Ambassador Jones meets with Haifa Mayor Yona Yahav

It is a pleasure for me to be here and I appreciate the opportunity that Haifa and the North Chamber of Commerce and Industry has given me to speak to you.

You have an important role to play in building the strong bilateral relationship between Israel and the United States. I am having a very busy day here in Haifa today. This morning I met with Mayor Yahav and visited the Leo Baeck

Arik Shemer, Senior Engineer, Intel Israel Design Center, shows Ambassador Jones and his wife examples of the latest Intel design technology

School here where I met with students.  I believe previous and returning school principal Mr. Dan Fessler is here today.  After this lunch I will be visiting the Matam Hi-Tech Center, the Intel Design Center and also Haifa University.  So, I am going to sleep well tonight.

On my way up this morning I had an opportunity to see something of the city thanks to my driver we made a wrong turn -- I am not joking -- but I was very impressed with the interesting mix of industry, trade, culture and tourism that Haifa offers. The preserved and reconstructed German Colony, Beit Ha'Gefen, which I visited the other night for a play, which was very well done, Wadi Nisnas and the Bahaii Center. All of these make Haifa an exemplary city for cultural tolerance and religious co-existence, being the home for Jews, Christians, Moslems and Bahais.

Putting co-existence and academic excellence on top of their agenda, the Haifa Rotary Club sponsors scholarships and activities that bring together people of all religious and economic backgrounds so they can prosper and eventually contribute to the development of this city.

Haifa as a port city, is the heart of Israel's north and its opening to the world. The heavy industry along Haifa Bay, the large concentration of hi-tech companies, two academic institutions, the beautiful location of the Carmel range with the Carmel Park and a vibrant cultural life make this city unique. But I think you know all this already as the residents, but you may not know that the United States National Nuclear Security Administration announced last month that it has selected Haifa as its home port in Israel and that it intends to install an advanced radiation detection system for screening and identifying radioactive materials as part of its MegaPort Security Initiative. Israeli and American officials informed the press that the decision to install the system in Haifa was due to the general growth potential and exports, including goods originated from Jordan, and shipped to the United States via Haifa. So we see a bright future for our bilateral relationship, not only with Israel, but with Haifa especially in the economic area.

The Mega-Port's Initiative is another outstanding example of the close cooperation that the United States and Israel enjoy while we work to protect our citizens against the scourge of terrorism.

Ambassador Jones addresses luncheon audience of the Haifa Rotary Club and Haifa Chamber of Commerce.

We also cooperate commercially, of course. I was also pleased to hear that several United States hi-tech companies have chosen Haifa as their base for research and development. IBM, I understand, has a productive research and development lab at the Haifa University campus, Microsoft, Intel and Qualcomm all have development centers at Matam. Hewlitt Packard also has a lab at the Technion campus. I will be visiting the Intel Design Center later today. It is home to technology that has come to form an integral part of our everyday life and just one example of American companies' recognition of the technical expertise the graduates of Haifa's universities have to offer.

Israel is developing new technology, business, and manufacturing innovations at a rapid pace. Just last week I hosted a business delegation from Akron, Ohio that came to Israel to identify new technologies that might provide opportunities for collaboration between Israeli companies and Akron area businesses. They also visited the Technion to view new advancements in bio-medical devices and new applications of engineered materials. During their visit, they also discussed possible research collaboration between the Technion and the Akron Polymer Research Center. Center. 

Ambassador Jones meets with and answers questions from high school students at Leo Baeck High School.

The U.S.-Israeli relation is critical to the United States. Everyone knows about the strong security and political relationships and American support for Israel's efforts in seeking a successful outcome to the territorial and political challenges facing the State of Israel. We fully support Prime Minister Sharon's courageous initiative to disengage from Gaza and part of the West Bank. We pray for his speedy recovery. This was not an easy decision for the Government of Israel nor for its people.

While the security and political relationships are critical components of our overall relationship, this afternoon I would like to focus more on the nature of our economic and commercial relations. In fact, I am convinced that it is this relationship that will, over the long term strengthen our overall bilateral relations and allow us to tackle the challenges that the future holds. Trade and economic development create opportunities and jobs and provide the wherewithal for both Israelis and Americans to interact on a personal level and stimulate opportunity for people in both the United States and Israel.  

During the first four months as American Ambassador in Israel I have witnessed not only difficult days of the disengagement from Gaza and the Prime Minister's illness, but important achievements within Israel. American firms are well-established here. And while they face challenges, the challenges of the Israeli marketplace are not unlike those faced by American companies in other markets around the world.

