I am deeply honored by your warm welcome. And I am deeply honored that you have given me the opportunity to address Congress a second time.

Mr. Vice President, do you remember the time we were the new kids in town?

And I do see a lot of old friends here. And I do see a lot of new friends of Israel here. Democrats and Republicans alike.

Israel has no better friend than America. And America has no better friend than Israel. We stand together to defend democracy. We stand together to advance peace. We stand together to fight terrorism. Congratulations America, Congratulations, Mr. President. You got bin Laden. Good riddance!

In an unstable Middle East, Israel is the one anchor of stability. In a region of shifting alliances, Israel is America's unwavering ally. Israel has always been pro-American. Israel will always be pro-American.

My friends, you don't need to do nation building in Israel. We're already built. You don't need to export democracy to Israel. We've already got it. You don't need to send American troops to defend Israel. We defend ourselves. You've been very generous in giving us tools to do the job of defending Israel on our own. Thank you all, and thank you President Obama, for your steadfast commitment to Israel's security. I know economic times are tough. I deeply appreciate this.

Support for Israel's security is a wise investment in our common future. For an epic battle is now unfolding in the Middle East, between tyranny and freedom. A great convulsion is shaking the earth from the Khyber Pass to the Straits of Gibraltar. The tremors have shattered states and toppled governments. And we can all see that the ground is still shifting. Now this historic moment holds the promise of a new dawn of freedom and opportunity. Millions of young people are determined to change their future. We all look at them. They muster courage. They risk their lives. They demand dignity. They desire liberty.

These extraordinary scenes in Tunis and Cairo, evoke those of Berlin and Prague in 1989. Yet as we share their hopes, but we also must also remember that those hopes could be snuffed out as they were in Tehran in 1979. You remember what happened then. The brief democratic spring in Iran was cut short by a ferocious and unforgiving tyranny. This same tyranny smothered Lebanon's democratic Cedar Revolution, and inflicted on that long-suffering country, the medieval rule of Hezbollah.

So today, the Middle East stands at a fateful crossroads. Like all of you, I pray

that the peoples of the region choose the path less traveled, the path of liberty. No one knows what this path consists of better than you. This path is not paved by elections alone. It is paved when governments permit protests in town squares, when limits are placed on the powers of rulers, when judges are beholden to laws and not men, and when human rights cannot be crushed by tribal loyalties or mob rule.

Israel has always embraced this path, in the Middle East has long rejected it. In a region where women are stoned, gays are hanged, Christians are persecuted, Israel stands out. It is different.

As the great English writer George Eliot predicted over a century ago, that once established, the Jewish state will "shine like a bright star of freedom amid the despotisms of the East." Well, she was right. We have a free press, independent courts, an open economy, rambunctious parliamentary debates. You think you guys are tough on one another in Congress? Come spend a day in the Knesset. Be my guest.

Courageous Arab protesters, are now struggling to secure these very same rights for their peoples, for their societies. We're proud that over one million Arab citizens of Israel have been enjoying these rights for decades. Of the 300 million Arabs in the Middle East and North Africa, only Israel's Arab citizens enjoy real democratic rights. I want you to stop for a second and think about that. Of those 300 million Arabs, less than one-half of one-percent are truly free, and they're all citizens of Israel!

This startling fact reveals a basic truth: Israel is not what is wrong about the Middle East. Israel is what is right about the Middle East.

Israel fully supports the desire of Arab peoples in our region to live freely. We long for the day when Israel will be one of many real democracies in the Middle East.

Fifteen years ago, I stood at this very podium, and said that democracy must start to take root in the Arab World. Well, it's begun to take root. This beginning holds the promise of a brilliant future of peace and prosperity. For I believe that a Middle East that is genuinely democratic will be a Middle East truly at peace.

But while we hope and work for the best, we must also recognize that powerful forces oppose this future. They oppose modernity. They oppose democracy. They oppose peace.

Foremost among these forces is Iran. The tyranny in Tehran brutalizes its own people. It supports attacks against American troops in Afghanistan and Iraq. It subjugates Lebanon and Gaza. It sponsors terror worldwide.

When I last stood here, I spoke of the dire consequences of Iran developing nuclear weapons. Now time is running out, and the hinge of history may soon turn. For the greatest danger facing humanity could soon be upon us: A militant Islamic regime armed with nuclear weapons.

Militant Islam threatens the world. It threatens Islam. I have no doubt that it will ultimately be defeated. It will eventually succumb to the forces of freedom and progress. But like other fanaticisms that were doomed to fail, militant Islam could exact a horrific price from all of us before its inevitable demise.

