AMBASSADOR SHOVAL: Good morning, ladies and gentlemen. I see we have Harry Truman's piano here, so if we run out of questions and answers we can always play some music. (Laughter.)

I would say that these last two days have been rather good to Israel and good for Israel-American relations. First, as we always assumed it would, the truth came out about the Patriot missile affair, clearing Israel all together from any wrongdoing in this matter. As we have said from the very first moment on, that this was a tissue of lies, and we are glad that the truth was definitely established.

And, of course, it isn't the matter of whether we shall or shall not receive an apology. That's not important. And I think Margaret Tutwiler correctly stated yesterday it's both America and Israel which are entitled to an apology by person or persons who leaked that false piece of information because damage has been done both to Israel and to the United States as an ally of Israel. And although this is not something which concerns us directly or officially, I hope that the authorities in this country will look to the sources and the reasons of that leak. But, as I said, we are very glad that the truth was established.

The other thing for which I think we have good reason to be happy about is the sense of the Senate, which was established the day before yesterday, by a 99 to 1 vote in the Senate for a resolution supporting immigrants' absorption guarantees. I think this was an expression of basic American decency. It was an expression of the basic commitment and support of the American people for the destiny of Israel, for the mission of Israel in absorbing Jewish refugees who are looking for a safe haven. And I would say, to quote Senator Kasten, it was the real America speaking out.

And the third item in my introductory remarks is we were very happy, we were very glad, to hear that in principle, there's now agreement on the next and the one after the next rounds of talks in the peace process between us and the different Arab delegations. As you know, it has in principle been agreed that there will be one further round here in Washington on the 27th of April and that the subsequent round will take place in a venue nearer to the region.

As you know, Israel has, on the suggestion of the United States, of the Secretary, submitted quite some time ago a list of ten possible venues from Israel's point of view. The Arab sides, according to the information we heard, has finally submitted its own list or lists, and as Margaret Tutwiler I think said yesterday, there is some commonality between these different lists. So, I hope a place will be agreed upon.

There's only one thing we are somewhat sorry about. The Arab delegations seem to want to postpone not the next round, but the round after that till after the Israeli elections. And we believe that no time should be lost. There's no reason why, between the next round and the Israeli elections, which take place on the 23rd of June, we should not have another round. I mean, peace is peace, and elections are elections. And this Israeli government, and I have no doubt any other Israeli government, does not want political reasons, internal political reasons, to create a delay in the peace process. Anyway, Israel is determined not to let the Arab side or anybody else stall the peace process which is so vitally important to all of us.

Thank you. These are my opening remarks.

AMB. SHOVAL: Yes, sir?

Q: William Gerber (sp.), free lance. In the last couple of days there have been contradictory reports in the press about the so-called compromise. Senator Leahy said that the President rejected it, and the White House said that the Senator has not replied to a letter from the President. Can you explain that contradiction?

AMB. SHOVAL: No, you must field that question either to the President or to Senator Leahy. This is a matter between a number of senators, headed by Senator Leahy and Kasten and others, and the administration. As you know, the compromise proposal, the Leahy-Kasten compromise proposal, was something worked out by the senators, not by the government of Israel. We were not privy to that compromise proposal. And of course we were sorry to see that that compromise proposal, according to Senator Leahy, was rejected. But I don't want to go into the details of that proposal, because as I said we are not party to that. We would have looked at it if it had been accepted and probably expressed our opinion after that but not before. Yes, Ralph?

Q: Ambassador Shoval, Ralph Begleiter with CNN. Deputy Secretary of State Lawrence Eagleburger has said that the United States has suspended -- or his words, I think, are "held up" -- military technology transfers to license authorizations for Israel recently. My question is, are all transfers held up or suspended, how long has the suspension been in effect, and what effect do you think, representing Israel, such a suspension has on Israel's ability to conduct its self-defense or other military operations and on the relationship with the United States?

