REID COLLINS, Anchor: With us now to continue our discussion on Middle East peace prospects is Zalman Shoval, the outgoing Israeli ambassador to the United States who leaves his post next week to be replaced by Itamar Rabinovich.

Mr. Ambassador, the relationship between your country and the United States was, perhaps, not as -- as firm as it has been during the latter stages of the Bush Administration; the bond guarantees, the Occupied Territories, West Bank construction. Tell me what you foresee a Clinton Administration will be to Jerusalem?

ZALMAN SHOVAL, Israeli Ambassador to U.S.: Well, let me say first of all, in spite of the bad chemistry and the atmospherics, in concrete results this was not a bad period. I mean, we had good agreements at the end of the day on the loan guarantees, on military and strategic matters. I think the perceptions were worse than the realities. With regard to the Clinton Administration, we have high hopes. There will definitely be continuity in some of the most important aspects and there may be some changes, maybe for the better. So, we have high hopes.

COLLINS: In the matter of the potential of some sanctions imposed by the United Nations, the American Ambassador Harab [sp] was quick to reassure, wasn't he?

AMB. SHOVAL: Well, it would be inconceivable that, for the first time in 44 years, that the United Nations would impose sanctions on Israel, a victim of aggression taking measures which may not be popular everywhere, but measures against a bunch of terrorists, fundamentalist, extremist terrorists, who have declared that they want to destroy the peace process. The State of Israel -- that Israel would not only be condemned on that, and I think that was a mistake.

I think the United Nations gave itself a black eye -- but impose sanctions -- would be inconceivable.

COLLINS: Well, you have to say, though, your description of a 'bunch of terrorists' doesn't seem to apply aptly to all 400 --

AMB. SHOVAL: No, there may have -- there may have been a few mistakes. There may have been a few mistakes. By the way, there's some misunderstanding about that. Some of those people, people who were brought back to Israel because they were expelled by mistake, are not innocents. They were put to trial --

COLLINS: They went to jail, didn't they?

AMB. SHOVAL: That's right. They are probably more active terrorists than the rest. These --

COLLINS: But, nonetheless --

AMB. SHOVAL: These people are the ringleaders of a very dangerous organization and Israel, like every democratic country, has a problem, has a dilemma. How do you deal with somebody who wants to subvert your very existence? That's what it's all about.

COLLINS: Mr. Ambassador, let me draw you an analogy that's not completely analogous, but it may fit. If the United States, following the central Los Angeles riots, had rounded up, say 400 Latinos, as sometimes people refer to them, sent them to Mexico -- what sort of reaction --

AMB. SHOVAL: What you call Latinos are American citizens.

COLLINS: Not all. No, I could find 400 who are not.

AMB. SHOVAL: Okay. This is not a group of people who have declared their avowed aim is the destruction of the State of Israel, the destruction of the Jewish people in Israel -- by the way, one of the leaders made the statement yesterday that the destruction of the United States of America would be one of their aims -- this is something which endangers our very existence, not to say, or not to mention even that they have said that the peace process between us and the Palestinians, between us and the Moderate Palestinians is illegitimate because they do not want to accept the State of Israel. This is a very harsh situation which sometimes, unfortunately, necessitates harsh measures.

COLLINS: But you have laws and you have jails. Why not simply have the -- let it go at that, jail those who disobey the law? Wouldn't that, in retrospect, have been easier?

AMB. SHOVAL: Well, the people who were expelled, and that's part of the dilemma, they're not necessarily the bomb-throwers or the pistol-shooters.

COLLINS: Well, they think wrongly?

AMB. SHOVAL: They are the people who direct these operations, they instigate them, they get the financing so that the organization -- what do you do with people like that? Do you put them in preventive concentration camps? That's a problem too.

COLLINS: No, I think you jail them for crimes committed or conspiracies that are provable.

AMB. SHOVAL: That could be a way, and that is a way which we, of course, take with certain people, but when they are in jail, in Israel or in the Territories, they maintain their contacts with their organizations. When they are brought -- the contacts are broken, these are harsh measures and this is a very harsh reality. It's not a humanitarian problem. It's not even a legal problem although legalistics are involved. It is a first-rate security problem; how does a small, free society defend itself against those who want to destroy it? Nobody has yet found the perfect answer, including the United States in the second World War, if I may add.

COLLINS: If the high court of your country finds the action to be illegal tomorrow, then what happens?

[crosstalk]

AMB. SHOVAL: Well, if the high court would -- if the high court would decide that the action was illegal, the government of Israel will, of course, obey the court. There's absolutely no doubt about that. If the court should decide that the action was legal, the government of Israel will take a political decision what it wants to do from now. It doesn't have to say 'Okay, they said it's legal, we won't make any changes.' That's a political, administrative decision which the government will have to embark on tomorrow.

COLLINS: Mr. Ambassador, we thank you very much for your time and for your service and company here in Washington.

[crosstalk]

AMB. SHOVAL: Thank you. I thank you.

COLLINS: And shalom.

AMB. SHOVAL: Good-bye. Shalom.