... Israel is facing today a set of challenges that are daunting, nothing less than that, and we'll need all the unity and the strength that we can muster to overcome those challenges.

The first challenge is Iran. You said, Natan [Sharansky], quoting my father, that the Jewish fate has changed because of the Jewish state, and that is true. But not the designs of the enemies of the Jewish people. They have not changed with the rise of the Jewish state.

That is the millennial desire of the enemies of the Jews, fired by Jew hatred in antiquity and medieval times and in modern times to eradicate the Jewish people. That has not changed. It may have taken a back seat for a few decades after the Holocaust, it was politically improper, but it has come back with full force, in the renascent Islamist anti-Semitism, the anarchist left and that strange bond between them, and also in the failure of those who should know better to stand up against the de-legitimization of Israel - in fact, to concur in it and to assist it by portraying Israel, which is a uniquely moral country and the only country that observes human rights and fights for democracy and fights for the rights of people to be heard and fights for the rights of minorities and maintains those rights and the rights of women and everyone else, the de-legitimization of Israel in the face of the attempts to actually destroy is one of the great moral failures of our time.

And we should expose it, we should speak out against it, and I know you do and I do and we should do so more often, because there's nothing short of an effort to eradicate the Jewish state, and we should be clear about that, that is spearheaded first by Iran. Iran makes no bones about it, it is developing nuclear weapons with the expressed purpose of destroying the Jewish state, and I think this is the foremost challenge of the next government that we will form.

I think as in the other instances, what is directed, the hatred that is directed against the Jews threatens the rest of the world, but the rest of the world doesn’t see it. That is also a repetition of history.

But I think that the development of nuclear weapons by Iran will be a pivot of history, will change the balance of power irrevocably in the world. When people with unlimited ambitions of aggression get unlimited weapons, what they believe are weapons of unlimited power, the demon is uncorked, and it's happened before. Up to the point when they think that they've got the power to work out their mad designs, up to that point, they're careful, even though they can be quite aggressive and they are, they can use terror and they can use subterfuge and they can use many other acts of violence, but this is nothing compared to the point where they think they've assumed the critical mass of power necessary to carry out their fantasies.

This is the greatest mistake of history - to assume that people will behave rationally when they're fundamentally irrational when you give them the power of mass death. Iran is seeking the power of mass death, and it's enough to see what they're doing now to realize what they'll do then. Because what they are doing now is conducting a worldwide web of terror - brazen, unabashed, across a dozen countries. That number is growing every day, with their henchman, Hezbollah - they've just been exposed in Bulgaria, but they're exposed everywhere. Governments know it, they know it, but they don’t call it like it is, and I congratulate Bulgaria for doing so. You should congratulate them too. And in addition what they're doing, they're conducting a brazen campaign of cyber attacks against everyone - against Israel, against the United States.

This is the unseen attack, but it's felt and it will be felt more and more. And they're arming their tentacles, their poisoned tentacles of Hamas and Islamic Jihad and Hezbollah with tens of thousands of rockets and deadly weapons. They're threatening, I believe, not only the security of Israel but the security of every regime in the Middle East, and certainly the flow of oil from this region. And certainly their development of nuclear weapons will spark a nuclear arms race. It will make the Middle East a nuclear tinderbox. It will change the world.

We've not seen anything like it. We've not seen since the advent of nuclear weapons a power that could contemplate using those weapons with happy abandon - they say so. Nobody has said so since the Cuban missile crisis, over a half a century ago. Nobody has said that.

They say it. They move forward. They're progressing. They're getting closer to the red line that I had set at the UN. They're building rapid centrifuges: that is centrifuges that enrich the uranium needed to make nuclear bombs at three times the pace so that they could cross that red line and get to a high enrichment to a sufficient amount of 90% enriched uranium within a much shorter time. They're doing all that. So far, they've not been stopped. And the sanctions themselves - even tougher sanctions - will not stop them.

Case in point, North Korea. Have tough sanctions stopped North Korea? No. And the fact that they produced a nuclear explosion reverberates everywhere in the Middle East, and especially in Iran. They say, "Where is the world? Where is the international community? Where is the tough response?" It's a question that everybody deserves to ask. Sanctions alone will not stop the nuclear program of Iran. They have to be coupled with a robust, credible military threat. If they are not, there's no chance to stop it. If they're coupled with that military threat, there is a chance to stop it. And if it doesn't stop it that way, then it will have to be stopped another way. But the world has to decide whether it allows this terror regime that breaks all norms to have access to atomic bombs.