AMB. SHOVAL: Well, I don't know about any actual suspensions. From time to time, I would say, among thousands of export licenses which have been granted over the last few years, there always was a number of I think not more than perhaps 20 or 30 which were temporarily held up. We don't know -- I don't know -- at this time about any specific holdings-up, if that's a word, of export licenses. And anyway, I will not go into detail about that question, which as you know is part of a classified report which I haven't seen.

Q: Actually, that part of it is part of the public report --

AMB. SHOVAL: Yeah, there's a very general allusion to that, but I don't know the details so I can't share any information with you.

Q: Do you have any comment on the implication of it, which is that the United States suspects Israel, in this public report, of having transferred illegally -- made unauthorized transfers of US military technology to other countries?

AMB. SHOVAL: Well, I think this is a rather theoretical question about a hypothetical part of a conjectural report. And not being an expert on technology, military technology, I cannot give you any details about that.

Q: Mr. Ambassador?

AMB. SHOVAL: I don't even see the question. Yes?

Q: Mark Matthews with the Baltimore Sun. Could you tell us the 10 cities outside Washington --

AMB. SHOVAL: No, no, I cannot, because this is supposed to be confidential. These names, ours and the Arabs, are in the hands of the Secretary and he will decide when he deems fit or if he deems fit to publish that.

Q: Kim Roberts, WTN. Do you have any comment on the news that was just released -- human rights report on Israel saying that the Israeli military has tortured Palestinians?

AMB. SHOVAL: Yes. I don't want to speak ill of the group, but this is not an objective human rights organization, it is a politically motivated organization. That's their perfect right. But their reports have to be looked at in that light. The Israeli army investigators, on this and on other matters, are forbidden to use violence or even threats of violence. And if there are cases -- and there have been cases -- when members of the Israeli armed forces were suspected of using violence, and if these suspicions were well-founded, they were brought to trial. And sometimes, very often, as a matter of fact, in these cases severe punishment was made by the courts.

So I cannot refer specifically to the (Bezellen ?) allegations, but the Israeli army and the Israeli government, the Israeli public looks with abhorrence, I would say, at any evidence of torture. This goes against the grain of our ethic.

Q: (Name inaudible.)

AMB. SHOVAL: Hello. How are you, old friend?

Q: Can you tell us anything about the -- any kind of changes which have been presented to the Palestinians concerning the autonomy, self-rule? I wonder if there is a reality about these major changes? And would you like to comment on what has happened in the foreign ministry, the minister decide to resign?

AMB. SHOVAL: Well, I'll start from the end. I will not comment on internal Israeli politics. This is a matter which does not -- is not part of my job. With regard to the proposals to the Palestinians, and I think I'm not telling you anything new, we have made very concrete suggestions, very concrete proposals to the Palestinians during the last round here in Washington, which relate to our view of the interim self- government arrangements, ISGA, which is, of course, similar, but not identical, with the Camp David approach of the autonomy. The name has changed, but the substance is that the Palestinians would, after agreement with us, be able to run their own affairs, I would say, in most walks of life, in all these things which usually are the matters of the points of interest to any sort of civilian and any normal country, whether it's economic affairs, taxation, trade, municipalities, agriculture, education, judiciary, police. I may have forgotten something.

It does not relate to the question of security, which in our plan will remain in Israel's hands. And if you'll remember, this is certainly part and parcel of the Camp David approach.

Now, the Palestinians at the last round, and I have commented on that before, unfortunately I would say backtracked to a certain extent. I suppose they may have been encouraged by their perception of the controversy between Israel and America on settlements of loan guarantees and so on and so forth. And they did not really put on the table a proposal which could have served or can serve as a basis for negotiations. They did put on the table a model, which was a model for a fully-fledged Palestinian state in anything but name. The caption was still interim self-government arrangements, but the content was the content of a fully-fledged Palestinian state, not even -- not even taking into account Israel's security concerns, because they said that Israeli troops would have to leave the territory altogether and so on, and so forth.

Now, whether at the next round we will get back to real negotiations really depends on the Palestinians. I mean, if they believe, as some of them may, that they can influence Israeli local politics by putting up an act here or whether they have constraints which emanate from internal discussions inside the Palestinian camp, whatever the reason, the last round has not been very helpful. We hope there may be a change at the next round.

