- Hamas could have pretended it wanted a political solution and the whole world would have recognized this. The Quartet posed to Hamas only three conditions: recognize your neighbor, recognize the peace agreements, and avoid terror. But Hamas said, no, Israel has no right to exist. They have a dream - to join the other Islamic forces, to revolutionize the whole Middle East.

- The Palestinian Authority is doing better at maintaining law and order in its territory in the West Bank. However, it has far from demonstrated any level of performance in dealing with terror.

- Today there is unprecedented military and intelligence cooperation between Hizbullah, Syria, and Iran. There is no "smuggling" of weapons from Iran through Syria to Lebanon, because it is not done in secret. Weapons of all kinds are being pushed toward Hizbullah, including tens of thousands of rockets.

- Hizbullah has turned Lebanon into a "banana republic." The president of Lebanon, who is a general and a former commander of the Lebanese army, does not know when his country will be involved in a confrontation with Israel. The one who decides this is Hizbullah leader Hassan Nasrallah, who has no official standing in the Lebanese government.

- There are indirect peace talks between Syria and Israel and the price being asked by Syria is known. The price Israel is asking in any peace agreement is security, but the definition of security is now different from a decade ago because there are now longer-range rockets and terror. Syria is sheltering all kinds of terrorist organizations. In any peace agreement, Syria must drop this support for terror.

Israel Seeks Real Peace with the Palestinians

Currently, Israel is living in a relatively good strategic environment. We are not facing imminent war and have not faced a hostile coalition since the 1970s. We seem to have defeated suicide terror, at least temporarily.

We in Israel are determined to have a real peace agreement with the Palestinians. Our goal is to have two states for two peoples living side-by-side in peace and security. This policy is easy to define, but it is very difficult to achieve. The main issue for Israel is the security issue.

The Palestinian Authority is split into two entities. Israel is ready to sign a peace deal with the Palestinians. This is the policy of the State of Israel. But we need to sign an agreement with the entities that represent both Gaza and the West Bank.

We are able to discuss this policy at all only because of the unprecedented success of the Israel Defense Forces in the West Bank. Between 2000 and 2002, Israel did not have great success in preventing Palestinian suicide bombers from targeting Israel's major cities. The only reason that we are living quietly today is our success in identifying the terrorists and enhancing the cooperation between intelligence and the army.

In Gaza, they keep trying to launch suicide terror attacks but they fail most of the time. In addition, we have not succeeded in preventing rocket fire from Gaza. In order to prevent it, you have to convince them that it is not worth their while.

The Palestinian Authority is doing better at maintaining law and order in its territory in the West Bank. However, it has far from demonstrated any level of performance in dealing with terror. This is the key measure of security, since Israel has no guarantee that the moment our forces leave the West Bank, we will not be attacked from Kalkilya - which is two kilometers away from Kfar Saba in Israel.

Hamastan in Gaza is a very dangerous phenomenon. First of all, Hamas does not believe in peace with Israel. It is sincere enough to declare that the destruction of the State of Israel is a strategic, historical goal of Hamas. Hamas says it wants to take over the West Bank and the Palestinian Authority, but its ultimate goal is to destroy Israel. Hamas considers Israel to be part of the Wakf, as holy Muslim land, and there is no room in it for Jews. As far as I know them, they will not change this ideology.

Are There Moderates in Hamas?

Are there members of Hamas who might be described as more pragmatic? Hamas is a movement with a charter that calls to destroy Israel and never have negotiations or peace. The PLO has at least declared that it wants peace with Israel, that it wants two states for two peoples living side-by-side in peace. Hamas declares openly and publicly and educates its children beginning in kindergarten that Israel is not legitimate, that Israel does not have any right to exist, and that their goal is to get rid of Israel. It is just a matter of time.

Hamas could have pretended it wanted a political solution and the whole world would have recognized this. The Quartet posed to Hamas only three conditions: recognize your neighbor, recognize the peace agreements, and avoid terror. But Hamas said, no, Israel has no right to exist. They have a dream - to join the other Islamic forces, to revolutionize the whole Middle East. They are not hiding it; you can read it in their books.

This is not a matter of moderates or extremists. There are more violent military types and terrorists, and there are the political types, those involved in the social welfare infrastructure, the daawa, but for all of them, the moment you belong to Hamas, you adopt a worldview that envisions the extermination of Israel and joining up with the Muslim Brotherhood to change the whole Middle East. Otherwise, you are not Hamas.

So as individuals, Hamas may include many who seem nice, like Ahmed Yousef writing in the New York Times. Hamas includes many educated people: doctors and professors. But it is not a matter of individuals, it is a matter of ideology. In the 1930s in Germany, the Nazis also enlisted professors and doctors. This is the nature of the enemy with whom we are dealing.

Hamas is also seeking to take over the Palestine Liberation Organization (PLO) because control of the PLO means taking control of the Palestinian national movement. According to Hamas, the Palestinian Authority is due to hold elections in January 2009. Whenever elections are held, Hamas will present its own candidate for the presidency of the Palestinian Authority in an effort to take over the PLO.

What Is Israel's Policy?

