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Detailed explanations on the economic ramifications of a failure to resolve the conflict, or demonstrations on a possible Arab shift toward supporting a binational state led many people to realize that "time is not on our side" and that the cost of a future peace may exceed that of peace today.

Since the outbreak of the Al-Aqsa Intifada, the fear of "terror now" has silenced the public discourse on "peace now." In the absence of an effective left, there is no agent in Israel able to convince the public of the urgent need for change, and to outline the heavy cost of perpetuating the conflict. Israel's right has entered this enormous void and filled it with alternative fears: It points to Hamastan at Jerusalem's gates and expresses fear in the face of the right of return and horror at Barack Hussein Obama.

I want you, the people and leaders of Iran, to understand the future that we seek.  It's a future with renewed exchanges among our people, and greater opportunities for partnership and commerce.  It's a future where the old divisions are overcome, where you and all of your neighbors and the wider world can live in greater security and greater peace.

I know that this won't be reached easily.  There are those who insist that we be defined by our differences.

we seek the promise of a new beginning.

Matilda Gifford, 24, said she recorded the meetings in an attempt to expose how police seek to disrupt the legitimate activities of climate change activists. She met the officers twice; they said they were a detective constable and his assistant. During the taped discussions, the officers:• Indicate that she could receive tens of thousands of pounds to pay off her student loans in return for information about individuals within Plane Stupid.• Say they will not pay money direct into her bank account because that would leave an audit trail that would leave her compromised. They said the money would be tax-free, and added: "UK plc can afford more than 20 quid."• Accept that she is a legitimate protester, but warn her that her activity could mean she will struggle to find employment in the future and result in a criminal record.• Claim they have hundreds of informants feeding them information from protest organisations and "big groupings" from across the political spectrum.• Explain that spying could assist her if she was arrested. "People would sell their soul to the devil," an officer said.• Warn her that she could be jailed alongside "hard, evil" people if she received a custodial sentence.

In a statement last night, assistant chief constable George Hamilton said the force had "a responsibility to gather intelligence", and such operations were conducted according to the Regulation of Investigatory Powers Act (RIPA). The force would not comment on the identity of the officers.

"Officers from Strathclyde police have been in contact with a number of protesters who were involved with the Plane Stupid protests including Aberdeen airport," he said. "The purpose of this contact has been to ensure that any future protest activity is carried out within the law and in a manner which respects the rights of all concerned."

Army radio also said the government would commit to working against unauthorised Jewish settlements in the West Bank. With Labour's support, Mr Netanyahu would have 66 seats in the 120-member Knesset, or parliament.

Israel's centre-left Labour party has narrowly voted to join a coalition government led by Benjamin Netanyahu of the right-wing Likud.

The far right Yisrael Beiteinu and ultra-Orthodox Jewish party Shas have already agreed to join the coalition. The centrist Kadima has so far refused to join over policy differences.

If he won support from all of Labour's MPs, he would command 66 seats in the 120-member Knesset, or parliament.

He wants to have Labour on board in order to calm widespread fears that a narrowly right-wing Israeli government could jeopardise renewed peace efforts with the Palestinians.

About half of the party's 13 lawmakers objected to Mr Netanyahu because of his long-standing opposition to peace efforts which Labour has backed, Haaretz newspaper reports. Mr Netanyahu has refused to sign up to the two-state formula which has underpinned more than 15 years of Israeli-Palestinian peace efforts.

Some delegates chanted "disgrace" as the result came in. Mr Barak is defence minister in the current government and would retain the post in the next government, reports suggest.

Under the draft coalition agreement, Labour would get five cabinet posts and the government would commit to continuing negotiations with the Palestinians and to respecting previous deals made with them. Army radio said the government would commit to working against unauthorised Jewish settlements in the West Bank.

A Likud member of the Knesset, Yuli-Yoel Edelstein, said there was general agreement between Likud and Labour on the main international challenges facing the incoming government.

"Because in practical terms, I don't think that either side really believes that it's possible to reach an agreement with the present Palestinian leadership in the near future."