Q: Can I follow-up, sir?

AMB. SHOVAL: Yes, please.

Q: Are you proposing now elections, local elections, and if so --

AMB. SHOVAL: Yeah, I'm sorry.

Q: Another, if you don't mind. Are you going to participate in the multilateral talks in May, which is coming very soon?

AMB. SHOVAL: Yeah, I'm glad you reminded me, because among the good news I should have mentioned the multilaterals, which are going to take place in different places around the world. There are different groups on several subjects, and of course we are going to participate in that.

I would like to remind this audience that a year and -- I don't know, so many months ago, in the National Press Club I first announced Israel's idea of having multilateral talks because we thought and we think, and that was the Israeli government's approach at the time, that talking about common problems like water, for instance, and ecology and others will create the right infrastructure for progress in the bilateral talks. So we will definitely participate in them, and there are still some wrinkles which have to be worked out, I understand, with regard to the multilaterals, and we hope they will.

The first part of your question was --

Q: About elections.

AMB. SHOVAL: Yes. We in our proposal, which we submitted to the Palestinians at the last round, there was a suggestion to negotiate or to discuss modalities. Modalities does include the possibility of elections. We will make our decision, or we will make our specific stand clear, obviously at the negotiating table, but I would like to state at this time -- at this point that there are, of course, different sorts of elections, and these different sorts will certainly be discussed among the modalities to implement the entrance of government arrangements. Yes.

Q: (Name inaudible) -- Reuters. A year ago, Mr. Ambassador, Jews were coming from the then Soviet Union to Israel at the rate of 30,000 or more a month, I believe --

AMB. SHOVAL: No, no. I think 20,000 was more or less the maximum. Yeah, but go ahead, please.

Q: Now that flow has diminished considerably. I wanted to ask you to maybe step back a little bit and take a historical perspective. What does this mean in terms of Jewish history, in terms of the redemption of Soviet Jewry? Why is this (happening ?)? Who is responsible, if anyone, for this? And in a historical sense, is a major opportunity from the Jewish point of view being lost?

AMB. SHOVAL: Yes, I would agree with some of the things implied in your question.

What we are really talking about now, people tend to forget in this whole controversy about loan guarantees, which seem to be dormant at the present time, but we're not pressing. We have not withdrawn our request. It's lying there, but we're not pressing for action at this time. What seems to be forgotten, that this is not about settlements, and it's not about foreign aid, it's about getting the survivors or the children of the survivors of Stalin and Hitler out of the Soviet Union where they and their parents and their grandparents were persecuted for three generations, if not more, because the situation of the Jews in Russia before the Revolution wasn't so idyllic, as we remember -- I mean, the Bolshevik Revolution -- to get them out and getting them back to the country of their forefathers. That's what it's all about.

Now, for three generations this was impossible because communism, especially Stalinism, for some perverted reason saw in Zionism as one of their major, major enemies, as if Zionism could have been a danger to the Bolshevik system, Stalinism. But anyway, that's the way it was. And the United States and others, but especially the United States, fought for a long time, for decades, for the Soviet Union to open the gates, from Jackson -- Scoop Jackson -- onwards, including President Bush. And happily, fortunately, this is happening in our generation.

Now, one of the reasons -- or the main reason -- why we are so upset that nothing has been worked out about the loan guarantees -- which, again, have nothing to do with the territories. They don't even have to do with housing a great deal, because 80 percent of these loan guarantees would not have gone into anything related to housing. The reason is that for economic reasons some Jews are holding up their immigration from the Soviet Union.

They also hear that there is a high rate of unemployment in Israel. Some of them have sent their children ahead. They are waiting. There are more than a million people, still, who have applied for visas. But they are holding up, waiting for another day. And who knows what another day could bring, looking at the situation in the former Soviet Union?

So I think it does mean a great deal to Jewish history. I think it goes beyond Jewish history. It's rectifying one of the wrongs which has been done to the Jewish people. It will be more difficult without loan guarantees, but we shall have to overcome.

