activist in Ramallah and the Palestinian areas. And indeed the Palestinian Authority did crack down in these last four weeks, or five weeks, on some of the Hamas operations, presumably fearing also some internecine clashes.

This points out what we're talking about, that the Palestinian Authority has the capacity to fight terrorism on a much more systematic scale if they wish to do so. And, in fact, they can and must do so because we find these suicide bomb factories, recently car bomb factories, in just about each one of the major cities in the Palestinian areas. And you know that those car bombs are just a few hundred yards from the headquarters of the Palestinian police. We know that they're being prepared as engines of death to be sent into our cities to bomb our children, to kill our women, to kill our people. And we expect the Palestinian Authority to do, as I said, not on an episodic basis, not on an ephemeral basis, but a continuous, systematic and effective way to fight the terrorism.

We're convinced they're able to do so. We insist that they do do so, precisely as they promised Mr. Rabin and Mr. Peres and myself in the Oslo Accords and in the Hebron agreements.

Now, you ask what is the importance on the other side of the fence, so to speak, on our insistence, as you say, three or four percent, or two or four percent, as you said. Well, let me tell you. First of all, each one of them, as I said, each percent is the size -- is a little bigger than Tel Aviv, which is not a small city, and I'm sure you visited it.

Secondly, this land comes atop of other land that we've already given. So it comes out to be, according to press reports -- not to something that I'm saying here -- maybe 40 or 50 percent more than what Israel thinks is can reasonably do without incurring serious risk. There's a limit to what we can stretch.

What this reminds me of -- you know, when people ask me, well, what about -- you can't add a few more percent? It's like a parachutist who jumps out of an airplane, and the pilot tells him, "You don't have to open the chute; you're two miles up." Through the radio, he tells the parachutists. Well, when he gets a mile above the ground, he says -- the pilot tells him again, "You don't have to open the chute; you're one mile up." And when he gets to be 100 yards above the ground, the pilot still tells him, "You're 100 yards up; you don't have to open the chute." And finally, when he gets to be three yards above ground, he shouts to the pilot, "I have got to open the chute; I'm three yards from the ground!" And the pilot says, "what kind of paratrooper or you? You can't jump three meeters?"

That's what you're telling me. I have to open the chute somewhere or we crash. I have to know where the limits are, and there are limits. When you add and add and add, at a certain point security collapses. So we have -- we have a clear understanding of what our limits are. We know every water, we know every mountain, we know every valley, we know every road, we know every firing position, we know every defensive position. We know it intimately. While I myself have walked that terrain a thousand times in the night and in the day. The ministers who are dealing with us are some of the greatest military experts in the world and certainly the greatest military experts here in Israel.

The general staff and other people who advise us are very serious. This is not a number that is contrived politically, it's a number built from the ground up, but -- and we stretch ourself -- but we reach a limit and believe me, we know that limit.

MANN: Another question now.

QUESTION: Thank you. I am Costas Yanaz (ph) from Cypress television (ph). And so while all these efforts to achieve peace are taking place your country is promoting military, a strategic military alliance with Turkey which many countries in the region consider it to be rather it creates an uneasiness for them. What's the need for such an alliance if everybody is working for peace in the region?

NETANYAHU: First of all I can tell you that we very much respect Cyprus. We have very friendly relations with it, and we watch with admiration the growth of the Cypriotic economy and your successes. I think we're competing with each other who will succeed faster on these and perhaps other fronts.

And I want to congratulate you on the work you've been doing economically with tourism and with other things, and I'm very glad with our cooperation. That is an -- by way of an introduction to say to Cypress and to every other country in the Middle East with whom we have and want to complete friendly relations and peaceful relations, that the relationship we have with Turkey is not meant against any state. We believe it adds a measure of stability to what is a basically an inherently unstable region at this time, that is the Middle East. And we think that the associations of countries who want to see peace, who want to see peace and security prevail in the area is only a positive thing.

MANN: Please go ahead

QUESTION: Sime Vidan (ph) from Nal TV (ph) Egypt. Prime Minister Netanyahu, you came to power on a platform of rejecting the Oslo accords and the peace process. I don't want to quote any of the campaign slogans, but is that still your position today that was announced while you were running for elections, or have you found a change of heart and now think that the peace process is a good idea, and if so why?

NETANYAHU: Well I'm going to have to correct you because I wish you would find the campaign slogans and my own statements. I went to the Israeli voters and I said I am going to abide by Oslo. I'm going to keep the Oslo agreements. Of course I had many criticisms of the way the agreement was conducted or hatched out if you will, especially the neglect of it's planners to consult our military, and introduce those buttressing elements of security that a flaw that proved to be so tragic in the aftermath of the Oslo accords which produced these savage ways of terrorism which I've sought to, obviously to change, and I think we have in large measure.

I cannot tell you, by the way, that as we speak there won't be a terrorist attack, but I believe that since we introduced the idea of reciprocity, the idea that there is a tit for tat here, that there is an understanding on the Palestinian side that Israel will no longer accept such bouts of terrorism and just go on with the process and hand additional land that could be used for additional terrorist attacks.

So I think we've introduced an important concept, the concept of compliance, the concepts of security, these are very important foundations for, not only of our policy, but for a real peace.

I have said before the elections, and as soon as I was elected, and I said it to the cabinet, and I said it to the people, I said we are going to follow through on Oslo. Oslo says that we keep our side of the bargain providing the Palestinians keep their part. That's one thing that it says, but it also says another thing, it says that we will have a negotiation on permanent status, that is on a permanent peace between us and the Palestinians which I am eager to engage in, in order to find a solution, which I hope will be a creative solution.

It requires an enormous amount of effort by Mr. Arafat and myself, by our respective leaderships to try to hammer out a lasting peace between our two peoples. In a way I'm disappointed that we're wasting, or spending if you will, so much time on an interim settlement that consumes our energies and that does not allow people to see a broader vision of peace that I have.

So I'd like to get through subject to these conditions of compliance and security, I'd like to get through this interim phase in Washington or anywhere else, and move as rapidly as we can to a final settlement of peace which Oslo stipulates and which it leaves open to the parties to negotiate, and I'm eager to negotiate it.

MANN: We have one more question from the floor. Please go ahead.

QUESTION: Mr. Prime Minister, to follow up on that question, my name is Eason Jordan with CNN. I wanted to ask you first, sir, for your reaction to the call from Hillary Clinton for the creation of a Palestinian state and secondly, can you envision any scenario by which in 1999 that you would accept the creation of a Palestinian state and if not in 1999 could you ever envision a scenario -- a scenario that you could accept for the creation of a Palestinian state?

NETANYAHU: I can certainly envision a state of peace, and I think I know what a realistic peace can be here in the Middle East as it really is, and I believe that peace should enable the Palestinians, as I said, to govern their lives, but for us to have our lives protected.

I think that- that is incompatible with unbridled self determination And I think when you use the word state what comes to most peoples mind is that a state is uninhibited, it can field a large army, it can bring in missiles and tanks and


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