The State of Israel is in a period of scuff and distress, but I am convinced that the State of Israel will manage to prevail, to strengthen her security, and to arrive at a state of coexistence with her neighbors and bridge the gaps. And this is primarily done by thoroughly reforming the education

We must free ourselves from "thought-traps," a fixation that exists amongst us from the time of the Oslo accords, and that is the perception that as long as the Palestinian conflict is not solved, we cannot succeed in the main aspects of our lives. I disagree with this perception – we can solve the economic crises regardless of the conflict.

The Israeli Economy's basic problem lies in the relations between ourselves: we must free the economy of the burden of monopolies and taxes.

Any digression from this fixation, I believe, will cost the political leadership a hefty price, although quick growth is the first mean for bridging the social gap and increasing tax revenues.

I would like to expound on two main areas: strengthening security and promoting the peace.

Strengthening Security – first of all, we must define and understand the root of the problem. The roots of Israel's security problems lie within the rise of radical Islam. We must prevent the possibility of a nuclear Iran – the greatest threat ever to the peace of humanity and Israel alike. There needs to be a national assembly whose aim is the limitation of Iran. International action is required which will include diplomatic action and economic sanctions.

In addition we must prevent Iran and a nuclear Iran from further establishing bases on our doorstop. The quick withdrawal from Lebanon encouraged the establishment of an Iranian base in the north, with the help of Iranian proxies – Hezbollah. The disengagement created a second Iranian base in the southern part of the country, and since then there have been thousands of rockets launched against us. This policy has failed the test of reality – the test of actual results. We must allow the establishment of a third Iranian (and this time over the Dan region and inside Jerusalem). We mustn't allow "a country with three missile directions." We must say, "In Samaria and Judea the security is guarded by us."

Another element of increasing security is the terrorist Hamas regime that has been created in Gaza. This creation emerged from an Israeli diplomatic blindness – by foregoing the Gaza Strip. Israel repeated a previous mistake – after the withdrawal from Lebanon there was not a massive enough response, and even today in the Gaza strip, the response is not massive. In fact, we have taken the path of a war of attrition, which serves as an anti-thesis to the concept of deterrence. The concept of deterrence means the use of force in a way which is not proportional. We must move from attrition to deterrence.

The promotion of peace - here too we must begin by analyzing the problem. Why is there no peace between us and the Palestinians? Is the problem over territory? The issue of returning the territories – the withdrawal from Lebanon and the Gaza strip did not prove themselves. The real problem is our enemies' resistance to the existence of the State of Israel and the sovereignty of a national state for the Jewish people.

Palestinian weakness cries out to the heavens, until the Palestinian Authority can not even control their own people. We have before us two alternatives: to change the reality (but really to ignore it, since you cannot base policy on an illusion), or to do nothing.

I propose a third option – a way of economic peace. Economic peace is a corridor to the possibility of future diplomatic peace, it allows for such conditions by preparing the grounds. Economic peace can and should prevent the enlistment of radical Islamic activists

Palestinians need hope. They must believe that there is possibility to improve their lives, that there is a future for their children.

Economic peace rests on Israeli security and on facts of the market. We must create "islands" of prosperity, bases of hope – farming projects, industries, tourism and others. Projects that are aimed at the periphery.

We must promote projects that rely on real market forces which will constitute a cycle and an option for discourse with the Palestinian Authority. We must promote regional cooperation. Jordan can make an excellent partner in this perception – the sea canal project from the red sea to the dead sea is just one example for such cooperation.

In conclusion, this practical path can allow us to advance today towards improving the situation and creating a positive horizon for us and our neighbors. We must maintain the economic momentum, and conduct thorough education reforms, to create security and promote economic peace.

Amnon Rubinstein asks:

From the beginning of the day the lecturers have spoken about many topics. Not one of them spoke about education as a main topic. What is your opinion on that?

Benjamin Netanyahu:

I defined the type of action required first of all as definition of the problem.

Is the problem of the education system in the lack of funds?

Up front I am stating that the teachers need a substantial increase in their salaries. Teachers' salaries in Israel are extremely low compared to the rest of the world. Is the problem in budget? The education budget in Israel is not particularly low, definitely not compared to the rest of the nations.

What happened in the rest of the nations that drastically increased their budget per student? Australia for instance, increased their education budget by four and their scores – less good. France also increased the education budget substantially; by three. There too the scores had dropped.

Israel increased their budget by seven billion shekels, an investment per student during the time of Prime Minister Rabin. He justly identified the problem with education and supplemented the budget as so. Despite this the results of the reading test in the IDF during 1985 before the supplements were far better than the results that were received in 2002. Investments were up but the results did not increase respectively.

And so I say that the problem is not the budget. We need an increase in salary, although that too will not solve the problem.

When we look at the states that have succeeded in raising the level of education such as Spain and Singapore, and we find what is in common, in seems that they have all done the same things that we don't do:

1.       Focus on raising the quality of teachers – a better selection and training of teachers is necessary. We raise the entrance levels, select the most excellent and invest in them. The level of doctors and psychologists in public service in the State of Israel is one of the highest in the world, and their level of pay is still low. There is prestige in these positions because of the criteria and quality and education and training of those practitioners, and not because of the paychecks. The countries that succeeded in substantially raising the level of education are focused on advanced study programs for teachers which filter out the weaker ones, and train for specific disciplines. As soon as you determine the quality of teachers you determine the quality of education and the fate of the children. If the teachers are worse that the students, we must assume that they will be less successful. Parents who have money will hire private tutors, and parents who do not have enough money will not do so and such phenomena are those who in fact widen the social gap.

2.       discovering students with difficulties and assisting them in real time –  countries who discover students who fall behind and lift them up. They don't wait until the end of the year for the student to fail the test and then detect the problem, when sometimes it is too late to help him.

3.       You let management manage – you let the manager act according to his authority, a manager can expel teachers that aren't good enough and retaining the good teachers.

4.       Focusing on core subjects – math, reading, writing, science, computers, and more.

5.       Education of values – discipline, citizenship, manners towards teachers, national values – bible studies, history, Zionism, etc'.

I have been working on it for a year. It is impossible to take leadership of the nation and then think about how to solve the problems. You must know these problems ahead of time and then you have the ability to make a change during the political time that was granted to you.

It is possible to make a quick change using a five year plan.

The Jewish people in ancient times came up with the concept of a school for every child. Spanning from the Heder students until Jewish Nobel Peace laureates, this is a people which excel at educating their children.