Yes? Yes, sir?

Q: (Name and affiliation inaudible.) So since this loan seems to be so obviously a huge question --

AMB. SHOVAL: Humanitarian.

Q: -- what went wrong with the good relations between Israel and the US that it couldn't be -- that those loans couldn't be worked out? And does Israel have alternative plans to finance immigration?

AMB. SHOVAL: Well, I -- I cannot really reply to the first part of your question because this would necessitate some very clear answers why the loan guarantees were not given. And we don't know the answers. We know many answers, but we don't know what the real answer is. Certainly -- and I've said this before -- it was not for the want of the Israeli government not being ready to strike a far-reaching compromise. The Israeli government was prepared.

And I have alluded before to the Leahy-Kasten proposal and I have said we were not privy to that. But if that compromise had been accepted by the administration, in the view of Senator Leahy and others, this would probably have addressed American policy concerns. Whether these concerns are correct or not, that's another matter. It would have addressed 80 or 90 percent of American policy concerns. I don't really know the answer to that question.

How are we going to cope with it? Well, the total budget, the total estimate of absorbing a million immigrants -- and let's not forget, 400,000 of those are already in Israel; we're not talking about theoretics, now -- is estimated by us to amount to about $50 to $60 billion till the end of 1995-1996. Half of that amount comes out of the pockets of the Israeli taxpayer, philanthropy, and the growth, let's say, of the Israeli economy itself.

The other half is supposed to come from international sources: loan guarantees, investments, loans, credit lines, and so on and so forth. One of the worrisome aspects of this question has been that other countries, either as an alibi for not acting or as the real reason, are not going ahead because they look to what America will do, first. So the problem is really magnified by not having reached an agreement here in America.

We will have to take alternative steps, none of which will be easy. I'm afraid that this may hinder, or at least stall, the progress of establishing a fully fledged market economy in Israel, because the government would probably have to step in providing jobs to some of these immigrants, which will perhaps increase the -- again, the involvement, the involvement of the Israeli government in economic activities, which is not something which we like because we are going in the other direction -- now we are going in the direction of privatization -- but we have a responsibility. We cannot leave these people jobless. We have to provide for them. We have to provide for them housing. We did, as a matter of fact. The housing problem is probably the least of the problems now. The problems of jobs. It's not going to easy. It's going to be very, very difficult.

Yes, David.

Q: David Hoffman, from the Washington Post. Just to follow up on that, this past week the Western industrial democracies pledged some $44 billion for what they think will be an even greater source of potential instability, the former Soviet Union. Do you subscribe to the view that some hold that Israel essentially will now have to find its own way, because in the competition for aid and help, there are needier, greater cases out there, particularly in the former Soviet republics, and if that's a fact of life now?

AMB. SHOVAL: Well, it may be a fact of life. We don't want to compete with the former Soviet Union, and of course, I don't want to interfere in an internal debate which has been going on in this country about the magnitude or the speed of aid to the Soviet Union. But you are right. There may be a competition, not only with regard to the former Soviet Union.

There is a worldwide competition today for investment capital. Now Israel probably, theoretically or even practically, has one of the most advantageous positions or situations in that respect, in that competition, because where do investments usually go? Where they can become profitable, where there can be a fruit. How does an economy grow these days? Not because of raw materials, that's not the main point. The main point is knowledge, economic leadership, manpower, and investments. Now Israel probably has one of the highest concentrations -- perhaps the highest concentration in the world per capita of highly- skilled, technological, scientific manpower today -- even before that immigration, certainly after that immigration. What we don't have is the investments. Israel, given the right possibilities, would by the end of the century be able, except perhaps for the military aspects, stand on its own feet economically, perhaps dispense with foreign aid all together, certainly cooperate with our Arab neighbors in creating a new Middle East. But we are, as we said, now put before certain obstacles which we will find difficult to overcome, but we will have to look for ways.

Q: I'd just like to follow up --

AMB. SHOVAL: Yes?

