MR. NETANYAHU: Good morning -- afternoon, really. This will be a briefing in the full sense of the word. It will be brief. We have a few points that we want to impart within the guidelines that we -- I think we tried to establish yesterday that we will talk about the general direction or the -- some specific directions of the talks but not get into the full details of our proposals, and secondly, also within the objective of saving something to tell you tomorrow, which I think is important.

We have today had a good day within the talks. We had progress in all the delegations. In every one of the delegations there is a discussion going about right now about Israeli proposals submitted in each of the three forums. In the Jordanian-Palestinian delegation there is an Israeli paper that is being discussed. In the Syrian-Israeli talks, there is an Israeli paper being discussed. In the Lebanese-Israeli talks, there is an Israeli paper being discussed.

We think that the talks have reached a stage where we can reduce the gaps or the distances between the sides and move towards some sort of negotiated result around these proposals. This is not yet the culmination of negotiations, but it is the beginning of the narrowing of differences over concrete ideas and concrete areas. We are to that end offering immediately to undertake to agree today or tomorrow or certainly by Thursday by the time that we leave, to agree on a second round of negotiations to be held from our point of view as soon as possible. We have certain limitations next week, as you know, because of our national holidays, but as far as we're concerned, we're prepared to resume the negotiations right afterwards or the closest possible date. We think it's important to maintain the positive momentum that we are experiencing within the delegations, and we hope that the Arab delegations respond positively.

In the Palestinian-Jordanian -- I'm sorry, in the Palestinian component of the Palestinian-Jordanian delegation, we continued to discuss today in great detail -- in considerable detail the ideas for existence -- co-existence in the territories which we have proposed that outlines all the areas that we are talking about for the framework of self-government.

In the area of the municipal -- the pilot municipal elections that we talked about yesterday, I think it's important to stress first that we talked about it. We received several questions on this subject. There began a discussion today, a concrete discussion on this.

The important thing to stress is this: this is not a substitute for broader elections. Broader elections involve a very complicated range of negotiations. They involve questions that tie together the whole area and all the areas of the interim arrangement. They will require complex and, I suspect, lengthy negotiations.

What we have offered is something that allows the undertaking of elections -- other elections immediately. We have suggested something that I think can bring about a positive atmosphere in the territories. I mentioned the response, the positive and, indeed, the enthusiastic response of the Palestinian Arab population to the thirty-odd elections in various organizations yesterday. And I think it also will habituate -- these pilot municipal elections will habituate everyone involved to the idea of democracy.

This is not an obvious idea. This is not an obvious idea. Somebody talked about election games. Elections are not a game. Elections are serious business and a business that is not familiar, unhappily, to the residents, the Arab residents of the territories. We have suggested, therefore, starting something immediately that can be seized upon that can improve the atmosphere that can move the momentum forward. And in no way does it contradict or nullify the negotiations over broader election issues and election questions.

I want to close by saying that in the Syrian delegation we did cross a kind of threshold today, because for the first time since the beginning of these talks, and I mean since Madrid, the Syrians for the first time agreed to accept an Israeli paper that outlines the areas of agreement between Israel and Syria to date. I hope that this is a harbinger of the future, but in any case it's something that did not happen before and it's of some positive note, I think, that it happened today.

MODERATOR: Thank you, Bibi. Ambassador Shoval.

AMB. SHOVAL: There was a very good meeting today between Israel's Foreign Minister, David Levy, and the Secretary of State. The meeting lasted for about an hour and a quarter, I believe.

Although the talks today did not relate directly to the bilateral talks about which Deputy Minister Netanyahu has just reported, I think I could say that both ministers expressed their satisfaction at the way the bilateral talks are proceeding. We also raised some questions with regard to the multilateral talks -- and as you know, there are still some points of disagreement between Israel and the United States on certain aspects of these talks -- as well as reiterated its position in that respect.

I would say that no less important than questions relating to the peace process were the points pertaining to US-Israel bilateral relations, and some very positive points were mentioned and agreed upon. For instance, it was agreed that the United States and Israel will jointly examine the possibility of cooperating on a technical plane with regard to utilizing Israel's expertise in agriculture irrigation and other fields in the former Central Asian republics -- or the Central Asian republics of the former Soviet Union, rather.

