REMARKS BY AMBASSADOR SHOVAL AT THE NATIONAL PRESS CLUB
                   Washington, D.C. - January 24, 1991


AMBASSADOR SHOVAL: Thank you very much.  After these introductions I 
always feel as if I could run for office in the United States -- which 
is not my intention, however.

For obvious reasons, I did not prepare any sort of speech or message 
because things are changing so rapidly it doesn't really make much 
sense.  So I will confine myself to some introductory remarks, comments, 
and then we may go to the questions and answers; hopefully I'll have the 
answers as well.

Last night, fortunately, fortunately, the people of Israel had a quiet 
night, if you can describe as quiet a night where people are still 
sleeping in sealed rooms and probably being awakened by every little 
noise -- children and old people -- fearing that there may be a repeat 
of the terror attacks.  And they were terror attacks, just as President 
Bush described them yesterday, which we had in the previous nights.

That we did have a quiet night yesterday does not mean, of course, that 
we will necessarily have further quiet nights as time passes.  Our 
people in Israel have been warned, warned by the Minister of Defense and 
by the Army spokesman, that further attacks should be expected and 
chemical attacks cannot be ruled out. That's the reason why people are 
staying overnight in those sealed rooms and not in air raid shelters 
which might have given them better protection against explosives.  But 
the chemical menace of course is more worrying, and as I said it is very 
much still there although there is no complete certainty, of course. The 
whole nature of these attacks reminds me of the V-1, V-2 attacks of 
Hitler in the last few weeks, or last few months of the second World 
War, more actually of V-2 than V-1, which did not serve any military or 
strategic target and they were, as those Scud missiles at the present 
time are, purely for psychological terrorist reasons.

The people of Israel are standing up well, as well as can be expected, 
perhaps even better.  There's a certain feeling, underlying feeling of 
similarity to what the British underwent in London during the Second 
World War.  The people of Israel are not going to be subdued or 
frightened.  And the country is slowly getting back to normal.  Schools 
in most areas of the country except the central area -- the central Tel 
Aviv area have been open for a number of days.  The Tel Aviv schools 
were supposed to have been opened yesterday; they were not opened 
yesterday.  I hope they will be open today -- well, today is actually 
already passed, so I don't know if they were open today or not.

Most businesses have been reopened including [in] the Tel Aviv area, and 
the Tel Aviv Stock Exchange has begun functioning again.  The banks 
work, export-import services work, air transportation -- the internal 
air transportation in Israel is fully functioning, international flights 
-- you know many of the international carriers have stopped their 
flights to Israel, not all of them, but El Al is emulating the 
Washington-New York shuttle.  They are shuttling back and forth between 
Ben Gurion Airport and American and European airports bringing in 
thousands of people including thousands of emigrants from the Soviet 
Union who are still coming in large numbers in spite of what's going on 
in the area.

The Patriot missiles have been very effective.  In the last missile 
attack, as you know, the Scud was shot down and dropped into the sea in 
the vicinity of Haifa.  In the previous night, unfortunately, it had not 
been as successful as that but as you have probably learned in the 
meantime the Scud -- the Patriot anti-missile missile did hit the Scud 
but probably only in the tail section and therefore the part containing 
the explosives did drop on a residential area, on an apartment house, 
and did create the damage which it did, including one death -- one 
casualty which can be attributed directly to the terror bombing, a woman 
who was caught under the rubble, and two elderly people who died of 
heart failure as a result of that, and 98 injured, some of them 
seriously, including a little girl, a baby; others less seriously 
fortunately, and very, very considerable material damage.

However, we are encouraged by the functioning of the Patriots.  And we 
are very thankful to the United States for having provided them, and 
even providing them temporarily with American teams to operate these 
Patriot missiles.  I don't know how many days or weeks the American 
teams will be there.  It won't be for a long time.  As a matter of fact, 
the successful Patriot launching the day before yesterday -- or 
yesterday actually was done by a mixed Israeli-American team, and these 
Patriots are installed on Israeli manufactured platforms or trailers. 
And I think it won't be a very long time before the operation will be 
fully in the hands of Israeli forces.

