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Ladies and Gentlemen,

The Iranian sphere is possibly the most important one requiring action by the international community in order to isolate and defeat the extremists.

Iran is today the clearest threat to the existence of the State of Israel.

Iran is striving consistently to acquire nuclear weapons. Iran has been funding and supporting terrorist groups in the region, thus damaging stability not only in this region but throughout the world. More than any other actor, Iran is working to undermine the moderates of the region. Tehran has become the core problem and danger. Nor can I identify any softening in the extremist position of the Iranian theocracy, which rejects the existence of the State of Israel.

The international community is more aware than it has ever been regarding the potential threat from Iran. Nevertheless, this awareness has not been translated adequately into effective and coordinated action on the part of the international community. We must ensure that the nightmare scenario of a nuclear Iran does not become a reality. The international community must take resolute and concerted action against Iran's efforts to acquire nuclear weapons.

I am leading a diplomatic campaign to mobilize the necessary international support for this kind of action. As a result in part of our efforts, Europe now understands that a nuclear Iran poses a threat not only to Israel, but also to Europe. The missiles developed by Iran will also be able to strike European cities.

We must act with persistence and determination to increase the pressure on Iran, including through handing the issue over to the UN Security Council, in order to ensure that Teheran abandons its nuclear plans.

We are also maintaining the international pressure on Hizbullah. This organization - the long arm of the Iranian terrorist regime - has replaced Saddam Hussein as the main external element promoting and financing terrorist attacks against Israeli citizens.

Hizbullah's television channel Al-Manar, which is seeking to expand its broadcasts throughout the world, is responsible for vicious incitement against Israel and the Jewish people. Hizbullah has also been working with Palestinian terrorist organizations to prevent the emergence of a moderate Palestinian leadership that seeks peace.

During 2005, I will continue to work to ensure that Hizbullah is recognized worldwide as a terrorist organization, and that it is placed on all the terrorist lists - something we achieved with the Hamas organization. We are also taking action against the broadcasts of Al-Manar. Only recently, in the wake of our determined campaign there, a French court ruled that Al-Manar would be prohibited from broadcasting in France.

By maintaining a comprehensive campaign against the terrorist organizations and the states which sponsor them, the international community will send a message that the world is united in its struggle to isolate the extremists.

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Ladies and Gentlemen,

A time of change is often also a time of danger. The challenges facing Israel's foreign policy, against the backdrop of the changes occurring in the world and in the region, are not simple. It is up to us to make the most of this fluid situation.

If we will know how to navigate correctly, take advantage of the opportunities, read the map correctly and act in time, the present wave of change could carry us far.

However, if we just mark time and close our eyes, we risk falling and being dragged down into the depths, from where it may take us years to get back to where we wish to be.

Translating this into foreign policy terms, it is clear that we must take the initiative, adopt dynamic and active positions and avoid anachronisms. We must not rest on our laurels.

All of the formidable foreign policy challenges currently facing Israel - dialogue with the Palestinians, strengthening our relations with the Arab states, breaking the stalemate with the Syrians, halting the Iranian threat, boosting the strategic alliance with the United States and advancing our dialogue with Europe - all of these have one goal: to strengthen the moderates in the region and to put pressure on the extremists.

The turning point of Arafat's death gives us a great opportunity for 2005. We must not miss this opportunity.

We are standing on the threshold of a new era, an era of hope, which may lead us to the end of the conflict. I hope that the Palestinian Authority, the leaders of the Arab states and the international community understand the magnitude of the hour and rise to the occasion. We will act. And I call upon the international community to act as well, so that next year, from this podium, when we summarize the year that is past and look forward to the one ahead, we will be able to say that we identified the challenges and knew how to respond to them to bring peace and unity to our people and our region.

Thank you.