[Edited transcript]

I want to talk about something that's loomed large in my visit now in Davos. I described Israel as the "Innovation Nation", and I didn't have to persuade people because they were persuaded. But I did say that in the world that we're entering now and that is developing around us, the world of Internet, the world of interconnectivity, we have great hopes and great dangers. We have to maximize the blessing, minimize the curse. And I think Israel can help do both.

When I talk about blessings, they're obvious – it's the spread of knowledge and information and choice, the potential increase in productivity, the advances in education and healthcare, in commerce and entertainment, the accessibility of things that were unimaginable: the libraries of all things instantly available at a fingertip...

So we believe that there is tremendous potential, positive potential, in all these areas and probably many areas that we don't even envision today.

The first thing we're doing is creating a digital Israel. We're connecting the country with fast fiber, which is perhaps one of the ways of closing social gaps, cancelling the whole idea of the periphery – what is called in Israel the periphery. This is a small country anyway, but ultimately it's the fast route of knowledge that can come to every home and give everyone an equal opportunity to partake in this future...

The second thing is to create the environment that allows our entrepreneurs and allows our technologists, our young men and women, to create the devices, the products, the systems, for this new world. Israel is exploding in these capacities and at Davos, I described five factors that enable Israel to be at least 50 times its relative size – I think closer to 80 times its relative size. That means that we're like a country that would have about half a billion people in terms of our cyber capabilities. Why does Israel have these things? I think there are five reasons we have this concentration of talent...

The combination of military or security requirements, extraordinary research institutions, small space, a culture of literacy, and the survival imperative have produced this special mix that makes Israel an outstanding society that produces outstanding capabilities in the field of cyber...

There is one other element that I think is necessary and without it, all of these five elements would not take off and that's a pro-market environment. Unless you have that, the ingenuity in our people, ingenuity of our young people cannot take root. They would simply go elsewhere. The shekel now is very strong currency. That allows them to bring to fruition all these elements. We are committed to making Israel good for business.
 
That is the blessing part. Now comes the curse. There are at least three huge problems that we are tasked to solve in the Internet age.

The first is the problem of skill distribution: Those who have the skills and the capacities and the talents to compete in this world have the future cut out for them, and in many ways the Internet revolution allows you to assure that in Israel and every part of Israel you can get to the people. But what happens with those who don't have the skill set? What happens with those who are less talented? How do we make them not fall behind? How do we give them a piece of this future? This I think is challenge number one.

I think challenge number two is something that has not fully been addressed, but it's the question of the cultural change of instant gratification. Instant gratification becomes a habit. You want something, you click it – pretty soon you won't have to click it either – you get it. But that's not how life works. That's how part of life works and ultimately the ability to defer gratification is the ability to make human advancement and that becomes a specific problem in my line of work because what you're dealing with is the proliferation of instant referendums. And that's not how we govern traditionally.

Ever since the collapse of the Athenian assembly, which you had at least a large decision-making body of several thousand people who are sitting together and making these decisions, we learned that representative government and deferred decisions, deferred gratification, is a much more efficient way to govern. The Internet is challenging that in fundamental ways. I'm not sure for the good, but it's a fact of life.

But I've come to talk to you today about challenge number three, which I think is the biggest challenge of all. The biggest challenge of all is how do we protect cyberspace. This is a huge issue. There isn't any privacy. You know why? You see this thing here, this computer? Porous. Anything that you see around you is perforated and if it's not perforated, it can be perforated. The networks are exposed. The fact that we have networks, increasing complexity of networks, interconnectivity on networks means that anything and everything can be exposed and violated.

That's not something that we've had in history. We have kept human society free because we have had a society of secrets. Individuals have their own space. What is developing now in the world is a fundamental challenge to the idea of privacy and secrecy. There are some who, for obvious and legitimate reasons, extol transparency and transparency has its virtues, but ultimately free societies have limits on transparency. They guarantee individuals or collections of individuals the ability to decide to keep their secrets. For example, the whole idea of intellectual property – that is being fundamentally challenged. The privacy of individuals – fundamentally challenged. The sanctity of our bank accounts – fundamentally challenged. And this goes obviously into public systems: power grids, traffic nets, water systems – you name it. Everything can be violated. Everything can be opened up. Everything can be also sabotaged.