I don't want to get involved in the overall appreciation of what's 
happening in the Gulf.  We are not part of the coalition.  We are not by 
our own will part of this war.  We were made part of this war ipso facto 
by having been bombed by the Iraqis.  But we are certainly not a party 
to any operational planning or intelligence and so on and so forth with 
regard to the operations themselves in the Gulf area.

There may be different evaluations of what's going on there.  We do 
believe American, British, allied forces and so on, especially air 
forces are effective, but this does not necessarily mean that this is 
going to be a short war or a very short war.  As a matter of fact we 
believe that Saddam Hussein believes that he may not have done too badly 
in the first round of the war if you understand -- I think I see an old 
friend from the Camp David days -- hello, my friend from Egypt, how are 
you?

After all, what he's trying to do is to sit it out without incurring too 
many losses to his army, to his air force, and so on, and to create a 
political atmosphere which may be beneficial to him.  Now I don't know 
about the political atmosphere and I think he's certainly mistaken with 
regard to the atmosphere in the Arab world.

I haven't seen any large-scale demonstrations in the Arab world, in Arab 
countries in support of Saddam Hussein.  Certainly there hasn't been any 
upsurge of the sort which he may have expected, except, perhaps, for 
Jordan and in Jordan they have, of course, very specific political 
reasons for that. But on the other hand, you know, like it be in the 
beginning of the Second World War, there was talk of a German blitzkrieg 
and then later on, they used to speak about a sitskrieg, which means a 
war just sitting it out at the very beginning of the war.  That changed, 
of course, later on.  I believe the war will end the way the allies 
intended it to end and a lot will depend on that.  But it is too early 
to assess what the realities, what the perception, what the atmosphere 
in Iraq, itself, is.

By the way, there have been about 20 terrorist acts in the last week or 
so in different parts of the world made by terrorist organizations which 
were -- which are directed from Baghdad.  Twenty -- I should correct 
myself, twenty operations or attempts at terrorist acts, fortunately, 
not very successful.  There has been the one in Turkey and others.  But 
I think it must be very clear that just as we are just in the first week 
of the war on the ground, we have not seen the end of terrorist 
activity, either.

I think -- and I will conclude with that remark, a lot of thought will 
have to be given to what's going to evolve in the area after this war is 
over.  And I do believe that there are people -- I hope anyway -- right 
here in Washington who do give some thought, hopefully, a lot of 
thought, to what the nature of the area should be once the war is over.  
Because we should never agree -- the world should never agree just to go 
back to the status quo ante.  I believe there is a chance that this war, 
with all the hardships it will have, that this war will bring with it a 
new chance for new realities in the Middle East, for peace in the Middle 
East, perhaps for increasing stability in the Middle East, but all of 
this will of course depend very largely on the result of this war.

If Saddam Hussein will be perceived to have had the upper hand in this 
confrontation, in this war -- and perception in our part of the world 
does not necessarily have to conform with reality -- but if the 
perception will be even by sitting it out, that he has been victorious, 
large parts of the Arab world, of Islam, may see in him the leader who 
has successfully stood up to the United States of America, to that 
coalition, and then of course, the Arab world and the Muslim world will 
be less inclined to come to any sort of accommodation, accords or 
compromise with the West.  Keeping in mind that there are even at this 
time many seeds, many ingredients of confrontation between the Muslim 
Arab world and the West about things which may have nothing to do at all 
for instance with the Israeli-Palestinian question -- there are North 
African problems, there are economic problems, there are historical 
problems.

But if, on the other hand, Saddam Hussein, is defeated, clearly and 
completely defeated, I believe the Arab world will say that leaders like 
Mubarak were right all along, that the future of the Middle East and the 
future of the Arab world and the future of Islam must lie in the realm 
of coexistence, of cooperation, of compromise, and not of ongoing 
confrontation and radicalization.  So really, a very great deal depends 
on the outcome of this war, I would say, for the future of the Middle 
East and for the future of the world.  Thank you.

Q: (Off mike.) And a follow-up on that, could you -- (inaudible) -- for 
us why, right now, it's in Israel's best interest not to retaliate?