Another point which was raised was the question of how to ascertain that Israel's qualitative edge shall be maintained under every condition, under any condition, and it was agreed in principle that a joint group will be set up by the two countries, by the two governments, in order to examine that question.

I would say, in summarizing, in summing up, that these talks today proceeded in the spirit of the very close relationship and friendship between our two countries. Thank you.

MODERATOR: Yes, please?

Q: Mr. Ambassador, how did Secretary Baker respond to Israel's concerns about the diaspora Palestinians?

AMB. SHOVAL: Well, we made our position -- the Minister made our position very clear in that regard. We reiterated that Israel would not agree to participate in any working group in this peace process which does not function in accordance with the ground rules which had been set up originally for this whole process. Certainly not in a question like that. It is very clear to us and I think it's very -- should be very clear to anybody who knows anything about it that the insistence of the Palestinians to include outside Palestinians or diaspora Palestinians in this process is in order to get the right of return question back into the whole process through the back door. Otherwise, there's very little explanation, very little reason why they should insist all of the sudden for so-called diaspora Palestinians to be included. And Israel will not agree to that.

Now if refugees -- Palestinian refugees, the diaspora Palestinians so-called, want to discuss their problems with the Arab governments, well, it is basically really a problem which relates to the Arab governments which have perpetuated the refugee problem for so many decades and to the refugees. If they want to discuss that, let them discuss it. But this is not part of the present peace process. That's the way we look at it.

Q: Mr. Netanyahu, if I could follow up on a question yesterday that was raised in the Palestinian briefing today, there was a comment made on Israel radio by an Israeli spokesperson that if during these municipal elections, a candidate was elected who ended up being a PLO supporter, Israel would find that unacceptable. This goes to what I asked you yesterday. As long as they're under military occupation, what is there to protect the integrity of these elections which is what the Palestinians seem to be concerned about. How can we say we won't accept who you vote in?

MR. NETANYAHU: Let's distinguish between two things. The PLO is an outlaw organization in Israel and any member of the PLO would not participate in the negotiations just as no formal member of the PLO as you know, participates in these talks as well. That is Israel's traditional position. It has not changed.

On the other hand, we're aware of two things. First, that people may have sympathies. We're not in the business of censoring sympathies. Secondly, we understand also that the PLO will try to insert itself into the process, and from our point of view the test of not only the pilot municipal elections that we're talking about, but any other elections that will be undertaken would be the emergence of a leadership that breaks with the PLO. The PLO is committed to the destruction of Israel, not to peace with Israel. It may say differently in other forms but it is -- acts and says precisely this line and follows it in everything that it does. So from Israel's point of view, it is simply not an acceptable negotiating partner.

If on the other hand, there is a leadership that emerges that breaks with the PLO line, the destructionist line, nothing else, Israel refused to negotiate with the PLO, not merely because it's a terrorist organization, but because it's a unique kind of terrorist organization. It is a terrorist organization that is committed to wiping out a sovereign state.

And I don't think that other governments that opposed each one for their own reasons the negotiations with their "terrorists," in quotes, would have any greater agreement to negotiate, say, with the IRA, which there is no willingness to negotiate, or with the Red Army faction, which the Germany government does not negotiate with, and so on, if those terrorist groups also espouse, in addition to terror, the idea of destroying Germany or Britain or whatever. So Israel is not unique in that sense to any other country. What is unique is the terror groups that are attacking Israel. This terrorist organization seeks a goal that is even more incompatible and more unacceptable to any reasonable government. Therefore, what we're seeking is the emergence of a different leadership that will break with this terrorist and destructionist line.

Now, you ask how can we have negotiations guaranteed? We just had them. We just had free elections in the territories. No one -- by the way, no Palestinian Arab today that I know of -- there may have been individual sayings, but I'm not aware of anybody contesting the fairness of the elections. No one has challenged the outcomes of the elections that we've just held. And I think that this is the best indication of the kind of elections that we have in mind.

MODERATOR: Okay, Hamedi (sp) and then Tom.

