MINISTER PERETZ: (In Hebrew): Good day to everyone. Mr. Secretary of Defense, we are happy to host you here in Israel. We are happy to have you here as a guest here in the Israeli Ministry of Defense. We are welcoming you two days after having marked Holocaust Remembrance Day in Israel. We are welcoming you a short time after celebrating the Passover holiday when we read the verse that in every generation our enemies try to destroy us. These are days of remembrance for the Jewish people. In a week's time we will celebrate our 59^th Independence Day. It is symbolic to me that our meeting is taking place at this time. In our talk today and previously in Washington, we spoke, analyzed all the threats developing in the Middle East, the concern for stability, the joint war on terror. We examined our joint projects. We determined our working tracks in order to be prepared for every time threat - symmetrical and asymmetrical threats. We agreed on the vital need to continue to contend with the threat from Iran. In this generation, too, there is a nation that has declared that it wants to destroy the State of Israel. In your presence, Mr. Secretary, I would like to underscore the position of the State of Israel which determines that Iran is a threat not only to Israel but to the entire region and the free world. This is a problem that concerns your government, the governments of Europe and all the countries of the free world. Iran denies the Holocaust, openly declares its plans and intentions and we are sure that the free world, led by the United States, will not stand by.

I repeat our analysis that the year 2007 is critical for the diplomatic efforts in order to thwart Iran's nuclear program. I would like to congratulate the United States for its success in the Security Council and the Resolutions there in order to strengthen the sanctions on Iran, strengthen the diplomatic pressure in order to thwart its dangerous plans. The diplomatic track is preferable and it must be exhausted, but it is still not able to remove other options from the table. Israel and the United States, although they are distant geographically from one another, there is a huge ocean that divides us, however, our hearts are close and there are warm and strong ties between our nations and long, well established ties between our governments based on common interests. This relationship is based on shared values but also on mutual consideration of the interests of each state.

We must always bear in mind and never forget that the military has two purposes: to protect citizens in every way possible and also to create diplomatic expanse for international agreements and we are prepared for any opportunity that can advance negotiations and provide a diplomatic response to complement the military one. There is no military option that stands alone. As the Minister of Defense of the State of Israel I consider of supreme diplomatic importance and I would like to thank you for addressing and being aware of our needs and I want to thank you for your positive approach throughout this entire period. I think that today the Ministry of Defense and the Department of Defense are in a very important place where there is a common analysis and also an understanding of the responses that we can provide.

Thank you.

SECRETARY GATES: I was surprised to learn as I began to prepare for this visit that I was the first Secretary of Defense to visit Israel in almost eight years. I think the fact that I have come here in the end of my fourth month as Secretary illustrates the importance that I attach to our relationship with Israel. We had a good discussion and following up on our meeting in Washington last month. As the Minister has indicated we reviewed security challenges in the region - Syria, we also, as he suggested, talked at length about Iran and I stressed my view that it was important to deal with the Iranian nuclear problem through a diplomacy which appears to be working. We discussed the bilateral relationship and particularly the military-to-military relationship, which of course is longstanding.

We briefly discussed the opportunities presented by the peace process. I repeated for the Minister my view of the situation in Iraq at the present time.

Thank you.

QUESTION: Secretary Gates, you said that the diplomatic channel with Iran is working. How exactly? Did they stop or reduce their activity regarding the nuclear weapons? How the United States will act in face of an Iranian attack on Israel? And do you support, please, Bashar Al-Assad's regime in Syria, do you still think he can be a partner?

QUESTION (In Hebrew): You said that you have nothing to hide regarding the Second Lebanon War. Are you in favor of having your testimony made public immediately or in the coming days?

