The tragedy in Tel Aviv was terrible. It was a massacre of young people and a cynical murder. We have a choice before us: either to try and do our very best by political means to achieve a cease-fire or to use our security capabilities to create a deterrent. Clearly our preference is for cease-fire and peace, and not to show that we are strong and able to handle the situation. If we choose the second option, it would be a policy of contradiction.

If we retaliate immediately, I think many people in the world would say: okay, now two parties are equal and we have to tell them not to escalate. I believe that we acted wisely and courageously by showing restraint and by giving the international community a chance to tell Arafat the true story. In fact, Arafat had begun to preside over a coalition of terror on the one hand and at the same time tried to create an impression of negotiation. After a very long while, maybe for the first time, America, Russia, and many other countries turned to Arafat and told him to stop it and that he will be blamed. It was effective.

The statement that Arafat issued has some good points. The first thing that he said, in his own voice, in Arabic, is that he will make an effort to stop the violence. He did not say that he ordered an end to the violence and to the terror. He combined the texts of the Jordanian-Egyptian proposal and the Mitchell Report. The combination has two shortcomings:

a. We submitted our comments to the Egyptians and the Jordanians; they never responded. So it is a one-sided document led by three parties - the Egyptians, the Jordanians, and the Palestinians - without any reference to Israel whatsoever.

b. We are very unhappy with the decision that calls for the continuation of the intifada and the call to sever themselves from Israel. We are not begging anybody to do us a favor and talk to us if they don't want to talk.

Our policy is the following:

• As far as Arafat's statement is concerned, we should judge it by the situation on the ground, by facts on the record. There was no shooting today, but the day is still not over and we are being very careful. Clearly that test should take a little bit of time. We know that Arafat gave orders to his commanders to stop shooting. We are not sure that he gave them orders to arrest the people who are responsible and also to try and prevent further acts. He says he did so, but we shall check it again.
• We accept the Mitchell Report in its totality and do not want to change the words or the sequence. The Mitchell Report should remain as is without additions, omissions or changes. If minor changes are made, the report is open to major changes. This is for the time being the best document for us, so we shall reject any attempt to change it.
• The attitudes of President Bush and Secretary Powell were extremely positive, helpful, and understanding, and we look forward to working together with them. We also received support from congressmen and senators, which came in many forms.
• We feel, again, that we need the solidarity of our people because the test period is not over and many dangers still exist. We have to be very cautious and work together and be aware that the situation may change tomorrow. Se we call upon everyone to remain alert, unified, and to face the situation, with the necessary serenity.

In response to questions, Foreign Minister Peres added:

On what Israel wants from the Palestinians concerning the cease-fire:

• We look for signs of confiscation of weapons and basically the prevention of further acts of terror. We need to prevent Palestinian leaders from defending the murders. We feel it is crucial to have a cessation of the incitement because individuals may take the initiative to continue the violence. This can break the whole attempt for peace.

On the road to peace based on the four steps outlined by the Mitchell Report:

1. Cease-fire: Israel has already announced a unilateral cease-fire and is waiting for Arafat's cease-fire to be implemented on the ground.
2. A cooling off period: We suggest that it last for at least 8 weeks. I believe the United States offered 6 weeks and the parties should be able to live with that.
3. Confidence building measures: There is a list of measures we have to take and there is a list of measures that the Palestinians have to take. Our list of measures includes the issue of the settlements. Our interpretation of the Mitchell Report is as follows: not to establish new settlements; not to confiscate land for existing settlements; to freeze building outside the area of the existing settlements; the future of the settlements will be dealt with when we start the political negotiations.
4. On the Palestinian side, they have to collect arms, to reduce the police force and to make sure that peace will prevail. This should occur in the third stage, six weeks after the announcement of the cease-fire. The third stage should also include the cessation of incitement, improvement of conditions in the territories, and the redeployment of Israeli forces to the point that existed before the Intifada started in September of last year.

The beginning of political negotiations: There were different ideas, including negotiating an interim or a permanent solution. Our proposal is:

1. We are ready to negotiate with the aim of achieving a solution based on 242 and 338, but the first item on the agenda should be the implementation of the existing agreements. The two agreements signed by both sides should be equally implemented. We feel that we have invested too much effort in the definitions and not enough effort in the implementation.
2. As per the timetable, the Palestinians suggest that after six months there should be a review of the negotiations and there should be a one-year time limit for the negotiations. We are ready to put a time limit, but we think that one year is too short. Our aims are to take the Mitchell Report, as is, without changes and without any acrobatics, and to use the cease-fire to lead us to a renewal of the negotiations.

On Chairman Arafat:

• There is a struggle between Arafat and ourselves to win over the international community. We think that in order to bring peace, it is not enough that the two sides negotiate, but it is also necessary that the United States, Europe, and Russia and other communities will take a clear stand. In my judgment, Arafat can hardly continue his way without the support of Europe, the US and Russia, and we want to make it clear that this support is conditioned upon peace and not upon violence. If we would declare that Arafat is a terrorist, I am not sure that this would be sufficient. There is an organization of nonaligned nations of 110 countries, which would immediately declare him as a fighter for liberty. We don't want to do it and I don't think that titles will help.

I think what we need now is to mobilize the international community to stand against terror and to stand for the renewal of the negotiations. Our aim is peace; we do not want to dominate other people. We do not want to endanger other people. Our policy is clearly self-defense on the one hand and achieving peace on the other.

Our national unity government is facing many difficulties in this crucial moment in Israeli history. The eyes of many Israelis are filled with tears. We don't act with a pleasure or light-mindedness, but with a responsibility for the future of our people. We are acting together, right wing and left wing. We need to work together and keep our differences for another day. By and large people understand what we are doing and we enjoy wide support because we are united and because people feel their views are represented in the Cabinet. Although we are upset, we remain cool and rational.