Q: Ambassador Shoval, we understood that Secretary Levy has got a different point of view, which does not coincide with the Prime Minister concerning the participation of the Palestinians, that the Palestinians could be represented in Ottawa as observers, not as full members. And the question to Mr. Netanyahu concerns -- yes?

MR. NETANYAHU: Let me just put this to rest. This is just not accurate. There's absolutely no divergence of opinion between any part of the Israeli government about that question. No, it's not correct.

Q: Mr. Netanyahu, we understood from the Jordanians that there is a kind of a joint agenda, and he mentioned that you have discussed water and other projects. Can you give us an idea about what is this kind of joint agenda you have agreed on?

MR. NETANYAHU: There are a number of areas that relate to the bilateral relations between Israel and Jordan that would be part of the normalization of the relationship between any two states and especially any two bordering states. You mentioned and correctly such questions as water. I added yesterday that we brought in a deputy minister -- a deputy director general of the ministry of the environment, because the environment questions loom large in the relations between Israel and Jordan. We have a common port, as you know, in Aqaba and so on. And there is a problem of pollution there. We have anything from mosquitoes who don't recognize borders to any -- many, many other areas that would be discussed in the course of establishing normal relations between our two countries.

We have decided that a useful way to approach the subject of politically normalizing these relations is to begin addressing each one of these building blocks of common good neighborly relations. And that's what we're doing. Now, I think in the -- what we sought to do is not only begin to probe these subjects, but to develop an agenda, an agreed upon agenda. That is, we initially proposed, as you know, a set of points which follow very much our ideas of what a peace treaty should look like. What we're seeking to do today, and will continue to do this afternoon, is to try to establish a joint list, an agreed upon list -- agreed upon, that is, by Israel and Jordan -- on the common points to be negotiated in this round of talks and the next round of talks.

MODERATOR: Tom, please?

Q: A couple of questions. One is on the elections. You said the elections won't be a substitute for broader elections. I understand what municipal elections are and I understand what broader elections are, but I don't understand what "pilot municipal elections" are. So I wonder first if you could explain what are you talking about? Is it just municipal elections from one city to the next?

And the second point relates to the Syrian gesture yesterday of apparently lifting the travel ban on Jews. Obviously this is something Israel had asked for a long time, something Israel considered to be a right. But nevertheless, in the context of this relationship in these negotiations it is something of a confidence-building gesture. Do you anticipate Israel would make a counter or reciprocal gesture toward Syria?

MR. NETANYAHU: On the first question you asked on the question of the pilot municipal elections, we said yesterday that we wouldn't discuss our ideas. We have them, by the way, we have ideas on how to proceed.

When I say "pilot" or when we use the word "pilot" that necessarily implies something that begins and that will be followed by something else. Now, we could circumscribe it geographically, or we can circumscribe it functionally. I'm not saying how we view it because this is something that we hope to negotiate -- and I think we have, in a way, begun to negotiate with the first probing questions today from the other side -- in the negotiating room. But the operative word, I think, is "initial."

Q: It will begin with a test case? MR. NETANYAHU: It will begin with an initial stage that will be followed by something else, expanded into something else. And I'm deliberately holding back our own views, which we have, I assure you, because we think that that kind of discussion really ought to take place in the negotiations themselves and not here.

Secondly, you asked about the Syrian policy vis-a-vis the Syrian Jews. I said yesterday that we welcomed this change. I want to say very clearly that we do not think that this should be linked in any way to the peace negotiations. First of all, if we linked it, we would be establishing a principle of hostage-taking.

Q: But you raised it in your negotiations with Syria.