But precisely because of our strong ties in other areas, we need to do more to overcome these challenges. There are a number of issues such as standards, government procurement regulations and the protection of intellectual property rights, which need to be addressed. Although we have made progress in these areas we will continue to engage our Israeli counterparts in various ministries in order to remove these and other non-tariff trade barriers.

Such challenges are not exclusive to Israel, and I am convinced that if our partnership can produce new and improved technology while working towards a viable solution for peace, tackling the challenges that exist in our trade relationship is not impossible.

The United States-Israel Free Trade Agreement signed some 20 years ago provides the foundation for our trade relations. Its genesis was the recognition of the need for a strong trading relationship between our two nations to support the already strong historical and political ties that unite us. It was the first free trade agreement that the United States signed with a trading partner, but certainly not the last. In fact, there was a mention of my receiving an award for work on trade issues. That award was for my work on another free trade agreement. It was the United States-Canadian Free Trade Agreement. These talks took place in the mid-1980's and they were not the first time that we had tried to conclude a free trade agreement with Canada. In fact, we had tried four times over the previous 140 years. So, after 140 years of failure, with the U.S.-Israel Free Trade Agreement as our inspiration, we succeeded with Canada.  

As the United States continues to pursue opportunities for trade liberalization, multilaterally and bilaterally, in the region and around the world, the U.S.-Israel agreement still holds a special significance. The Free Trade Agreement has played a key role to Israel's ranking as the United States' 19th largest export market, which is pretty amazing when you think of the size of Israel and the level of development of the country that you could be the 19th trading partner for the United States worldwide. That is, I think, truly an accomplishment. In fact, in 2004, the United States and Israel had a total two-way trade of about $23.7 billion dollars, with Israel enjoying a trading surplus of $5.3 billion according to figures provided by the U.S. Department of Commerce. While we are still awaiting final figures for 2005, initial statistics show that this disparity has not narrowed. Despite a ten percent increase in American exports to Israel during the first nine months of 2005, exports from Israel to the United States rose by 20 percent. Clearly, the size of this trade deficit, which we believe reflects the existence of the non-tarriff barriers I mentioned, is problematic for two such close partners and allies.

American companies are committed to narrowing this trade gap. U.S. firms in all sectors are doing business here in Israel and look upon this market as a very sophisticated and growing one. They see a market in which the types of high-value goods and services American companies excel at providing can find greater opportunities.

Our Commercial Section at the Embassy is working full-time to help American companies of all sizes take advantage of the opportunities here. Our Embassy offers assistance to help Israeli manufacturers and importers source products in the United States, and our Commercial Section staff is familiar with many of the companies present here today. We look forward to providing continued counseling and commercial assistance. For example, last fall, the first ever Israel Franchise Trade Fair took place in Tel Aviv, and the American companies that participated all expressed optimism about the opportunities that exist in that sector here in Israel.

As I mentioned, the United States-Israel Free Trade Agreement underpins our overall trading relationship. It has also opened doors for the qualifying industrial zone agreements signed with Jordan in 1998 and with Egypt in 2004. The "Q.I.Z.'s" as we call them have not only established business-to-business connections between Israel and Jordan and Israel and Egypt, but they have helped to reinforce a lasting peace between Israel and its neighbors. In the first six months of its existence, the Israel-Egypt QIZs exported $65 million in duty free exports to the United States. Of this $65 million, more than $8.5 million in Israeli inputs were sent to Egypt. This represented 15 percent of the 2004 total bilateral trade between Israel and Egypt. In the wake of the Gaza disengagement, as we work actively towards President Bush's vision of two states living side by side in peace and security, establishing durable economic relationships between Israel and the Palestinian Authority that enable the free market to work will be equally important.

The U.S.-Israel economic relation is not built solely on trade. The $9 billion loan guarantee program has helped reinforce Israel's own commitment to curb government deficits and spending and set the Israeli economy on the path to recovery. Each year the United States provides more than $2.5 billion dollars in economic and military assistance. The U.S. is confident that this money is well-spent, as we see the Israeli economy recover from recession with a focus on businesses leading the recovery efforts.

Enhancing the impact of that assistance is continued economic reform in Israel. Fiscal discipline and judicious use of resources are challenges that face all governments-- including my own-- but they must be faced squarely and aggressively to ensure long-term economic growth and wider prosperity. 