I turn to you, our Palestinian neighbors, led by the Palestinian Authority, and I say: Let’s begin negotiations immediately without preconditions.Israel is obligated by its international commitments and expects all parties to keep their commitments. We want to live with you in peace, as good neighbors.

I do not want war.  No one in Israel wants war.

to our regret, this is not the case with the Palestinians. The closer we get to an agreement with them, the further they retreat and raise demands that are inconsistent with a true desire to end the conflict. Many good people have told us that withdrawal from territories is the key to peace with the Palestinians. Well, we withdrew. But the fact is that every withdrawal was met with massive waves of terror, by suicide bombers and thousands of missiles. We tried to withdraw with an agreement and without an agreement.  We tried a partial withdrawal and a full withdrawal.  In 2000 and again last year, Israel proposed an almost total withdrawal in exchange for an end to the conflict, and twice our offers were rejected. We evacuated every last inch of the Gaza strip, we uprooted tens of settlements and evicted thousands of Israelis from their homes, and in response, we received a hail of missiles on our cities, towns and children.  The claim that territorial withdrawals will bring peace with the Palestinians, or at least advance peace, has up till now not stood the test of reality.

Territorial withdrawals have not lessened the hatred, and to our regret, Palestinian moderates are not yet ready to say the simple words: Israel is the nation-state of the Jewish people, and it will stay that way.

But we must also tell the truth in its entirety: within this homeland lives a large Palestinian community. We do not want to rule over them, we do not want to govern their lives, we do not want to impose either our flag or our culture on them.

The Palestinian leadership must arise and say: “Enough of this conflict. We recognize the right of the Jewish people to a state of their own in this land, and we are prepared to live beside you in true peace.”  I am yearning for that moment, for when Palestinian leaders say those words to our people and to their people, then a path will be opened to resolving all the problems between our peoples, no matter how complex they may be.

Therefore, a fundamental prerequisite for ending the conflict is a public, binding and unequivocal Palestinian recognition of Israel as the nation state of the Jewish people.  To vest this declaration with practical meaning, there must also be a clear understanding that the Palestinian refugee problem will be resolved outside Israel’s borders.  For it is clear that any demand for resettling Palestinian refugees within Israel undermines Israel’s continued existence as the state of the Jewish people.

Tiny Israel successfully absorbed tens of thousands of Jewish refugees who left their homes and belongings in Arab countries.  Therefore, justice and logic demand that the Palestinian refugee problem be solved outside Israel’s borders.

the connection between the Jewish people and the Land of Israel has lasted for more than 3500 years.  Judea and Samaria, the places where Abraham, Isaac, and Jacob, David and Solomon, and Isaiah and Jeremiah lived, are not alien to us.  This is the land of our forefathers. The right of the Jewish people to a state in the land of Israel does not derive from the catastrophes that have plagued our people. True, for 2000 years the Jewish people suffered expulsions, pogroms, blood libels, and massacres which culminated in a Holocaust - a suffering which has no parallel in human history.  There are those who say that if the Holocaust had not occurred, the state of Israel would never have been established.  But I say that if the state of Israel would have been established earlier, the Holocaust would not have occured. 

our right to build our sovereign state here, in the land of Israel, arises from one simple fact: this is the homeland of the Jewish people, this is where our identity was forged. 

the simple truth is that the root of the conflict was, and remains, the refusal to recognize the right of the Jewish people to a state of their own, in their historic homeland.   In 1947, when the United Nations proposed the partition plan of a Jewish state and an Arab state, the entire Arab world rejected the resolution. The Jewish community, by contrast, welcomed it by dancing and rejoicing. The Arabs rejected any Jewish state, in any borders. Those who think that the continued enmity toward Israel is a product of our presence in Judea, Samaria and Gaza, is confusing cause and consequence. The attacks against us began in the 1920s, escalated into a comprehensive attack in 1948 with the declaration of Israel’s independence, continued with the fedayeen attacks in the 1950s, and climaxed in 1967, on the eve of the six-day war, in an attempt to tighten a noose around the neck of the State of Israel.  All this occurred during the fifty years before a single Israeli soldier ever set foot in Judea and Samaria .