MR. NETANYAHU: We didn't raise it as an issue for commensurate response: If you release these prisoners -- or these hostages that shouldn't be there in the first place, we will do this or that. We said: Release them because you should release them a long time ago. But since you asked -- and by the way, let me say that when we raised this issue yesterday for information -- because we received news about this from public sources. We did not get any kind of communication, direct or indirect, from the Syrians. We heard Ms. Tutwiler say exactly what she said, like you, shortly -- or I think during, actually, the negotiations we got the information. Well, our delegates turned to the Syrians and they asked, "Can you tell us anything about this?" And they said, "Well, we really have nothing to say on this. It's not related to the negotiations." So it's not only we who have, as a principle, from our point of view, unlinked or refused to link these issues with the negotiations, it appears to be Syria's position as well. Now, since you asked, though, about gestures, confidence-building gestures from the Israeli side toward the Syrians, let me point out that we've recently made two of them. We don't perhaps publicize them in the same way, but you should be aware first that a Syrian ship was found in trouble along the coast of Israel, was taken into the Israel port and was fixed up, patched up, treated. There was a very complicated issue of how Syria would pay, or this Syrian company would pay the Israeli --

AMB. SHOVAL: They solved the issue. They didn't pay. (Laughter.)

MR. NETANYAHU: He took the --

Q: But the position of the -- MR. NETANYAHU: Ambassador Shoval took the punch line away. (Laughter.) It was very complicated. We are now in peace negotiations, but Israel, in fact -- talk about gestures, good will gestures - - (laughs) -- we spent thousands and thousands of dollars fixing up this ship in distress, which good neighbors do with one another -- (laughs) -- and then said, well, could we get paid? And they said, well, we're not paying Israel. (Laughter.) We're not at peace with Israel. This is a country we don't recognize. So we ended up footing the bill. Maybe in the course of the peace negotiations we'd have a reciprocal gesture and get paid for that.

In addition, we had some Syrian soldiers stranded in the Hermon, on the Syrian side of Mt. Hermon, which gets to be very snowy, I mean, with several meters of snow and they are really locked out from any reinforcements.

There is only a possibility of reinforcing or supplying them from the air. But for Syria to access that point they go through very sensitive military airspace. And normally we would be very concerned with such flights of helicopters or any other aircraft. The Syrians approached us, and we enabled such -- shall I say succor? -- to be delivered to these Syrian solders in distress.

So here you have within the space of days two Israeli gestures, one towards a civilian ship, commercial ship, the others toward soldiers, Syrian soldiers. And I think that says about enough about our willingness and the spirit that we are bringing to these talks.

AMB. SHOVAL: By the way --

MR. NETANYAHU: All of us.

AMB. SHOVAL: -- we expressed our appreciation today to the Secretary for the American efforts with regard to Syrian Jewry, and I think this note of thanks was certainly due.

MODERATOR: (Calls on questioner.)

Q: Mr. Netanyahu, I'd like to ask you about the benefit of local elections, of municipal elections, for Israel. And you counted yesterday, and then today, what would be the benefits for the Palestinians, you know, nurturing democratic values among them, and so on. But what good would it do for Israel? Why -- would the be interlocutors, as far as Israel is concerned? What's the benefit?

MR. NETANYAHU: The benefit is something that most of the world -- most of the world with the exception of the Middle East -- has come to recognize, that -- I'm not going to repeat Churchill's clichZ, that -- (laughs) -- democracy is - - is it. It may be the worst, but it's the best available. And it definitely makes for better representatives, better -- it makes for better decision- making, and I must tell you it makes ultimately for better negotiations. So the benefit is for everyone, for Arabs, for Jews, I think the benefit is for an ethos that emerges -- that will emerge perhaps in a corner of the Middle East, in a corner of the Arab world, that I hope would spread elsewhere.

You know that same question you can ask to the American government, why there is this -- taking the full court press in the face of what is happening in Peru or the positions taken by the United States and other countries in the face of what happened in China. Democracy is its own value. We could discuss at great length if you wish -- (laughs) -- outside this room, the full implications of the benefits of democracy. I, for one, believe there is a direct relationship ultimately between democracy and the predilection to go to war or the lack of predilection to go to war.

So I see so many benefits that I -- I beg your forgiveness for not going into them. It would take too long. I think they're obvious.

MODERATOR: We have about five minutes. Yes, please?

Q: Minister Netanyahu, are the pilot municipal elections a necessary prerequisite to negotiations on broader elections? And the second question: When you talk about resuming negotiations the week after next, are you talking about a sixth round in Rome or a continuation of this round back in Washington?

