First of all, we are waiting in the very near future, a week from now, for a decision or a report by ElBaradei to the IAEA [International Atomic Energy Agency]. This report is very important because Iran is trying to solve certain issues with the IAEA and convince them that they are clean of any illegal nuclear activities, this would help them in the international community. We will see the outcome of this report. We are worried about it because we have some experience from the past with the IAEA, and its dealings with Iran and the issues of Iran. This year, the report is even more important than in the past, because of Iran's attempt to settle things with IAEA, and the report will immediately affect the Security Council's decision.

We have had, up until now, two Security Council resolutions - resolutions that could not by themselves bring about changes in Iran and in Iranian behavior. What was important in these resolutions was mainly the fact that we - meaning the US, Israel and other countries who are involved in fighting Iran and trying to stop Iran - we made the entire international community aware of the Iran issue, of the danger of Iran, and aware of the fact that the international community is working together with understanding and a commitment against Iran. We thought that this might have an effect by creating momentum against Iran - momentum of many different countries all over the world and this might change some of the views in Iran and the Iranians' self-confidence - and then try to continue with the effort and see the international community's behavior towards them.

We believe that the third Security Council resolution will be important. First of all we would like to get a real result from the resolution - meaning better sanctions against Iran. But we also see pressure by the international community through economic measures against Iran as the basis for later on. We believe that after we have a Security Council resolution it will be easier to bring European Union sanctions against Iran and maybe to bring other countries to support such an effort against Iran. When we try to analyze the situation in Europe, we see some countries leading the effort against Iran, some other countries that are very far from supporting the effort, and some of them even causing various difficulties for this effort.

When we try to analyze it, we see, first of all, France, which became a leader in the effort against Iran. They get support from Britain which was there the whole time, and we also see some support for that effort from Germany. We see some hesitation from other countries, like Italy and Austria, which are not making the same effort and are not willing to make the same sacrifices that we see France, Britain, and even Germany making now.

It is very important for us to convince those countries in Europe to make the effort and join the other countries in exerring economic pressure against Iran. In some cases it is difficult for us to convince countries to make this effort and sacrifice what they have to in their economic relations with Iran, if they see other countries picking up the slack of the businesses they left, and not joining the effort against Iran. So the standing of Europe this year is going to be very important, even crucial.

We will have to work very effectively with Russia, which is definitely a very important factor in the Security Council, but also in their relationship with Iran. We hoped in the past that Russia would be with us on the issue of the nuclear reactor at Bushehr, but we did not manage to convince Russia not to let Bushehr become active. They now present this as proof that Iran does not need any assistance to have nuclear infrastructure, because they have Bushehr and can have other plants like it, but this issue was important to us. This year we did not manage, unfortunately, to convince Russia, but the economic relations between Russia and Iran are very important.

The same goes for China. China is not supporting the effort against Iran the way we hoped they would. In certain cases in their economic relations in Iran, they are even moving in to replace other countries which are trying to halt activities with Iran. So we are making an effort with China on that issue, but we do not yet see it as being effective.

In 2008, all these efforts have to be even greater and achieve results, because we have two clocks competing against each other. The first one is of Iran building their nuclear activities. They have their timetable and are making the effort, and according to Israeli intelligence they are going to have nuclear weapons in a very short time. Whether it is in 2009 or at the end of 2008 is less important, but they are definitely going to have it within a very short period of time.

Competing with this clock is the clock of the international diplomatic and economic efforts, and if they continue at the same pace they have been, I am very worried about the results we will face two years from now. So the time to make a decision is today and it is now, and this is the year which will have to make the difference on that front.

We are telling our friends, all over the world, that this is not a matter of the United States against Iran, or of Israel against Iran. This is an issue for the international community as a whole; because if Iran succeeds in their efforts, the world we are going to live in will be a very different world. It is not the world that we are used to, but one in which the NPT [Non-Proliferation Treaty] regime falls and collapses.

