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.

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

Thank you very much.