I believe that stronger sanctions must be combined with credible military means, and I believe that stopping Iran is the number one goal of anyone seeking peace and security in the world. It's certainly the number one topic that President Obama and I will talk about in our upcoming meeting here, which I attach great importance to. I look forward to welcoming President Obama here in Israel, and we have said together that this is item number one.

Item number two is Syria. There's a humanitarian disaster going there. There are over 60,000 people who have butchered. Some of them need medical treatment. The other day, we took some wounded prisoners in, just out of a humanitarian concern, but it's important to understand that Syria could also be a strategic disaster. It is an underdeveloped country. Its GDP per capita is a few thousand dollars at best.

But it contains the most lethal weapons on earth, short of nuclear weapons. It's got chemical weapons; it's got advanced anti-aircraft missile systems that are the most advanced in the world; it's got other deadly weapons that could threaten not only Israel, but threaten the United States and its allies. Some of them are the most sophisticated weapons ever built. And those weapons will be up for grabs if the Syrian regime collapses. Israel can't sit idly by and see these weapons transferred to Hezbollah or other terror groups. So we will do whatever is necessary to defend ourselves.

In addition to that, of course, we have the general instability in this region. I'm giving you the good news. Look around us. There's a tide, and that tide is moving in the wrong direction. It is not moving in the direction of modernity. It is moving in the direction of early medievalism. I didn't want to say medievalism because my father was a scholar of medieval history, and I think he would tell me that there were advances in late medieval Europe that we haven't seen in parts of these countries. They set back the clock. They want to turn back history. And they move.

I have to say that history waits for no one. Things are moving. They're moving right now in a bad direction that I have defined, and we can't sit and wait for things to happen. We have to united our forces and take whatever necessary action to protect ourselves, prepare ourselves for what is taking place. That is often not mirrored in our public discussions and even in our politics or in our press, but these are the fundamental facts of our existence and the challenges to our future.

One of them is to seek a realistic peace with our Palestinian neighbors: realistic because we understand the territories that we vacated have been taken over by the forces I've just described. We walked out of Lebanon and we've got an Iranian proxy, Hezbollah, armed to the teeth, firing rockets on our country. We walked out of Gaza and we've got an Iranian proxy, Hamas, armed to the teeth, firing rockets into our cities. We can't afford to do this a third time, so we need a peace process and a peace result that gives us peace and gives us security; and that is not achieved by merely signing a piece of paper. Peace treaties in themselves do not guarantee the continuity of peace. Just think about that. I could give you a case in point, but you can imagine it yourself.

So in addition to a piece of paper, we need actual security on the ground. This means that when we speak about our Palestinian neighbors, we must have a credibly, thoroughly demilitarized Palestinian state. We have to have that. Otherwise, we'll have a replication of what happened in Lebanon and in Gaza. And this is not a simple task. It requires very, very stringent conditions, and it requires very tough negotiations. Because we just can't close our eyes and say, "All right. Let's just walk out. Sign the paper. Hope for the best". We can't do that. We have to assure that what happened once, what happened twice, doesn't happen thrice. That's the first thing.

And the second thing is: we want to have a peace that is based on mutual recognition. Mutual recognition means not only that we recognize them, but that they recognize us. We have the Jewish nation-state of Israel here. It's high time that the Palestinians recognize that. It doesn't that it will percolate from the top down. For that we need security. But that's a necessary understanding, that we have here the nation-state of the Jewish people. That it's not going to be bifurcated or trifurcated into various zones, various autonomies.

This is the state of the Jews. The ability to have any Jew come here is fundamental to our existence. The ability to have our national symbols, our holidays, our history, our culture - that is fundamental. It's a nation-state. It cannot be dissolved. So the conflict has to be resolved with the solidity of the Jewish state ensured, both in terms of recognition and also in terms of security arrangements.

This is something we're prepared to move on. It's difficult. It's not easy to get into these negotiations, because as I've just described it, it's only Israel that has to make concessions. Everybody knows that. Everybody speaks about that. It's the Palestinians who will have to make concessions too. That's part of the world, and that's part of a genuine, workable and durable peace, even though it's not raised like that. But I raise it like that. I call it like it is, and it's a difficult task.