Other countries will make an effort to obtain nuclear capabilities and nobody in the international community will have the power to tell them to stop it, because if Iran has it, other countries in the Middle East and in other places in the world will have the same desire for nuclear capabilities. When we will have a world with a nuclear Iran, and other countries with a very problematic record will also go nuclear, we are going to live in a very different world.

So maybe Iran is targeting its efforts against Israel, but other countries are going to have nuclear weapons, and their nuclear capabilities are going to confront other countries in the world. So they should be aware of that. If we fail, then this will be the failure of the Security Council and the international community to work in an organized way, to try to stop any country from their actions which go against the interests of the international community.

So this is a very crucial year and a very crucial period of time. We cannot fail in this effort. I know that you are great partners of Israel, supporting us in this effort. So I call upon you as I call upon ourselves, this year, and in this period of time, to go the extra mile, to make a bigger effort, because this is becoming a very crucial period.

When we speak about Iran, we have to remember that Iran is active in our region and see what is happening in Lebanon and in Gaza.

We had a war in Lebanon. After the Lebanon war we had United Nations Resolution 1701, and we have to analyze it after a period of time and see how well it worked. Did we achieve what we wanted to achieve or not?

When I try to analyze it and examine some of the elements of Resolution 1701 to see the result, there are some positive elements - and some people look at this part and see the bright side of Resolution 1701. First of all, for a long time we had wanted the Lebanese army to be deployed along the border between Israel and Lebanon. In this effort, we succeeded. The Lebanese army is deployed along the border between Israel and Lebanon, and we believe that they are doing fine work along the border.

We have UNIFIL deployed in a force of over 13,000 soldiers and from time to time close to 15,000 soldiers, and they are deployed along the border between Israel and Lebanon. They are doing their work, and this is a positive thing.

But we believe that these might be the only two positive elements of Resolution 1701. The other elements that we were hoping would change some of the dynamics in the northern part of Israel and on the border with Lebanon are not effective, although the border has long been quiet and this is a positive thing in itself. A year of quiet along the border between Israel and Lebanon is a long time. It is important for the people who live there. It is important for the opportunity to develop the area.

This is important on its own, but we have to look at it and learn from the experience that when you have a quiet period, something is happening there, and somebody is preparing themselves for a time that will not look as fine as it looks now. And the other elements that we see make us very worried about the situation.

First of all, Hizbullah has built itself back up to the force it was before the war; in some ways, it is even a greater force than it was before the war. They have more missiles, more weapons, and more artillery than they had before the war, and they are doing it for a specific reason, for a specific target - they are preparing themselves to attack us.

Secondly, the border between Syria and Lebanon, the border that, based on Resolution 1701, we were hoping would be sealed, namely a border across which ammunition and weapons are not smuggled - it is not working this way. The border is open for smuggling weapons and ammunition, and the entire build-up of Hizbullah during this period was through this border. And the fact that the kidnapped Israeli soldiers are still being held is something we continue to remember all the time. Resolution 1701 called for returning the Israeli soldiers, but we have not seen even a sign of their being alive. So these are the elements of Resolution 1701 which are not yet successful.

Therefore, when we analyze the situation and see what is positive and what is negative, it makes me very worried indeed about the situation in the northern part of Israel and in Lebanon. We have to make an extra effort in order to change some of the dynamics in Lebanon. We will have to think what the best way to do it is. Is it through building a coalition of the international community to change some of the elements there? Should we go back to the United Nations and look at the elements of Resolution 1701 that were not implemented, and maybe get some kind of consensus on changing them? Should it be through some kind of pressure against Syria, Hizbullah's partner, maybe using some of the outstanding issues between Syria and the international community to put pressure on Syria? We have to consider very carefully what we can do and not let the situation continue as it is now because, based on our experience, we know that if it does, this is the basis for repeated attacks against Israel.