A nuclear-armed Iran would ignite a nuclear arms race in the Middle East. It would give terrorists a nuclear umbrella. It would make the nightmare of nuclear terrorism a clear and present danger throughout the world. I want you to understand what this means. They could put the bomb anywhere. They could put it on a missile. It could be on a container ship in a port, or in a suitcase on a subway.

Now the threat to my country cannot be overstated. Those who dismiss it are sticking their heads in the sand. Less than seven decades after six million Jews were murdered, Iran's leaders deny the Holocaust of the Jewish people, while calling for the annihilation of the Jewish state.

Leaders who spew such venom, should be banned from every respectable forum on the planet. But there is something that makes the outrage even greater: The lack of outrage. In much of the international community, the calls for our destruction are met with utter silence. It is even worse because there are many who rush to condemn Israel for defending itself against Iran's terror proxies.

But not you. Not America. You have acted differently. You've condemned the Iranian regime for its genocidal aims. You've passed tough sanctions against Iran. History will salute you America.

President Obama has said that the United States is determined to prevent Iran from developing nuclear weapons. He successfully led the Security Council to adopt sanctions against Iran. You in Congress passed even tougher sanctions. These words and deeds are vitally important.

Yet the Ayatollah regime briefly suspended its nuclear program only once, in 2003, when it feared the possibility of military action. That same year, Muammar Qadaffi gave up his nuclear weapons program, and for the same reason. The more Iran believes that all options are on the table, the less the chance of confrontation. This is why I ask you to continue to send an unequivocal message: That America will never permit Iran to develop nuclear weapons.

As for Israel, if history has taught the Jewish people anything, it is that we must take calls for our destruction seriously. We are a nation that rose from the ashes of the Holocaust. When we say never again, we mean never again. Israel always reserves the right to defend itself.

My friends, while Israel will be ever vigilant in its defense, we will never give up on our quest for peace. I guess we'll give it up when we achieve it. Israel wants peace. Israel needs peace. We've achieved historic peace agreements with Egypt and Jordan that have held up for decades.

I remember what it was like before we had peace. I was nearly killed in a firefight inside the Suez Canal. I mean that literally. I battled terrorists along both banks of the Jordan River. Too many Israelis have lost loved ones. I know their grief. I lost my brother.

So no one in Israel wants a return to those terrible days. The peace with Egypt and Jordan has long served as an anchor of stability and peace in the heart of the Middle East.

This peace should be bolstered by economic and political support to all those who remain committed to peace.

The peace agreements with Egypt and Jordan are vital. But they're not enough. We must also find a way to forge a lasting peace with the Palestinians. Two years ago, I publicly committed to a solution of two states for two peoples: A Palestinian state alongside the Jewish state.

I am willing to make painful compromises to achieve this historic peace. As the leader of Israel, it is my responsibility to lead my people to peace.

This is not easy for me. I recognize that in a genuine peace, we will be required to give up parts of the Jewish homeland. In Judea and Samaria, the Jewish people are not foreign occupiers. We are not the British in India. We are not the Belgians in the Congo.

This is the land of our forefathers, the Land of Israel, to which Abraham brought the idea of one God, where David set out to confront Goliath, and where Isaiah saw a vision of eternal peace. No distortion of history can deny the four thousand year old bond, between the Jewish people and the Jewish land.

But there is another truth: The Palestinians share this small land with us. We seek a peace in which they will be neither Israel's subjects nor its citizens. They should enjoy a national life of dignity as a free, viable and independent people in their own state. They should enjoy a prosperous economy, where their creativity and initiative can flourish.

We've already seen the beginnings of what is possible. In the last two years,

the Palestinians have begun to build a better life for themselves. Prime Minister Fayad has led this effort. I wish him a speedy recovery from his recent operation.

We've helped the Palestinian economy by removing hundreds of barriers and roadblocks to the free flow of goods and people. The results have been nothing short of remarkable. The Palestinian economy is booming. It's growing by more than 10% a year.

Palestinian cities look very different today than they did just a few years ago. They have shopping malls, movie theaters, restaurants, banks. They even have e-businesses. This is all happening without peace. Imagine what could happen with peace. Peace would herald a new day for both peoples. It would make the dream of a broader Arab-Israeli peace a realistic possibility.

So now here is the question. You have to ask it. If the benefits of peace with the Palestinians are so clear, why has peace eluded us? Because all six Israeli Prime Ministers since the signing of Oslo accords agreed to establish a Palestinian state. Myself included. So why has peace not been achieved? Because so far, the Palestinians have been unwilling to accept a Palestinian state, if it meant accepting a Jewish state alongside it.

You see, our conflict has never been about the establishment of a Palestinian state. It has always been about the existence of the Jewish state. This is what this conflict is about. In 1947, the United Nations voted to partition the land into a Jewish state and an Arab state. The Jews said yes. The Palestinians said no. In recent years, the Palestinians twice refused generous offers by Israeli Prime Ministers, to establish a Palestinian state on virtually all the territory won by Israel in the Six Day War.