Hamas - and Hamastan - is Israel's enemy. However, it is now very difficult for Hamas to carry out terror attacks and launch rockets. The price is too high for them. But their goal is to become stronger and more powerful - like Hizbullah - so they are following their own interests. We do not have any illusions about Hamas. We are preparing ourselves for any military options that may be needed, but for the time being there is an agreement to maintain quiet - a tahdiye.

First of all, the tahdiye gives us quiet. Secondly, it gives us more time to prepare. Thirdly, it helps our relations with Egypt, and without Egypt, I do not believe that it is feasible to have stability in the Middle East. I believe Egypt will always be the leader of the Arab Middle East, based on my intelligence experience and my relationships with the Egyptians. Egypt can prevent the build-up of the power of Hamas. Husni Mubarak, the president of Egypt, and the talented people around him contribute to the fact that we are living in a stable area, and there are many advantages to this peace.

We see this in relation to Hamastan, where the Rafiah international border crossing with Egypt remains closed most of the time, against the wishes of Hamas. Egypt has continued to respect its commitments to keep the crossing closed. Egypt is trying to stabilize the Middle East, and of course we support it, but we are very sensitive to the smuggling of weapons from Sinai to Gaza, the build-up of Hamas' military capabilities, and its relationship with Iran.

We are also very proud of the peace with Jordan. The Hashemite Kingdom of Jordan has a state-of-the-art armed forces and an excellent intelligence service. I cannot imagine a stable and sane Middle East without Jordan. It is not that well-known because they are modest and do not make much noise. But professionally, the strategic importance of Jordan under the late King Hussein and now under his son, King Abdullah, is beyond imagination.

Al-Qaeda has ambitions to penetrate into Gaza. It looks ideal for them. Al-Qaeda has bases in Egypt and in Sinai, and sends agents into Gaza to build an infrastructure based on certain clans. Hamas considers them an enemy and is trying to contain them.

There is the same phenomenon in Lebanon. An extension of al-Qaeda was defeated in the north by the Lebanese army, and they are also considered as an enemy by Hizbullah.

Threats from the North

In the north we have the phenomenon of Syria under Bashar Assad. On the one hand, Assad supports all kinds of evil forces, like Hizbullah, and today there is unprecedented military and intelligence cooperation between Hizbullah, Syria, and Iran. There is no "smuggling" of weapons from Iran through Syria to Lebanon, because it is not done in secret. Weapons of all kinds are being pushed toward Hizbullah, including tens of thousands of rockets. There is no real border between Syria and Lebanon, so one cannot talk of smuggling. Hizbullahstan, Iran, and Syria represent a single operational entity.

According to some rumors that have been published, Syria tried to establish a military nuclear capability and, according to these rumors, this capability no longer exists. According to these rumors, the North Koreans tried to establish a twin reactor to one in North Korea, but today, Syria for the time being does not have any nuclear capability.

In parallel to this, there are indirect peace talks between Syria and Israel. The price that is being asked by Syria is known, but the price Israel is asking in any peace agreement is security. The definition of security is now different from a decade ago because there are now longer-range rockets and terror. Syria is sheltering all kinds of terrorist organizations. In any peace agreement, Syria has to give up all of these threats against us - and not only against us. The Syrians support Al Qaeda in Iraq. They must drop this support for terror and change their policy. These issues will be a major focus during the coming year.

Iran

Iran is the main strategic threat, the dark cloud on the horizon. The threat is to the whole Middle East and we have some common ground with the entire Sunni world, which also considers Iran to be a strategic threat. It does not mean that they like us, but it does mean that they consider this threat to be a most important one, perhaps even more important than Israel.

Iran is proceeding systematically to acquire a military nuclear option. They will not give up the option to have a nuclear bomb. They are determined to achieve this capability and will do so unless they are stopped. Unlike other assessments, we are absolutely confident that they are proceeding. The picture is very clear. They are dealing with the enrichment of uranium. They are dealing with the delivery system - the missiles. The threat from Iran to the whole world is a strategic one and for Israel it may become an existential one, because we have to depend upon their interpretation of when they use such a weapon. But it is not only a threat to Israel. It is a threat to the Sunni world, to the peaceful countries in the Middle East.

The Iranian threat is not only the bomb. What they are trying to achieve is to challenge the entire structure of the Middle East. They are successfully building Hizbullahstan in Lebanon. Hizbullah is now focused on attaining legitimacy in the Lebanese government. They do not want Prime Minister Fouad Siniora to question their legitimacy in the future, and it will not happen again, from Hizbullah's point of view.

Hizbullah has turned Lebanon into a "banana republic." The president of Lebanon, who is a general and a former commander of the Lebanese army, does not know when his country will be involved in a confrontation with Israel. The one who decides this is Hizbullah leader Hassan Nasrallah, who has no official standing in the Lebanese government.

Iran is trying to convince some states in the Middle East that this is the era of the Iranian Empire. It is not only Israel who is threatened. Iran has global ambitions to become a superpower that is recognized by the whole world, like the empire of Cyrus the Great.

This is the main challenge to the entire world and I hope we will be united against it. I am not sure that the diplomatic option will be effective enough to prevent it, and we have to measure success based on results. There are other options, but I am against boasting and declarations. All options are on the table and, at the end of the day, Israel will make its own decision.