AMB. SHOVAL: Well, we are -- we are being complimented and being told so 
much to restrain ourselves, that I am sometimes afraid we'll strain 
ourselves by just restraining ourselves.  Look, any policy adopted by a 
rational state, by a rational government, must view all the different 
components of security and not just look at one aspect or another 
aspect.  Israel's security has always been and will probably for a long 
time depend on its own ability to defend itself.

That's a very important point.  We live in a neighborhood which, except 
for Egypt, has not yet accepted our existence, our right to exist.  And 
there are still many, many forces in that area who believe that Israel 
can be eliminated, can be annihilated, can be thrown into the sea or 
that it is a temporary apparition in the area, like some modern-day, 
modern-age crusadist country. That's, by the way, why there was this 
outcry against immigration, because there were people, especially among 
the PLO who said, "Here the population of Israel is not growing very 
fast and so on and so forth; another 10 years, 20 years, 30 years this 
state may just wither away." And all of a sudden they got the shocks of 
their lives when they see hundreds of thousands or perhaps millions of 
Jewish people coming home to Israel.

Now, as long as this situation continues, where some Arab countries will 
still be tempted to attack Israel because they believe Israel can be 
defeated in war, we must be very insistent on our own ability to deter 
potential aggression. The Americans won't be there forever.  We will.  
And our neighbors will.  And if there should be a perception, a false 
perception, an erroneous perception on the part of some of our neighbors 
that Israel is not winning or able to defend itself, we shall invite 
aggression or potential aggression in the future.  And that's a very 
important aspect.

But after having said that, and perhaps I should also add, let's not 
forget low-profile or not low-profile, Israel does have the strongest 
military capability in the area, and the strongest air force, and so on 
and so forth, which we are not eager to use if we can refrain from that.  
But we may have to use it.

But as I said, our close relations with the United States of America are 
also a strategic component of the defense of Israel.  And if America 
thinks that with Israel continuing to be on the sidelines the overall 
objective of this war may be better served, Israel is certainly going to 
give this continuous, sympathetic, positive attention; up to a point, up 
to a point. And if we speak about response it is not retaliation, it is 
not retribution, it is not an "eye for an eye," although that principle 
originated in our culture, it is the question of what means to take and 
when to take them in order to best serve the defense of the State of 
Israel.

Q: (Off mike) -- exact location of Hussein's Scud missile hits be used 
to any strategic advantage by him?

AMB. SHOVAL: Well, I know there is a big argument going on in America 
between freedom of the press and national security and so on, and I 
don't want to get involved in that.  But I will say the following, that 
this is a very strange war, it's a surrealistic war.  I mean I sit at my 
desk in the embassy and see a missile fall -- dropping down on Tel Aviv 
and I pick up the phone and ask my daughter how she is doing.  And this 
is something which we have never experienced before -- I mean the world.

In the Second World War it took two or three months for a letter from a 
soldier to get back to his parents or family.  This is a war and this is 
bloodshed in real time.  And this is viewed all over the world.  And I 
do think that there is a danger that people on the other side, when they 
see on television where a bomb or where a missile is dropping and if 
they get the exact location, this could be dangerous and helpful to the 
-- dangerous to us or to the Americans wherever, and helpful to the 
enemy.

So I think television must be responsible enough, and I believe it is, 
to restrain itself from being over active in that.

Q: (Off mike) -- peace in the Middle East after the war.  What are you 
offering to the Syrians, to the Jordanians, to the Palestinians -- and 
the creation of the Palestinian state.  What is your imagination for 
peace after this war?

AMB. SHOVAL: Well, you know, I could have replied to the question of my 
friend here very briefly and said, what are you offering for peace?  I 
would have said we offer peace, which is of course the main purpose.  
It's not some sort of commercial transaction where you give a piece of 
land and get a piece of peace or anything like that, but I will address 
myself to your question seriously. One thing which has been proven 
beyond any doubt is that the Israeli-Palestinian problem is not the main 
reason -- certainly, not the single reason -- for instability in the 
Middle East.  I mean, nobody, including the Iraqis, hopefully including 
Palestinians, I don't know, don't believe that Saddam Hussein went into 
Kuwait in order to help the Palestinians.