MR. NETANYAHU: I'm sorry. Could you repeat the first question. Oh, you asked about the pilot?

Q: Are the pilot elections a necessary --

MR. NETANYAHU: I see. I see.

Q: -- prerequisite to negotiating on broader elections?

MR. NETANYAHU: No. We haven't placed it as a condition of any kind. Realistically, though, and I think we have some experience with this, the broader issue of elections is going to require considerable negotiations, and it probably would be -- I think it probably would benefit from the establishment of these municipal elections. I think it would actually facilitate the negotiations. But we haven't linked the two. We haven't said, well, unless you accept such and such, we won't discuss. We suggest, in fact, discussing continuously and in parallel other subjects, as well.

What we're suggesting is not merely negotiating; we're suggesting implementing these negotiations while -- these pilot municipal elections as we are engaged in negotiations. We haven't placed any limitation on the implementation. I think that's important to stress. Not only did we not link broader negotiations to municipal elections, but we didn't link municipal elections to broader elections in the other way. So as far as we're concerned, we can continue the negotiations on the other issues while implementing already this question.

The second question you asked concerned the venue of the next round. I think that's been agreed upon, and we'll be happy to see all of you there in Rome. It's certainly closer to home.

MODERATOR: Barry, please?

Q: At the last round, we understood that the Palestinians weren't willing to talk about anything that didn't lead to a state, even though at the last day or two they listened to some of your experts a little bit, but essentially there was no negotiations. They wanted only arrangements for statehood. Now, can you -- it's almost impossible to follow their public line. They're hot one day, cold the other. Could you tell us what their basic approach has been in these last two days? Are they negotiating with you on autonomy, are they simply listening and not throwing it back at you, or are they making the same demands that whatever happens has to produce a state?

MR. NETANYAHU: Let me draw a distinction between what happens inside and what happens on the outside. What happens on the inside is actually quite encouraging, in our point of view. It is encouraging because we're discussing concrete, substantive proposals. These are not slogans. These are spheres of life and areas of potential agreement that we have put on the table. They have not been rejected, and we're going one by one and negotiating them.

On the area of pilot municipal elections, there was a willingness to study the proposal yesterday. I thought that was important because it wasn't described I think as it was last -- the whole areas -- or the list of areas was discussed in the last round as "an insult to intelligence." And, of course, we're discussing this today without any insult. And, secondly, the fact that today we already received some questions on this, I think indicates a positive direction. That's on the inside.

On the outside, it's something else. I'm afraid you'll have to form your own impressions. I think maybe there is a disappointment in some quarters that this is actually proceeding in a businesslike and concrete way. I think that maybe there is a -- there's been a pampering, I suppose, in certain quarters that whatever is said, whatever statement is made is taken immediately at face value, whatever the exaggeration, whatever the charge, immediately there is a -- you know, the press lines up with the proverbial Israel bashing. Well, it never happens quite that way even in the worst of times, and this is not the worst of times. This is actually one of the good times. So, there may be a disappointment there that it's not -- the field of press gravity doesn't quite line up according to the Palestinian magnet.

But that's unimportant. We have been trying to downplay the public battles. We're not -- we hear all these incantations of doubt and negativism. We're just not interested now. We're interested in making concrete progress, and since we're making it in the room, I think that's important.

MODERATOR: The last question goes to Israel Radio, Mr. Ben Ami.

Q: Ambassador Shoval, just by what you -- how you quoted Minister Levy today regarding the multilateral and the Israeli policy, Ms. Tutwiler said today that the administration is still waiting for the Israeli official response for the invitation that five countries issued to all parties. Is the -- Mr. Levy's discussion with Secretary Baker today is the official Israeli response or not?

AMB. SHOVAL: No, there is no contradiction between the two things. You are right. We have not yet given our official response. Maybe some of the others haven't given them either. I don't know. What the Foreign Minister restated today was Israel's very clear position opposing any possibility of outside Palestinians participating in any part of these negotiations because this goes counter to the ground rules which were agreed upon. And once you change ground rules, I mean there's no end to it. And, of course, we know why the Palestinians want to change them, and we are not going to go along with that.

MODERATOR: Okay. Thank you very much.