Now, I'm not placing these conditions before the entrance gate. In fact, I place no conditions on entering the negotiations. I have a clear idea of what has to be done to achieve a workable peace. I'm prepared to do it, but I don't place any conditions on entering negotiations. Would that this were true on the Palestinian side. They've done nothing but place condition upon precondition upon precondition for entering the talks. I don't think we should spend or waste another four years negotiating about the negotiations. I think we should just get on with it. And I view President Obama's visit here, along with Secretary Kerry, as an opportunity to reset this and get back to the business of genuine negotiations - direct, unimpeded negotiations without preconditions between Israel and the Palestinians. That's the way to proceed towards peace.

These are the main issues that I'm going to discuss with President Obama when he comes here, but of course, I have other discussions going on today. They're to build a coalition inside Israel that works to form the necessary unity to address the challenges, the enormous challenges I've just described, and one or two that I haven't. And of course most of the conversation is focused on the internal questions of how to continue our economic growth, but also in a way that would lower the prices of commodities, but especially the prices of housing in Israel. And that's a pretty daunting task, although easier than some of the things that I've said, because on the whole, Israel has demonstrated - I think we have demonstrated a great capacity to manage our economy responsibly and effectively.

We're number one in the developed world in growth over the last four years, in the creation of jobs, in low unemployment. That's not bad. I mean, we've been criticized for having a 4% deficit. I know a lot of countries who would trade and get that immediately. But obviously, these successes - as important as they are - have come through deliberate policies, and those policies also have to address the fact that Israelis pay about three times what they should be paying relative to America for the cost of housing, and that even though we've gone up and since I was Finance Minister and we made some big reforms in this country - in fact we began them earlier by opening our markets to import competition. That was seen as a disaster at the time.

And then as Prime Minister for the first time, I opened up our currency markets. You can actually take money in and out of this country in an unlimited way. Can you imagine Israel in 1998, 1997 - you couldn't take out more than $3,000. You would have to register this with the Central Bank. You remember that? Can you imagine this? This was the country, this was the hi-tech country giving software to all the companies - financial software - to all the countries in the world, and you'd have to get a Central Bank official to authorize the dollar subscription to Newsweek! Well, things have changed, haven't they?

So we changed that. We've done a lot of reforms, a lot of reforms. And as a result, Israel has caught up with Europe, but we still are not at the place where I believe we can be. We have $32,000 per capita income; I think we can go a lot higher, and as we go higher, I want to drive down the costs which are primarily the result of cartels and monopolies, and very often when it comes to the price of housing, government monopolies. Try to build a porch in this country and you'll see how difficult that is.

So we have a big job to do, and we also have a job to do of sharing the burden. I think it's not a simple process, because it involves essentially changing patterns that have been sustained here over the last 65 years, begun by David Ben-Gurion. We have to take a Haredi population that has moved in one direction and move it in the other direction in such a way that we don't create an irreparable rupture in the society. That has begun to happen in the last four years as the numbers of Haredim in the military service and in national service jumped for the first time from 300 to about 3,000. And we want to continue this without causing retrenchment.

And we want to continue this also with the tremendous increase of participation in the job market. That is also happening, partly as a result of very difficult reforms that I put in as Finance Minister that reduced child allowances and encouraged people to go into the job market. The rate of participation in the job market has gone up by 2.5% in the last four years. That's an enormous number, enormous. It's relative to the OECD or relative to other countries, relative to Israel itself, it's an enormous change. You have to know the particulars to appreciate how deep that is. We want to continue both trends: we want to continue the participation in the military and national service; and we want to continue the participation in the job market. Because that's the only way that we'll secure not only the sharing of the total burden, but also give Israel the opportunity for growth. This is a source of growth, a clear engine of growth for the coming two decades.

This is a daunting challenge because it's simplified, it's sloganized, it's diluted to irrelevancy by the political process, but that's always the tendency of the political process, and it's the task of political leaders to extract depth from superficiality or depth from shallowness. I don't know how we do that. That's alchemy, but that's the main job that we have, and I intend to do it.

So these are some of the main problems that we face, the main challenges that we face. They're by no means simple, and especially they're not simple because of the turbulence around us and the great change in the regimes around us and the great change in the weapons around us. This is something that we've been able to deal with so far, and we've dealt with them, I think, responsibly and effectively. But it remains the main challenge to secure the Jewish future.

I don't believe that we can do that disunited, and I keep pushing for a broad national unity government. But that national unity government also extends to the Jewish people. We need to unite our forces against our enemies, against our detractors, against those who don't see the enormity of the challenges that we face, and those who constantly, constantly jab at an Israel that is seeking to create a better life for Jews and Arabs, and accuse it of being a backward, dark regime. It's not. We should stand up for Israel. We should stand up for the truth.

Thank you very much.