And, I don't remember who it was, which Arab leader which said "If that 
had been his intention, he would have launched his missiles at Israel 
before going into Kuwait." I mean, there's absolutely no relationship 
between the two things. People are not so naive.  And the first 
condition which has to be met is that the Arab world, just like Egypt in 
1977 and then '78, should understand that they will have to stop seeing 
in Israel an illegitimate state in the area and will have to come and 
sit down and talk about peace with us.

And a lot can be achieved in direct negotiations, which, again, Egypt 
can remind us of, with the help of the United States.  We still think 
the United States must play a role in that -- can play a role in that.  
Jordan and Syria and Saudi Arabia -- I don't mention Lebanon, 
unfortunately -- even Iraq, if they were a different Iraq.  What 
conflict is there between Iraq and Israel?  What territorial problems 
are there between Iraq and Israel?  During that famous press conference 
of Aziz in Geneva, he was asked by one of the journalists and he said 
"There's no conflict between Iraq and Israel." And then he went on that 
-- to say that Iraq would send missiles to Israel.

We have an approach which let's address this problem in stages.  First 
of all, the Arab countries which are still at war with Israel, which is 
all of them except for Egypt, should declare a cessation of hostilities, 
a cessation of the state of belligerency with Israel.  At the same time, 
we hope that the free world led by the United States, perhaps other 
countries, will initiate talks of regional cooperation between the 
countries of the Middle East.  Can you imagine how the Middle East would 
like if we could combine the natural resources of that area with the 
human resources and technological resources and the intellectual 
resources of the state of Israel?  This could really become, again, the 
Garden of Eden.  The Middle East, positioned as it is between Asia and 
Europe and the Third World and Africa, this could be the hub of 
progress, and not the generator of conflicts and wars that it has been 
for so many years.

The third stage would be to address the problem of armaments of the 
area. Israel believes that we must soon begin to tackle the question of 
armaments; arms control, arms limitation in the area.

The next point is that at the same time, but not earlier, we should make 
another effort to sit down with the Palestinians, to get elected 
representatives of the Palestinians and their territories, sit down with 
us and see whether we can reach some sort of modus vivendi, which we 
have not been successful in the past. For the past 70 years or so, there 
have been proposals, propositions of compromise to the Palestinian 
population -- to the Arab population of Palestine. They didn't call 
themselves Palestinians then.  That's a recent invention.  But, anyway, 
we did this at the end of the first World War and the late Chaim 
Weizmann sat down with the great uncle of the present King Hussein of 
Jordan and had an agreement which didn't work.  And then again in 1936, 
and then again 1947, and as a matter of fact in the Camp David talks.

If those conclusions which were worked out between President Sadat, 
Prime Minister Begin, President Carter -- if the Palestinians had given 
it a try, and hadn't listened to their own extremist leadership, which 
had told them and are still telling them, you'll get everything, you 
don't have to compromise, they would have achieved a lot by now. And 
then again, in May 1989, the Israeli government made an initiative which 
came to naught for different reasons -- I am not evading the issue -- 
for different reasons, also internal Israeli political reasons.  But 
mainly because it was the PLO -- the PLO in Tunis, who told the 
Palestinians in the territories "Hold out, don't give in to demands of 
compromise."

I believe that after this war is over in the Gulf, and if it ends the 
way it should end, more and more Palestinians will finally come around 
to the belief, to the understanding, that peace between Israel and the 
Palestinians can only be achieved by Israel and the Palestinians.  Not 
by Saddam Hussein and not by somebody else.  With the help perhaps of 
the United States.  That is without any doubt very much uppermost in our 
minds.  But let me add just one further reflection.

If Israel had been foolish enough to give up the territories, which it 
occupied in 1967 as a result of an aggressive war against Israel, had we 
not been able to defend ourselves in 1967, we would have been Kuwait.  
Had we not held onto these territories, we would have had Iraq by proxy, 
not just in the Persian Gulf, but in the eastern Mediterranean.  Because 
we would have had a Palestinian state or even a Jordanian-Palestinian 
entity, and we see the present political position of Jordan, we would 
have had that, not only seven minutes from Tel Aviv, and one and a half 
minutes from Ben Gurion Airport, and 12 minutes or 16 minutes from 
Haifa, we would have had it in the eastern Mediterranean, with all the 
dangers involved in that.