And now, the next element related to Iranian activities in our region is the Israel-Gaza issue. First of all, we know the results of the situation in Gaza; every day and every week in Israel, we see the continuous Hamas attacks against targets in Israel, against civilians, against the citizens of Sderot, Ashkelon and the communities around Gaza. We know it and we suffer from it day after day, and this is something we cannot allow. But we have to remember that this is part of the picture we are seeing in Gaza. Gaza has become a strategic danger to everything we are trying to achieve in our region.

If we are trying to build some kind of understanding between us and the Palestinians, and some kind of hope for peace, Gaza stands between us and that goal. The fact that we are attacked from Gaza day after day is affecting our ability to negotiate with the Palestinians. It is affecting the situation in Israel - although we are continuing the negotiations - but it has an effect on the situation in Israel. But even more important, we will not be able in the future to implement any agreement between us and the Palestinians unless the issue of Gaza is solved. I am sure that Foreign Minister Tzipi Livni, who is going to speak after me, will speak about this in more detail.

When we went to Annapolis, Israel's conditions were that we will negotiate, but the negotiations will be subject to implementation of the Roadmap.

A very important element of the Roadmap is having security and quiet for Israel for a certain period of time. Of course, we cannot implement any agreement between us and the Palestinians if the situation in Gaza remains as it is now. So it is not only that we are suffering the attacks themselves, but they are not allowing us to achieve results and implement the results in the negotiations between us and the Palestinians. Moreover, the border between Gaza and Egypt being as it is now is continuing to build the Hamas into a greater force, but is also affecting our relations with Egypt.

So the situation in Gaza and the complexity of this station has many repercussions on what we are doing now. First of all, as I was saying, is the fact that we are being attacked and that the Israeli citizens are suffering from these attacks. Secondly, it affects our ability to achieve results in negotiations between us and the Palestinians. Thirdly, it affects our relationship with Egypt.

If we would like to achieve results with the Palestinians by the end of this year, we have to find a solution to the issue of Gaza. If we do not find a solution to the issue of Gaza, it will prevent us from achieving anything in the negotiations between us and the Palestinians.

These are some of the issues in our region, but I would like to touch upon another issue, on which I think that we will have to consult with you in the near future, and this is the issue of the relationship between Israel and the US. The question is whether this year, the 60th anniversary of Israel and the last year of the Bush administration, maybe together we can think of a way to do something different and make an effort to upgrade the relationship between the US and Israel

We are going to do that with the Europeans, and we have a plan. We have a group of people who are now working on a specific plan with the Europeans, hoping to reach a result by June 16th for a plan to be implemented starting then.

French President Sarkozy is going to come here, and will be a partner in discussing this issue. German Chancellor Merkel is going to come here within the next few weeks and discuss this issue with us. And we will do the same with any European leader who is willing, and we believe that such a plan will be effective in 2008. We have to think, along with the Jewish community, and others, too, and I think can we achieve something this year with the US.

Thank you very much.

Q: [Inaudible]

DG ABRAMOVICH: It is definitely going to complicate the situation. If in the future we have a situation like we had in Lebanon a year and a half ago, we are going to have the Lebanese army and UNIFIL, which will make the situation even more complicated. For Hizbullah it is very simple: they will launch rockets and attack Israeli civilians. How we will deal with a complicated situation when we have the Lebanese army and UNIFIL troops there, is going to be a very complicated issue and I will not try to deal with it, but it is definitely something we will have to deal with.

Q: How hard are the Europeans holding the line on the issue of Hamas in terms of relations with Hamas at present, and looking forward?

DG ABRAMOVICH: First of all, I do not see a real chance to negotiate with Hamas. Hamas does not even think in the same terms as us - a two state solution. They do not want two states, a Palestinian state for the Palestinians and Israel for the Jewish people. For them, we should be out of this region, so I do not see that we have any basis to negotiate with Hamas, and, by the way, they do not want to speak to us in any real discussion.

I can say that, so far, the situation with the Europeans is that they are not negotiating with Hamas and do not accept Hamas' rule over Gaza. I think that our efforts with the European Community have been successful in this regard.

Thank you very much.