Finally, let me say that the increased importation of American goods and services into the Israeli market has a political impact to the extent that Israel is perceived as an open market with few barriers to American goods and services. A market that is seen as open attracts more American businesses and jobs, creating trade and investment, which in turn will strengthen our overall relations.

I appreciate very much the opportunity to be here in Haifa and I hope it is only the first of many such visits here.

QUESTION: Mr. Ambassador, after the Second World War, the United States probably saved the world from another world war by helping Germany and Japan to reestablish themselves and to become strong economically in the Marshall Plan. Does the United States talk at all about helping Israel and the Middle East by investing in and helping its commercial relations in Palestinian territory?

AMBASSADOR JONES: We certainly are investing in the Palestinian territories. This past year we have (microphone malfunction). The short answer is yes, we are. This year alone we have contributed $400 million in development assistance to the Palestinian territories. The Quartet the four quadripartite alliance of the United States, the European Union, the United Nations and Russia, has named former World Bank President Jim Wolfensohn to be its special envoy for Palestinian development and he has been raising money around the world for the support of the Palestinian economy and we are poised to mount a major undertaking in the years ahead to help develop the Palestinian Authorities including Gaza. This will be a multilateral undertaking but the United States will certainly play its part and I think the $400 million that we devoted to AID programs this year alone demonstrates that we are fully prepared to put our money where our mouth is when it comes to Palestinian development, because we do understand the importance of economic activity to political stability, to the future of democracy and quite honestly the impact it will have in reducing the propensity to undertake terror actions. So, we think if we give them an economic future and economic hope and opportunity that that will help very much to further peace in the region and Israel's security.

QUESTION: In the agreement there is a penalty (inaudible)?

No, there are no such penalties.

Can you give us your comments about the Iranian (inaudible) and what do you think the steps that the United States should take?

AMBASSADOR JONES: This is a question that is on everybody's mind. In fact, you are the third person to ask it today in the different events that I have been at. It is one that we are taking very seriously. It was a centerpiece of the strategic dialogue that was held in Washington between our two countries. It featured prominently in the discussions that we had last week at the joint political military group and in meetings that Assistant Secretary David Welch had with Israeli officials as well. So, it is something that is on everyone's minds, it is in the news and I believe that we are moving forward in dealing with this issue but we are dealing with it when I say "we" I mean not just the United States and Israel but the international community. We are dealing with it as an international problem. We are not trying to deal with it as a bilateral American-Iranian problem or Israel is not trying to deal with it as a bilateral Israeli-Iranian problem. It truly is a problem for the entire international community. I think in recognition of that, you have had this very concerted effort by the European states, particularly the United Kingdom, France and Germany and this gives me an opportunity to -- I would be remiss if I didn't acknowledge the presence of my French colleague, France's consul here today -- let me make sure that I get your name "Louanne Bergeron" (sic) who has joined us today. I do want to express my appreciation for her presence.  

But together, the United Kingdom, France and Germany have led a determined initiative over several months now, in fact more than a year, to encourage and to persuade Iran to turn its program to peaceful means. Of course, the Iranians claim their program is peaceful, but in fact we have discovered in recent months that the Iranian program has actually practiced deception over a very extended period, of practically 20 years of deception, which does not give one confidence that their intentions are peaceful, obviously. So, we have been working with the Europeans who have done their best to try and persuade Iran to reassure the international community by accepting limits on its program. Unfortunately, the Iranians continue to progress. They take very small steps but they continue to take these steps towards a program that would enable them to develop nuclear weapons. We believe that that would be a disaster for the world, would be a disaster for the region, and it probably also be a disaster for the Iranian people, quite honestly.

So, we are working very hard with the international community on this. Unfortunately, I can't say that the Iranians have responded to the efforts from Europe and the Russians have joined these efforts, they recently made a proposal on the question of enrichment, which the Iranians have rejected. Now, because of those rejections -- because of that lack of Iranian cooperation we are moving to a situation where in the very near future, I believe, the board of governors of the International Atomic Energy Agency will, in fact, refer the Iranian non-compliance with its provisions to the United Nations Security Council, which I believe is prepared to deal with this issue. I think in the not too distant future you will see a resolution introduced regarding sanctions on the Iranian nuclear program. The purpose of such sanctions, of course,would be to delay any progress towards a nuclear weapon and to make it much, much more expensive for Iran, not only in economic terms but also in political terms. We would hope that through these actions we can persuade the Iranians to desist in their efforts at acquiring nuclear weapons. 