This means that, with the growth of Internet and all the blessings that I described and the other problems that I mentioned, this is one fundamental problem that has to be addressed. I don't know if we can control it fully. We cannot. There will always be states and non-states, for example organized crime, that will make it their goal to violate our systems. And there may always be an arms race between those who seek to attack and those who seek to defend or counter-attack. But that doesn't mean that we cannot bring a series of norms to mitigate this problem. And that's the first thing that I want to say: this belongs to the realm not merely of companies that are discussing this issue here today, but it really should be the priority of top policy makers in government, in the states, but also in the leading non-state actors that are here.

In this I think Israel is unquestionably a leading power, disproportionate to our size for the reasons I mentioned, with great talents and great resources. We have decided to put these resources together in a coherent way and we have structured a national cyber bureau. I've asked Dr. Eviatar Matania to lead it. The basic idea that we have is to put together a consortium, if you will, of our security arms, our university and research capabilities and business together. We think that we can turn this curse into a blessing because we know that people need this. Everybody needs cyber protection.

So we have created a special organization to try to mesh together these elements, obviously to afford cyber defense to our critical systems, to the country; but also to see how we can share with others our experience and our talents. And this requires a decision, which I have made, to relax or reduce some of the constraints that we have traditionally put on such business. The government usually puts constraints on things that have implications for national security, but we have consciously made the decision to lower these restraints because we're taking a gamble, if you will, on the growth of these partnerships, entailing some risks, but willing to do so in order to get a much bigger gain – a bigger gain for Israel, a bigger for these companies; also a bigger gain for you.

Everything that I've just described is driving the growth of hundreds of cyber companies – hundreds of them – in Israel. About half of them didn't exist three or four years ago, and the number is growing rapidly with major investments taking place. And I'm delighted that some very important companies are doing this. They know the Israeli companies that have dealt with this issue, most notably of course, Check Point, but many, many, many others. And companies like EMC, RSA, SafeNet and PayPal and others are here.

These are all developments that we think can expand and we want to assure that this expansion takes place on a grand scale. This is not a flash in the pan. This is not a one-year or two-year effort. We view this as a great effort, a great partnership between government and business for the next decade, possibly two decades or three decades. It will grow. It will change as well, but this is something that we're committed to on a multi-year basis and it's not something that we're going to let go of.

We're also using this to realize, shall we say, my updated vision of Ben Gurion's vision. Ben Gurion always wanted to develop the Negev and he basically believed that by calling people to go there and by having subsidized businesses, in those days textile businesses, that would do it. It didn't quite get the job done, but the dream was still there. What we're doing now is something else. What we're doing is turning Beer Sheva and the whole Negev into the cyber region of Israel and I think of the eastern hemisphere. And the reason we're doing that is because we have an excellent university there with thousands of graduates each year in these relevant fields.

We are deliberately creating exactly this model in Beer Sheva. We have moved significant units of the Israeli Defense Forces to the south; we're putting our national cyber command smack in the University of Beer Sheva; we have a railway line leading from Tel Aviv with a train station that literally you disembark on that point in the campus. So you have our security outfits, our university and an industrial park all within walking distance of 100 yards. That's called a cyber-hub. It's a big thing.

It reflects our commitment to continue to develop Israel, with your partnership and not merely as Innovation Nation, but also as a main contributor, global contributor to something that we all want to see: we want to see cyberspace that is safe, prosperous and free. And we hope that you will be part of it with us. So my parting message to you is this: when you think cyber, think of Israel and on the rest, you can go to Rubik Danilovich. He's waiting there for you – the mayor of Beer Sheva.

Thank you very much.