In my vision of peace, in this small land of ours, two peoples live freely, side-by-side, in amity and mutual respect.  Each will have its own flag, its own national anthem, its own government.  Neither will threaten the security or survival of the other.

This policy must take into account the international situation that has recently developed.  We must recognize this reality and at the same time stand firmly on those principles essential for Israel.

Palestinians must clearly and unambiguously recognize Israel as the state of the Jewish people.  The second principle is: demilitarization. The territory under Palestinian control must be demilitarized with ironclad security provisions for Israel.  Without these two conditions, there is a real danger that an armed Palestinian state would emerge that would become another terrorist base against the Jewish state, such as the one in Gaza. 

In order to achieve peace, we must ensure that Palestinians will not be able to import missiles into their territory, to field an army, to close their airspace to us, or to make pacts with the likes of Hezbollah and Iran.

It is impossible to expect us to agree in advance to the principle of a Palestinian state without assurances that this state will be demilitarized.

Therefore, today we ask our friends in the international community, led by the United States, for what is critical to the security of Israel:  Clear commitments that in a future peace agreement, the territory controlled by the Palestinians will be demilitarized: namely, without an army, without control of its airspace, and with effective security measures to prevent weapons smuggling into the territory – real monitoring, and not what occurs in Gaza today.  And obviously, the Palestinians will not be able to forge military pacts.

Without this, sooner or later, these territories will become another Hamastan. And that we cannot accept.

Regarding the remaining important issues that will be discussed as part of the final settlement, my positions are known: Israel needs defensible borders, and Jerusalem must remain the united capital of Israel

The territorial question will be discussed as part of the final peace agreement.  In the meantime, we have no intention of building new settlements or of expropriating additional land for existing settlements. But there is a need to enable the residents to live normal lives, to allow mothers and fathers to raise their children like families elsewhere.  The settlers are neither the enemies of the people nor the enemies of peace.  Rather, they are an integral part of our people, a principled, pioneering and Zionist public.

Unity among us is essential and will help us achieve reconciliation with our neighbors.

If the Palestinians turn toward peace – in fighting terror, in strengthening governance and the rule of law, in educating their children for peace and in stopping incitement against Israel - we will do our part in making every effort to facilitate freedom of movement and access, and to enable them to develop their economy.  All of this will help us advance a peace treaty between us. 

Above all else, the Palestinians must decide between the path of peace and the path of Hamas. The Palestinian Authority will have to establish the rule of law in Gaza and overcome Hamas.  Israel will not sit at the negotiating table with terrorists who seek their destruction.   Hamas will not even allow the Red Cross to visit our kidnapped soldier Gilad Shalit

If we receive this guarantee regarding demilitirization and Israel’s security needs, and if the Palestinians recognize Israel as the State of the Jewish people, then we will be ready in a future peace agreement to reach a solution where a demilitarized Palestinian state exists alongside the Jewish state. 

Netanyahu, in an address seen as his response to Obama, refused to heed the U.S. call for an immediate freeze of construction on lands Palestinians claim for their future state. He also said the holy city of Jerusalem must remain under Israeli sovereignty.

''I call on you, our Palestinian neighbors, and to the leadership of the Palestinian Authority: Let us begin peace negotiations immediately, without preconditions,'' he said, calling on the wider Arab world to work with him. ''Let's make peace. I am willing to meet with you any time any place -- in Damascus, Riyadh, Beirut and in Jerusalem.''

''Our right to form our sovereign state here in the land of Israel stems from one simple fact. The Land of Israel is the birthplace of the Jewish people,'' he said.

''In my vision, there are two free peoples living side by side each with each other, each with its own flag and national anthem,'' he said.Netanyahu has said he fears the West Bank could follow the path of the Gaza Strip -- which the Palestinians also claim for their future state. Israel withdrew from Gaza in 2005, and Hamas militants now control the area, often firing rockets into southern Israel.''In any peace agreement, the territory under Palestinian control must be disarmed, with solid security guarantees for Israel,'' he said.