Q: -- the question about the multilateral talks. You said Israel would attend the multilateral talks. Can you say that Israel will attend the -- all of the sessions of the multilateral talks, including the refugee session planned for Ottawa under the terms and conditions expressed by Secretary of State Baker during the Moscow talks?

AMB. SHOVAL: It has been agreed, and we will not agree to any change with that regard -- with regard to that agreement that that multilateral talks, just as the bilateral talks will have to proceed along the Madrid formula. If there will be any -- an attempt to change the Madrid formula, we will have to look at it. And we certainly hope there will not be a change because this could throw a spanner into the wheels of the peace process.

Q: It's already been -- I mean, Baker has already expressed that policy. He did that on Moscow.

AMB. SHOVAL: Yes, but it depends on Israel's agreeing to it.

Q: Right.

AMB. SHOVAL: Or also to the Arab parties agreeing to it. That's the nature of this process.

Q: My other question was that you said Israel would have to look at it. In other words, Israel has not looked at it.

AMB. SHOVAL: Well, Israel has made it very clear, and I want to reiterate that, that stand, that Israel will attend these talks if they are run along the lines of the Madrid formula.

Q: Can I ask another question? Now, do you feel, Ambassador, being here

Ambassador for two years in the --

AMB. SHOVAL: A year and a half.

Q: Do you feel Israel is still that important a strategic asset for the United States and vice versa?

AMB. SHOVAL: Well, let me say very clearly, in spite of what you may have read in the newspapers, I, for one, never thought that the strategic aspect of the Israeli-American relationship was the most important one. I never did. And people tend to forget that this whole strategic relationship between Israel and America is no more than, I don't know, about 12 years old. There was a time not so long ago when America didn't even sell arms to Israel. We had to buy our arms in other countries, European countries, and produce them ourselves. So I never did think that this was the most important facet of our relationship. Of course strategic interests can change. Of course.

I always thought, I always think that the real basis is the one which came to expression in that sense of the Senate the day before yesterday, of 99 senators voting for loan guarantees for Israel. The relationship between the peoples, the shared values, the shared traditions, shared spirit. And this will not change. There will be ups and downs, but this is, in my view, something which will not change.

After having said that, I do not think, and I agree with Secretary Baker what he said yesterday, the day before yesterday, this strategic relationship is at least as important as it was in the past. Yes, the nature of the potential adversary has changed, the Soviet Union is no longer there, but are we really living in a Middle East of stability, of permanent peace, of non-existent dangers? Perhaps there are increasing dangers. And that sort of relationship between Israel and America has proved itself very well in the past, and I believe it will remain very important in the future.

Q: (William Gerber ?), (affiliation inaudible). How do you see the matter of harmonizing two different objectives: one, privatization, the view to trying to promote stimulated economy, and on the other hand, continuation of Israel's traditional social policies of making sure that ordinary people have a reasonable way of living?

AMB. SHOVAL: Yes. This is, of course, an issue which most countries in the Western world face today: How can we economically take care of those needs of social justice or social policy or welfare state or whatever the term is, which I think most countries, not all, but most countries in the West accept at least as a certain minimum? And Israel does have a commitment, whether it's in the field of health services, whether it's in the field of education. We have a commitment and we are going to continue that commitment, especially with such a huge immigrant population coming in. I mean, 1 million compared to 4.5 million Israelis who were there before, a quarter, again, of our existing population.

There has to be schooling and retraining and so on and so forth. At the same time, we do hope that with privatization, with increased investments, with a growing economy, we will be able economically to share the burden with the recipients of that burden.

Of course, there's always the danger of the welfare state becoming something which at the end of the day, the end of the road is not really helpful to economic growth, but we will have to reconcile these two ways. We will not be totally one or the other. We will try to include and to continue our social values and ideological values, one could say, with the necessities and the aims of the market economy. It will become more difficult if we are not successful in attracting the investments which we need now.

Q: Thank you.

Q: Thank you, Mr. Ambassador.

AMB. SHOVAL: Thank you.