SECRETARY GATES: Well, first of all, with respect to the Iranian nuclear program and the diplomatic effort, I think first of all it's important that there have been two United Nations Resolutions, and that the international community is united in telling Iran what it needs to do with respect to its nuclear program. These things don't work overnight, but it seems to me clearly the preferable course to keep our focus on diplomatic initiatives and particularly because of the united front of the international community at this point. The United States has diplomatic relations with the Government of Syria. That doesn't mean we approve of much of anything that they do. Frankly, the Syrian activities both in allowing suicide bombers to cross their border into Iraq, where they kill both Iraqis and coalition partners, they are allowing them the re-supply of Hezbollah in Lebanon, and a variety of other activities are of great concern to us. Thank you.

MINISTER PERETZ (In Hebrew): After eight years the Secretary of Defense from the United States has come - an extremely friendly nation - to Israel to visit here in Israel during a very important period during a time where there are changes in the system of balances in the Middle East. Clearly, the citizens of Israel want to hear the results of the meeting, they want to hear what we discussed in our working meeting which was very important and covered many subjects on many areas. We presented our abilities, we presented our needs and we certainly examined the subjects that relate to cooperation between us. I am sure that there will be enough opportunities to discuss the internal matters that relate to the State of Israel today. Today the citizens of Israel want to hear how this meeting is one that is advancing important strategic responses in all the areas that are important to the State of Israel.

QUESTION: Dr. Gates, today 170 people were killed in Baghdad in a series of bombings, making it the most deadly day since the start of the Baghdad Security Plan. Do these attacks represent a failure of the security plan, and how do you stop these attacks leading to a new cycle of sectarian violence starting with Shi'ite revenge attacks?

SECRETARY GATES: I think we have anticipated from the very beginning and General Petreyas warned early on that as the Baghdad Security Plan began to take hold in Baghdad that the terrorists, that Al Qaeda, that the insurgency and others would attempt to increase the violence in order to make the plan a failure, or to make the people of Iraq believe the plan is a failure. So I think we have anticipated obviously the level of fatalities. Today was a horrifying thing. But I think it illustrates another point: these terrorists are killing innocent men, women and children who are Iraqis. They are killing their countrymen, and I think it is important to highlight their efforts to try and disrupt the process of a reconciliation, to try and prove the Baghdad Security Plan a failure, and we intend to persist to show that it is not.

QUESTION: How do you address the sectarian - the danger that the Shi'ites will respond?

SECRETARY GATES: Well, clearly, that is exactly what Al Qaeda and the insurgents want- -- I haven't seen the news reports, so I assume they were responsible, but then they have been responsible for most of the large-scale killings so far, and we can only hope that the Shia will have the confidence in their government and in the coalition, that we will go after the people that perpetrated this horror.

QUESTION: Is there a feeling of disappointment concerning the outcome of the recent war in Lebanon in the government, and did you personally expect Israel to do better in its fight against Hezbollah?

SECRETARY GATES: I am very happy to report that when the war took place, I was the President of Texas A& M University, and know only what I read in the newspapers, and that is not a basis with all due respect in rendering a judgment as an official.

QUESTION: A question for each of you. Mr. Minister, how concerned is Israel about the proposed sale of precision-guided munitions to Saudi Arabia, and do you feel that it would degrade Israel's military advantage in the region? Mr. Secretary, do you agree that security in the Middle East depends on standing up for democratic reforms, and if so, how do you square that idea with your decision not to raise the issue with President Mubarak today.

MINISTER PERETZ: (In Hebrew): The importance to preserve the IDF edge in facing all the threats in the Middle East is certainly a need that receives all the necessary backing from the United States and from the Secretary of Defense. We are examining the changes, we are analyzing the entire process, and of course, with every subject that comes up, we will establish working teams that will look into every question and all the implications. I have no doubt that the existing strategic understanding between Israel and the United States will ultimately decide.

SECRETARY GATES: With respect to your question on democratization, I would say that I think there are a variety of forms and a variety of ways in which the United States can make its views known on democratization. This has been a consistent policy of this Administration to promote democratization and I think that you'll find in the text of my remarks before the American Chamber of Commerce in Cairo today that I have addressed that subject.

Thank you.