Therefore, I'm just mentioning this.  Whatever solution there will be, 
whatever reality there will be after this war is over, Israel must still 
be concerned with its security.  And its security will still depend on 
the inability of potential aggressors to attack it, or to win a war with 
it, not just to attack it.  This will be uppermost in Israel's mind.  
But if we have achieved -- if we will have achieved by then peace 
between Israel and as many Arab countries in the area as possible, we 
may be more -- well, we may be less concerned about some of our security 
worries which we have at the present time.  It is not our intention to 
rule over hundreds of thousands of Palestinians, and make them part of 
the state of Israel against their will.  But we do not want them to 
determine our future and our security.

And I believe that the principle adopted in Camp David to find, to 
arrive at an interim period, a transitional period of so and so many 
years, where we will test each others' intentions -- I think confidence 
building measures is one of the terms used these days -- that principle 
is still very correct.  Five years along the road, ten years along the 
road, there may be other arrangements.

Q: Well, I can't, because I'm right in front of cameras.  My name is 
David Snapp (sp) with Cox Broadcasting.  Mr. Ambassador, you described 
that Israel would refrain, in your words, "up to a point." Could you 
describe the limits of Israel's patience, and how it may respond if it's 
pushed too far?

AMB. SHOVAL: Actually, I cannot.  But what I'm saying -- what I will say 
is the following.  The Israeli government's decision will not be a 
result of popular pressure or anything of that sort.  By the way, the 
Israeli population, for the time being, supports restraint, as you may 
have seen in public opinion polls.

When the point arrives, or if the point arrives where there will be a 
change in attitude on behalf of the Israeli government, I cannot say.  
But I would, perhaps, term it in the following way.  When the government 
-- based on the appreciation of the Israeli armed forces, among other 
things -- will decide that the advantages of striking at the enemy 
outweigh the disadvantages, political or otherwise, that is when the 
decision will be made.

Q: (Off mike) -- issue, is Israel prepared to become involved in this 
itself? Are you prepared to draw down your arsenals?

AMB. SHOVAL: Not only are we prepared, but we are prepared -- (audio 
break).  I don't want to go into specifics to draw down our arsenal, 
because we are -- the Israeli arsenal, whatever it is, faces the 
combined arsenals of the complete -- of the whole Arab world.  But a 
formula should be reached, and must be reached.  I mean, Iraq spent 
something like $200 billion on a war against Iran. I don't know how much 
they're spending these days.  Can you just imagine how the Middle East 
would look, how Israel would look, if it had to spend less money on 
arms?

By the way, for the first time in our history, this year -- this year of 
all years -- we have reduced our defense budget, originally, and 
increased our immigrants absorption budget.

Q: (Name and affiliation inaudible.) Does the Bush administration seem 
amenable to (the request for ?) -- $13 billion in additional aid?  And -
- (inaudible)? AMB. SHOVAL: I'm glad that you asked the question.  I've 
had the answer all the time, and I was waiting for the question.  Israel 
did not request $13 billion -- this is a canard.

While Secretary Eagleburger was -- and still is in Israel, by the way -- 
it was agreed that he will look at different aspects of what Israel may 
need in the field of armaments, in the field of defense.  And he also 
was given a review, an overlook of Israel's economic problems.  And he 
had a meeting with our Minister of Finance, Modai.  And at that meeting, 
Israel's economic situation was outlined.

And among other things, it was explained that as a direct or indirect 
result of the war, of the present crisis in the Gulf, Israel has already 
suffered financial losses, financial damage amounting to about 3.2 -- 
$3.2 billion because of tourism, which already, of course, has been 
eliminated now almost -- almost -- for quite a number of months; for 
defense necessities, civil defense; higher price of energy; loss of 
product -- if that's the right term.

Transportation increased, once it costs, and so on, and so forth.  And 
the fact that for the last few months, for instance, our airplanes have 
been continually, around the clock, in the air.  This does not yet 
include the cost of the damage which we have suffered in the last few 
days as a result of the bombing, as a result of the missiles.