It will take some time to see whether these efforts work, but I assure you that we are determined that Iran should not obtain nuclear weapons and these are but the next steps. Wherever the process leads depends a lot on Iran and its cooperation with the international community, but I know that President Bush is determined. I believe that other members of the international community are equally determined that this effort on Iran's part should not succeed and we will continue through the U.N. process and if necessary through other means to prevent that, I am confident.

QUESTION: Why are the American authorities so stubborn in relation to Pollard? Isn't there any difference between punishing a man who acted in the interest of an ally than a man who acted in the interest of the enemy although, of course, is contrary to the law after so long that he is already in prison?

AMBASSADOR JONES: I understand that Jonathan Pollard is a hero to many Israelis. However, he did violate the laws in the United States. He did potentially compromise our national security and the law does not allow a distinction between someone who commits espionage for a friend or someone who commits it for an enemy. The risk to our national security potential risk is the same, because once information is passed, we lose control over it. So, I think that that is quite honestly, the reason that Pollard is being punished is because we don't want such things to happen in the future. It was a complication to our relationship and I think it damaged the relations. I think it is in our mutual interest that we not see such actions happen again. Perhaps the best way to discourage such things from happening in the future is to demonstrate the seriousness with which we view the issue. It is unfortunate for Pollard and for his family, but in my view, in the long run, help avoid problems in our relationship and help avoid future Jonathan Pollards' suffering, because we don't want people to think that they can take matters into their own hands. There are channels for cooperating with allies and espionage should not be one of them.

QUESTION: (About Iran, Khomeini and the Shah; U.S. urging for democratic steps in the region Egypt, Palestinian Authority, Iraq.) Is it wise for the U.S. to keep urging for democratic steps when we get what we get?

AMBASSADOR JONES: The question is, what was the source of those examples you talk about. What was the source of the extremism. I don't think it was democracy. I think it was the lack of democracy for too many years. And what do we mean when we talk about democracy? A lot of people confuse elections with democracy and they think that when we are talking about democracy we only mean elections and they are quite rightly concerned that extremists could use elections to gain power and to take countries in radical directions. Khomeini didn't come to power through an election. Khomeini didn't come to power through democratic means. So, I don't think you can blame democracy for what happened in Iran. When we talk about bringing democracy to the region we talk about bringing the rights that all humans should expect, that, in fact, are guaranteed under the Universal Declaration of Human Rights and other international documents. We talk about bringing the rule of law to countries. We talk about building institutions like independent courts and we talk about helping people learn how to exercise their rights by building civil society and so on. That is what we are talking about when we are talking about bringing democracy to the region. Elections are part of the democratic process but really when you think about it if you are lucky, an election is maybe once every four or five years. The point is that democracy has to be every day and elections are not every day. So, elections are an important part of democracy. They help you to set the policy for the next several years, but that?s not what democracy is all about. Democracy is about people being able to live their lives in freedom and to be protected from the excesses of their neighbors. That is what we are talking about and that is why we want to bring democracy. 

We think it is the lack of democracy that has led to the rise of groups like Hamas, Hizbullah in Lebanon. It is true that terror groups will try and pervert the democratic process, trying to seize power through elections, but if we can build democratic institutions, if we can ingrain a respect for the rule of law, tolerance for the points of view of others in societies, we will all be better off. Would you really want Saddam Hussein or his ilk ruling large sections of humanity for extended periods of time? Then you would really get a nightmare. The President is extremely firm on this issue and I think he has got the strong support of the American people. For too long American administrations kind of looked the other way while countries abused their populations. Saudi Arabia for example, where I served twice - I spent five years of my life there it is the lack of democracy that has radicalized the people. Their inability to express themselves through any other way but religion has led to religious extremism and now political extremism and terrorism. It is not because of democracy. Saudi Arabia is far from a democracy, and yet that is one of the cradles of terrorism and radical ideology of today: Osama Bin Laden. He didn't become a terrorist because of an election or because of our efforts to bring democracy to the region. He was produced by a system that was fundamentally anti-democratic, that we left alone for too many years. So, I think it is about time that the United States is standing up for what we believe and we are pleased that Israel is standing with us.

Thank you.

Ambassador Jones and his wife meet with Shlomo Gilboa, Director of the Haifa Economic Corporation.

Shaul d'Angeli, President of the Haifa Rotary Club and Senior Partner for Ernst and Young, presents Ambassador Jones with a certificate.

Ambassador Jones and Haifa Mayor Yona Yahav exchange gifts.