Good evening.

Israel is at one of the most important moments in its history, a moment that will define its future.

Unfortunately, over the years, many have known how to diagnose the strategic threats facing Israel, and suggest merely tactical measures, which do not offer an overall solution to the ills of Israeli society. I intend to act differently, and offer the Israeli public a complete moral road map that includes a political chapter and a social-economic chapter, which will guide the entirety of the political and economic measures I propose. The chapters are interconnected because there will be no peace without social justice and there will be no social justice without progress in the peace process.

I can not present the entire plan here. The part that I will present today leans on a number of working assumption:

The first assumption includes two necessary standards for Israel's continued existence as a Jewish and democratic state: the moral standard and the demographic standard.

The second assumption sets strategic goals and an assessment of the strategic threats Israel is dealing with in two peripheral circles.

The third assumption is that leadership must lead to policy shaping reality rather than reality forcing policy.

I will explain one by one.

The question of the Jewish and democratic state is obvious. We are a people that for years was a minority in the Diaspora, and therefore the principle of equality for all citizens, and the principle of strengthening minorities, stems from our historic experience, and is the only way to guarantee Israeli democracy be more than just a wish.

The strategic threats

Israel's political situation is measured by the circles surrounding it.

The first circle is Egypt, Jordan, Lebanon, Syria and the Palestinian Authority. The second circle is Iraq, Iran and the Gulf states.

Let me begin with the second circle.

The Gulf States are waiting for progress on the Palestinian track and therefore they can serve as a positive element that will support correct political processes if they are put in place.

The change of the situation in Iraq allows us to divert the center of attention to the situation in Iran.

The Iranian threat

This subject must by no means be taken lightly. It is a very serious danger. The international community is converging towards taking significant steps towards Iran to stop its process of nuclearization.

We must do everything, acting with restraint and wisdom, to reinforce the international community's awareness that this is a problem that is a threat to the entire free world.

There is undoubtedly no difference between the different parties' positions on the need to prepare for the presence of nuclear weapons in a country that declares its intention to destroy Israel. The public statements made in Israel lately might harm that effort instead of bolstering it.

And now for the first circle – Egypt and Jordan

The peace agreements with Egypt and Jordan prove that with correct processes and brave decisions political agreements can be reached. But they prove another thing. After an agreement is reached, a country that chose the path of peace would find it hard to return to the path of war, because an agreement changes its priorities and its energies are directed inwards.

Our relations with Egypt and Jordan have an important impact on shaping the Middle East and therefore they should be strengthened however possible.

Syria and Lebanon

These may be two complex and completely different issues, but they still influence each other. Lebanon must prove it is able to prevent Hizbollah activity because we intend to continue operating with all force and all measures against any violent activity in the north. Nor do we intend to absolve Syria of responsibility for what is happening across the border.

Surely the current Syrian government is weak but I must warn against the tendency to gloat when a hostile regime appears to be weakening and collapsing.

The Israeli interest is to avoid a situation of our being surrounded by anarchy from all sides. If the Lebanese regime collapses, and the Syrian regime collapses, and the Palestinian Authority collapses – maybe we can tell the world we were right, that the Arab world can not be relied on to establish democracies. But we must remember that the emergence of anarchy in the neighboring Arab world is a serious danger we have an interest in preventing.

The Israeli-Palestinian conflict is the heart of Israel's conflict with the Arab world. It fuels it, it is the obstacle that stops Moslem countries throughout the world from moving towards compromise with Israel, and therefore resolvling the Israeli-Palestinian conflict has to remain a top priority.

Unfortunately, we have not succeeded in making brave decisions at the right time, and that is why we are dealing with a much more complex and complicated reality.

I hear the voices saying: "Sorry, we made a mistake, we reached an awareness, now we are prepared for compromise. Finally, we understood the obvious."

Who will account for the heavy price Israel paid for all those years we lived in a bloody conflict under the illusion of the Greater Land of Israel? Who will account for the backing the law breakers were given for years?

The seeds of calamity were already sowed back then. The seeds of violence and political short-sightedness. The cultivation of the settlements at the expense of the neighborhoods and development towns began back then.

But today there is a degree of conciliation, a sense that the days of dispute are over and a new national agreement has been born and surrounds most of the Israeli public.

You must be wondering why I am mentioning past disputes today. The reason is simple. When you examine a leader you must ask three questions: when did he present his positions? How did he express himself? And what price is he willing to pay for his principles?

In 1984 I served as the council head of Sderot. Already then I believed in the two-state solution for two peoples. The Labor Party at the time was still discussing the Palestinians' right of self-determination. The debate at the time was so fierce that when you look back at it today it seems ridiculous. And then came a young council head from Sderot and said, "dear colleagues, stop dealing with the past. If we support a Palestinian state today it will be less extremist and fundamentalist."

And I ask you, did you really have to be a great strategist to understand that or could any reasonable person understand that the moral question of being an occupier, the question that is gnawing at the essence of Israeli society, weakens us and makes our young generation doubt its commitment to the state?

Was it not clear that the democratic question and the demographic question are the most decisive questions, which will determine our future?

Wasn't it clear time was working against us?

The moral road map I propose includes a political plan, but in the same breath it also includes an economic-social plan.

Before I present the details of the plan I would like to present several conclusions from the disengagement:

I want to wish Arik Sharon a full recovery and express my appreciation for his carrying out the disengagement. Precisely the man who believed in the Great Land of Israel and compared Netzarim to Tel Aviv, carried out this brave plan. But we must remember that the unilateral process in Gaza, just like the unilateral process in Lebanon, were both correct because we were returning to the international borders and that is why we received international support and the recognition of most of the political system. But Gaza and Lebanon are not the same as Judea and Samaria.