We do believe, by the way, that just as countries -- other countries in 
the area, like Jordan, have been compensated by the international 
community because they accepted refugees from Iraq and other reasons, 
Israel has a right to be compensated by the international community, by 
the coalition or by others, ultimately, hopefully, through reparations 
which will be paid by Iraq to those countries which suffered from Iraq's 
aggression.  But the amount mentioned was 3.2 billion [dollars] and it 
was not a request, it was not a demand, it is not part of those things 
which were raised by Prime Minister Shamir via Eagleburger in the 
direction of the American administration.

Now why was there a confusion about the figures?  I think it is a well-
known fact that we are tackling, under very difficult conditions, the 
matter of absorbing Soviet immigrants -- Jewish immigrants from the 
Soviet Union.  The Bank of Israel calculates that the absorption of the 
immigrants in job-creating and housing, in teaching, in all sorts of 
things, will cost the state of Israel something like -- well, upwards of 
$30 billion over the next five years, if we talk about 1 million 
immigrants and there may be more.

By the way, for Israel absorbing 1 million immigrants within three or 
five years, it's like America absorbing the whole population of France 
within the span of one to three years.  So the financial problems are 
immense.  And this happens at a time when the world is in a recession.  
We realize the difficulties. There is going to be a great deal of help 
from the part of the Jewish community.  Of course, most of the funds 
which will be required come from the Israeli budget itself.  We have 
taken off all food subsidies, we have taken off all public 
transportation subsidies, and so on.  As I said before, we have reduced 
even our defense budget.  


But we will need help in accomplishing this historical challenge of 
getting the Jewish people out of the Soviet Union in a period when the 
dangers in the Soviet Union seem to be increasing.  But this is a 
separate issue.  We have talked about that with friends in this country.  
We do not want any direct financial aid from the United States about 
that.  We may talk about other devices where the American government and 
Congress can be helpful, but we are not going to ask for direct loans or 
anything, or grants in connection with that matter of the immigrants.

These are two separate issues altogether, and I want to stress once 
again.  We have not requested anything.  We have explained what our 
needs are.

Q: Ambassador, I'm -- David Schuster (ph.) from CNN.  In the event that 
Israel should decide that the advantages of responding to Iraqi 
terrorism outweigh the disadvantages, are you fully confident that there 
will be a complete cooperation between the United States military and 
the IDF?

MB. SHOVAL: Well, this, as you know, was one of the problems which have 
been bothering us, and perhaps the Americans, too.  I would say, 
however, that there has been an improvement in coordination between the 
two countries, and I believe that if Israel will decide to do something, 
whatever it will, this should not be an impediment.

Q: (Name and affiliation inaudible.) I'd like to back to the 2.2 billion 
[dollars] you mentioned in the losses from tourism and all the other 
things. Are you actually asking for aid from the United States for those 
losses, or are you looking for -- are you going to be looking to other 
sources to get that aid, such as, let's say, the International Monetary 
Fund, the World Bank, or -- AMB. SHOVAL: As I just said, we explained to 
Secretary Eagleburger what our needs are and what our damages -- what 
the economic damage was.  We did not go specifically into any requests.

Q: (Inaudible.)

AMB. SHOVAL: I couldn't say.  I don't know.  I don't know.

Q: Mark Times (ph.) from Voice of America.  Ambassador, we have not 
heard, amid all the other war news, very much news out of the 
territories.  The last I heard there was a curfew imposed.  I don't know 
if that is still in effect.  But I wonder if you think that the -- the 
intifada we have not heard much of either, of late.  I wondered if that 
is likely not to backfire and create a greater Palestinian problem at 
the end of this war?

AMB. SHOVAL: Well, the territories have been under curfew since the 
beginning of the actual military operations as a security measure -- I 
think an understandable security measure.  Not everyone in this country 
-- I'm not speaking about you, now, the newspapermen -- realize how 
small the territory or the territories really are, the ones we are 
talking about.  I mean, Israel and Judea and Samaria and Gaza, all this 
is probably altogether -- oh, I don't know -- like the State of New 
Jersey or less, something like that.  The distances are so very small.