'If we get this guarantee for demilitarization and necessary security arrangements for Israel, and if the Palestinians recognize Israel as the state of the Jewish people, we will be willing in a real peace agreement to reach a solution of a demilitarized Palestinian state alongside the Jewish state,'' he said.

Netanyahu gave no indication as to how much captured land he would be willing to relinquish. However, he ruled out a division of Jerusalem, saying, ''Israel's capital will remain united.''

''We have no intention to build new settlements or expropriate land for expanding existing settlements. But there is a need to allow residents to lead a normal life. Settlers are not the enemy of the nation and are not the enemy of peace -- they are our brothers and sisters,'' he said.

Netanyahu also said the Palestinians must recognize Israel as a Jewish state. The Palestinians have refused to do so, fearing it would amount to giving up the rights of millions of refugees and their descendants and discriminate against Israel's own Arab minority.Although the Palestinians have agreed to demilitarization under past peace proposals, Erekat rejected it, saying it would cement Israeli rule over them.

Alireza Nader, an expert on Iran with the RAND corporation, says Rafsanjani retains some leverage against Khamenei and Ahmadinejad as chairman of the Assembly of Experts. However, he says, Khamenei ignored a letter Rafsanjani wrote asking him to restrain Ahmadinejad, who accused the former president of corruption in a televised debate.Ignoring the letter, Nader said, "was perceived by many Iranians as a rebuke to Rafsanjani and his role in the political system."Rafsanjani's influence may have significantly dissipated as a result, he said."Rafsanjani is a son of the revolution," said Tellier of the International Crisis Group. "But his own future depends on how far the leader will allow Ahmadinejad to go in his attacks against Rafsanjani and his family."

Local giants Lockheed Martin and General Dynamics also run substantial government-support operations and would see some weapons projects cut, while other programs would receive budget increases.

In particular, the proposed budget would sharply reduce the number of contractors who help the Pentagon oversee and manage its vast weapons-buying apparatus following a string of reports chronicling cost overruns and other problems.

A CACI executive said the company is waiting for further details before commenting. The Arlington company has 12,300 employees, half of whom are in the D.C. region. Ninety-five percent of its $2.4 billion in revenue last year came from federal contracts for technical services and information technology and contracting oversight for the Army and Navy, as well as such Pentagon offices as the Defense Advanced Research Projects Agency and the Missile Defense Agency.

Overall, the budget Gates proposed calls for major cuts to the weapons programs of some of the largest contractors.

One of the hardest-hit defense firms was Boeing. The Chicago company's $150 billion Future Combat Systems, a family of Army vehicles linked by high-tech communications, came under criticism from Gates for being costly and plagued by development problems. He proposed canceling the $87 billion vehicle part of the system -- a move that would hurt Boeing, SAIC and their subcontractors, BAE and General Dynamics.

Gates also proposed canceling some of Boeing's missile defense programs, including one to equip a modified 747 aircraft with a laser that can shoot down missiles soon after they're launched, saying the program "has significant affordability and technology problems and the program's proposed operational role is highly questionable."

Boeing would also be hurt because it makes one-third of the F-22 fighter jet and the Pentagon plans to stop ordering additional aircraft. Gates would also cancel the Air Force's program to build a new search-and-rescue helicopter, which had been awarded to Boeing. And it would not order more of Boeing's C-17 cargo planes. Boeing could also see a military satellite program, known as TSAT, end.

Lockheed Martin, of Bethesda, the biggest defense contractor in the world, also took hits on several of its major programs.

Gates said he would kill the company's bid to build the presidential helicopter, known as the VH-71, citing the fact that the program is six years late and has gone from initial estimates of $6 billion to $13 billion.

Lockheed was also hit by the move to not order more F-22 fighter jets. Perhaps hoping for support in Congress, the company has taken out newspaper ads explaining how its F-22 supports roughly 25,000 jobs around the country.

But the Pentagon proposed ordering more of Lockheed's F-35 known as the Joint Strike Fighter, and it would increase from two to three the number of littoral combat ships being built by Lockheed and General Dynamics to patrol near enemy coastlines.