As I said, my moral road map includes two chapters, a political chapter and a social-economic chapter:

As part of the political chapter the Labor Party wishes to reach a final agreement by the end of the decade. The agreement would mean an end to the conflict and separation from the Palestinians. We would do this on the basis of the following guiding principles:

1. A just and lasting peace with our neighbors must be based on the principle of two states for two peoples, with the existence of one state not threatening the existence of the other. 2. The right way to reach peace is through direct negotiations between the sides. 3. Israel will maintain its military advantage and uncompromisingly fight terror of all kinds in cooperation with the international community. 4. The separation fence will be completed immediately. The unfortunate attempt by the Israeli government to push the fence eastward for political reasons caused Israel major international damage. The fence will be built on a route acceptable both to the security and legal authorities. 5. We will give the road map new political content in coordination with the international community. 6. As part of the moral road map the settlement blocs will be under Israeli sovereignty. 7. Jerusalem will be Israel's eternal capital within borders that guarantee a Jewish majority and character with international recognition.

Let me dwell for a moment on the question of Jerusalem. We must not ignore Jerusalem's condition. Today Jerusalem is a poor and weak city. Anyone who wants a strong Jerusalem must strengthen it economically, demographically and security-wise.

Anyone with an economic doctrine seeking ways to handle Israel's social problems must ask themselves whether at a time when there is no money for medicine and education we can continue paying more than one billion shekels a year in National Insurance Institute payments to those 230,000 residents.

Anyone who believes in maintaining Israel's Jewish majority must ask himself whether we want to annex 230,000 Palestinians who enjoy resident status but actually view themselves as Palestinians.

Two years ago they were in the Jerusalem municipality's voters' registrar and the day after tomorrow they will be in the Palestinian Authority's voters' registrar.

Anyone with a military doctrine can not ignore the meaning of free movement of Palestinians from Jerusalem throughout Israel.

Let's tell the truth and protect a strong and Jewish Jerusalem, recognized in the whole world as the capital of Israel.

You will surely ask what we will do if it turns out in two days that we can not meet a committed Palestinian leadership with stature in the near future. We can not ignore the fact that unfortunately while Israel has reached a considerable majority that favors agreement with the Palestinian people, it appears the Palestinians are going in the opposite direction, and might grant substantial support to Hamas.

In that case we will not accept political deadlock for too long. We will examine the possibilities of separation between us and the Palestinians. Physical, political and military separation. This separation will help us shape our lives and our priorities while allowing the Palestinians to rebuild their society. Such separation will allow Israel to converge into itself, give up many of the isolated settlements in Judea and Samaria and keep the settlement blocs.

Even if we choose the path of separation we will continue bolstering the pursuit of peace. The pursuit of peace must not die out because of doubts as to the nature of our partner. The pursuit of peace is real and must be the most important subject in the education of the young generation in Israel. We are fighting because we are being fought. We are not fighting because of territorial ambitions but because of the necessity to protect our right to live in peace and security.

The pursuit of peace is also a bridge of truth between us and the Arabs who live among us. They must feel they are citizens of Israel in every sense. The pursuit of peace will not dull the rightness of our struggle and our determination to fight the terror organizations, but it will give the young generation the correct perspective. They are going to war to achieve the peace that was and remains our desired goal.

Meanwhile every citizen who wants to leave his place of residence in Judea and Samaria will be fairly compensated so that he and his family can start a new life. I will not abandon the residents of the settlements to a slow death in the shadow of political and economic insecurity. Anyone who wants to rebuild his house will find an outstretched hand and full support. The Gaza evacuees living in crowded mobile homes are paying the price of human neglect that characterized the last evacuation. A Labor government will not hesitate to evacuate settlements but it will do so with honest concern for the people who live in them.

In the moral road map I propose the military, economic and political aspects are intertwined.

Today we were exposed to one of the harshest poverty reports we have ever seen. Anyone who pretends they are surprised is lying to himself and I want to speak only the truth here. Poverty is not a blow of fate and not a natural disaster. Nor was it a necessity to save the economy from crashing.

It wasn't the cuts that saved the economy, and it wasn't plunging Israel into moral shame that saved the economy.

What really saved the economy was a combination of recovery of the world market; tens of billions of dollars of American guarantees that stabilized Israel's credit rating; the removal of the Iraqi threat; the reduction in violence and terror attacks; the disengagement and the change in the international climate towards Israel.

I consider the social gap a strategic threat to the existence of Israel, and I am announcing right here that under me there will not be hungry children, under me there will not be old people foraging through the garbage, under me the middle class will not descend beneath the poverty line.

Therefore, as part of my moral road map I intend to implement, immediately, four social-economic measures:

A comprehensive educational reform A declaration of independence for weak workers – raising the minimum wage to $1,000 and reducing the activity of the manpower agencies A raise in elderly allowances and passing a pension law for every citizen An uncompromising fight against the money-power connection

I hereby announce that the resources will come from changing priorities within the budget and no new taxes will be imposed, including inheritance tax.

I am sure that the more determination we show towards a political agreement, the more the economy will grow and the economy and society will both strengthen. I am sure that a democratic Israel following a moral path, as I presented, can pass the big test being a state where there are both social justice and peace.

Allow me to end with words Yitzhak Rabin, may he rest in peace, said in 1992 in his first speech as prime minister:

"Security is not only the tank, the airplane and the missile boat. Security is also, and perhaps first of all, the person. It is the person's education, his house, His school, his street and his neighborhood. It is the society in which he grew."