Now, we had, of course, to undertake certain measures that if there was 
to be any activity -- terrorist activity, or demonstrations or violence 
in the territories, first of all, that that shouldn't occur and that it 
shouldn't overflow into Israel.  So we had -- we have a curfew which may 
be taken off soon, selectively, because there are also economic problems 
involved.  Many of the Arabs -- Palestinian Arabs in the territories -- 
work in Israel.  More than 100,000 work in Israel, and the curfew 
creates a certain situation, primarily to them, but in a certain field 
also to Israel, although that's not so terrible right now because we 
have people coming in and taking up these jobs.

Now, the intifada isn't over, although intifada has failed to bring any 
sort of advantage or any sort of progress to the Palestinian Arabs.  
Politically, perhaps, it has certainly brought part of the situation 
into the living rooms
of people all over the world, and this isn't a political aspect which 
I'm not disregarding.  But in actual terms, in real terms, it has 
brought very little benefit, if at all, and the economic situation in 
the territories as a result -- I mean even before this war -- was 
deteriorating seriously.

The Jordanian currency which most of those people still save has 
deteriorated by more than 50 percent, and so on and so forth. Their 
economic situation is very bad.  And we are sorry about that.  I wish it 
would be better.  I wish they would pay more attention to what their 
real needs are and not to violence. But to answer the last part of your 
question, no I don't think so.  I don't think that at the end of this 
war in the Gulf, the Palestinians and the territories must necessarily 
be more violent, and so on, and so forth.  I don't. I hope not, because 
there must come a day when those people who are just as realistic and 
just as wise, like anybody else, must understand that this leads them to 
nothing.  And if their misplaced alliance -- I mean, Arafat's alliance -
- with Saddam Hussein will turn out to be the biggest mistake he ever 
made.

And you know that Abba Eban once said that "Unfortunately the 
Palestinians never miss an opportunity to miss an opportunity." That's 
exactly what's -- what has happened again now.  But if Saddam Hussein is 
defeated in this war, hopefully, the Palestinians will finally get 
around to understand this is not the way.  And let us hope there will be 
more understanding and more compromising and more rationale about it.  
Moshe Dayan once said, "Let them come and talk to us, and they will be 
amazed how generous Israel can be." Let them come and sit down and talk 
with us without prior conditions.

Q: (Name inaudible) -- from CBS News.  Let me ask you to comment on a 
couple of the points you made and go over some remarks.  One is of the 
need you say not to return to the pre-war status quo.  Presumably, that 
requires -- (inaudible) -- but can you see a certain end in which Israel 
would accept the basic idea that some sort of international conference -
- (inaudible) -- and also, elaborate if you would on the remarks you 
made about perhaps Saddam Hussein, by being in this position, that he 
might not be terribly concerned about the conflict -- (inaudible) --

AMB. SHOVAL: I don't want to compete with your profession.  I don't want 
to be a commentator about what Saddam Hussein will or will not do, or 
whether this will be a longer war or a shorter war.  All I'm saying is 
that there may be a possibility not to -- what's the word you used -- 
husband or harbor his resources for a later part of the war -- he may 
just be assuming, wrongly I think, that by sitting it out one day there 
may be international pressure for negotiations, and if there are 
negotiations, he has already won the struggle in the perception 
certainly of many minds.  And this will leave him with a large part of 
his military capacity, both conventional and unconventional, and he 
could then threaten the world again a few years from now.  I mean, there 
were many people after the Iranian-Iraqi war was finished who believed 
that now he will demobilize his army and he will turn his attention to 
what has to be done in Iraq itself and building up the economy, and look 
how wrong they were.  He kept his army intact.  He just waited for the 
right moment or what he thought was the right moment.

Now, about the status quo.  What I meant is that after this war is over, 
we will still have the same sort of situation where there's an Arab 
world which does not accept Israel and has no peace agreement with 
Israel, and maybe some Arab countries because they had been part of the 
coalition will get very large-scale arms supplies against a potential 
aggressor, but perhaps turned against Israel at some time in the future.  
And there won't be a settlement of the real problems -- I don't know if 
you are aware of that.  The Middle East has severe water problems -- 
very severe water problems.  As somebody in this city wrote a month ago, 
the next war may be fought about water, not about oil.  I think it was 
Joyce Starr.  The water resources and water problems of Israel and the 
West Bank and Gaza are closely interrelated.  The water problems of 
Syria and Turkey and Iraq are closely interrelated.  And so on and so 
forth.  There has to be cooperation between these countries, on this, on 
the ecology, on energy. There has to be and there can be.  And we should 
not go back to a situation where there are two camps -- that's Israel; 
there are some of the aggressive Arab states, some of the more peaceful 
Arab states.  We should look at it in a new way.

Now, we never thought the international conference was a good idea, and 
we would not have participated in an international conference.  Why?  
Well, if there were an international conference in the image of the 
Security Council of the United Nations, for instance, plus the Arab 
states, we would never have a chance to get a fair deal -- never.  Just 
look at what happened not so long ago at the Security Council.  
Certainly, there's no sense in the new situation now even thinking about 
the possibility of an international conference where we would have the 
PLO, according to the ideas of some, or Iraq.  What Israel wants is to 
sit down with the Arab countries with the help of the United States.  
There were some ideas by some people that the Soviet Union could play a 
part in that, but who knows?  Who knows where the Soviet Union is going 
these days?  And to solve the problems between Israel and its neighbors 
on a one-on-one basis, we still think that's the best idea because if 
people are not even willing to sit down at the same table and negotiate, 
what chance is there for peace?

Q: (Name inaudible), Press Club.  Would Israel be willing to attend an 
international conference if it was understood it was a prelude --

AMB. SHOVAL: -- what?

Q: A prelude.

AMB. SHOVAL: A prelude.

Q: Some sort of bilateral peace talks -- with other Arab nations -- with 
Arab nations --

AMB. SHOVAL: Well, we have heard ideas of that sort, and we certainly -- 
I certainly wouldn't want the prelude to become an interlude.  We would 
like any sort of arrangement to be really helpful in advancing the cause 
of peace.  If an idea of that -- like that came up, would come up, I'm 
sure the Israeli government would consider it.  But so far, there has 
not been any suggestion in that direction.

Q: (Name inaudible.) Doesn't it bother you that the Israeli army failed, 
in a way, for the first time, to defend its population?  Did it -- why 
didn't it have (more?) Patriot missiles? Did it underestimate the Scuds, 
or didn't know the ability of the Patriot?

AMB. SHOVAL: Well, it didn't have -- it didn't have the Patriot missiles 
because it didn't get the Patriot missiles.  So, why -- I don't want to 
go into that, certainly not before the war is over.  But we didn't have 
any.  And we are now getting.  We have got a few days ago some Patriots.  
We are getting some more these days, and we are very happy that they are 
helpful.

The Israeli army has not failed in defending Israel.  The Israeli army 
and the Israeli government knew that there was very little protection 
against Scud missiles.  We also knew that militarily, they were not very 
important, as they have turned out to be -- not very important 
militarily, if at all.  But if Israel will decide that the time has come 
to act actively in defending its population, it will do so.  And I am 
sure they are -- that whatever the Israeli army will do will be very 
effective, and will be remembered.

Q: (Name inaudible), Focus Israel Newsletter.  (Inaudible) -- given 
prior Iraqi military cooperation with Jordan -- (inaudible) -- is there 
any indication that Scuds are being launched from Jordanian territory?

AMB. SHOVAL: No.  There is no indication at all.  I'll answer that the 
Scuds are being launched at H-2 and H-3 in western Iraq.

Q: (Inaudible) -- is there any indication that Scuds are overflying 
Syrian airspace?

AMB. SHOVAL: Well, they certainly didn't reach Israel underground -- 
they had to overfly some sort of airspace.  I don't know about Syria; I 
would assume that they overflew Jordanian territory, which makes it a 
bit surprising that the Jordanian government differentiates between 
Iraqi missiles fired to Tel Aviv and whatever Israel may or may not do, 
and may have to do over the territory of Jordan.  I mean, there can't be 
a selective neutrality and impartiality with regard to that question.

AMB. SHOVAL: Thank you very much.  See you after the war.  (Applause.)

Q: Thank you very much.

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