They were simply unwilling to end the conflict. And I regret to say this: They continue to educate their children to hate. They continue to name public squares after terrorists. And worst of all, they continue to perpetuate the fantasy that Israel will one day be flooded by the descendants of Palestinian refugees.

My friends, this must come to an end. President Abbas must do what I have done. I stood before my people, and I told you it wasn't easy for me, and I said... "I will accept a Palestinian state." It is time for President Abbas to stand before his people and say... "I will accept a Jewish state."

Those six words will change history. They will make clear to the Palestinians that this conflict must come to an end. That they are not building a state to continue the conflict with Israel, but to end it. They will convince the people of Israel that they have a true partner for peace. With such a partner, the people of Israel will be prepared to make a far reaching compromise. I will be prepared to make a far reaching compromise.

This compromise must reflect the dramatic demographic changes that have occurred since 1967. The vast majority of the 650,000 Israelis who live beyond the 1967 lines, reside in neighborhoods and suburbs of Jerusalem and Greater Tel Aviv.

These areas are densely populated but geographically quite small. Under any realistic peace agreement, these areas, as well as other places of critical strategic and national importance, will be incorporated into the final borders of Israel.

The status of the settlements will be decided only in negotiations. But we must also be honest. So I am saying today something that should be said publicly by anyone serious about peace. In any peace agreement that ends the conflict, some settlements will end up beyond Israel's borders. The precise delineation of those borders must be negotiated. We will be very generous on the size of a future Palestinian state. But as President Obama said, the border will be different than the one that existed on June 4, 1967. Israel will not return to the indefensible lines of 1967.

We recognize that a Palestinian state must be big enough to be viable, independent and prosperous. President Obama rightly referred to Israel as the homeland of the Jewish people, just as he referred to the future Palestinian state as the homeland of the Palestinian people. Jews from around the world have a right to immigrate to the Jewish state. Palestinians from around the world should have a right to immigrate, if they so choose, to a Palestinian state. This means that the Palestinian refugee problem will be resolved outside the borders of Israel.

As for Jerusalem, only a democratic Israel has protected freedom of worship for all faiths in the city. Jerusalem must never again be divided. Jerusalem must remain the united capital of Israel. I know that this is a difficult issue for Palestinians. But I believe with creativity and goodwill a solution can be found.

This is the peace I plan to forge with a Palestinian partner committed to peace. But you know very well, that in the Middle East, the only peace that will hold is a peace you can defend.

So peace must be anchored in security. In recent years, Israel withdrew from South Lebanon and Gaza. But we didn't get peace. Instead, we got 12,000 thousand rockets fired from those areas on our cities, on our children, by Hezbollah and Hamas. The UN peacekeepers in Lebanon failed to prevent the smuggling of this weaponry. The European observers in Gaza evaporated overnight. So if Israel simply walked out of the territories, the flow of weapons into a future Palestinian state would be unchecked. Missiles fired from it could reach virtually every home in Israel in less than a minute. I want you to think about that too. Imagine that right now we all had less than 60 seconds to find shelter from an incoming rocket. Would you live that way? Would anyone live that way? Well, we aren't going to live that way either.

The truth is that Israel needs unique security arrangements because of its unique size. Israel is one of netanyahu congress 2011the smallest countries in the world. Mr. Vice President, I'll grant you this. It's bigger than Delaware. It's even bigger than Rhode Island. But that's about it. Israel on the 1967 lines would be half the width of the Washington Beltway.

Now here's a bit of nostalgia. I first came to Washington thirty years ago as a young diplomat. It took me a while, but I finally figured it out: There is an America beyond the Beltway. But Israel on the 1967 lines would be only nine miles wide. So much for strategic depth.

So it is therefore absolutely vital for Israel's security that a Palestinian state be fully demilitarized. And it is vital that Israel maintain a long-term military presence along the Jordan River. Solid security arrangements on the ground are necessary not only to protect the peace, they are necessary to protect Israel in case the peace unravels. For in our unstable region, no one can guarantee that our peace partners today will be there tomorrow.

And when I say tomorrow, I don't mean some distant time in the future. I mean -- tomorrow. Peace can be achieved only around the negotiating table. The Palestinian attempt to impose a settlement through the United Nations will not bring peace. It should be forcefully opposed by all those who want to see this conflict end.

I appreciate the President's clear position on this issue. Peace cannot be imposed. It must be negotiated. But it can only be negotiated with partners committed to peace.

And Hamas is not a partner for peace. Hamas remains committed to Israel's destruction and to terrorism. They have a charter. That charter not only calls for the obliteration of Israel, but says 'kill the Jews wherever you find them'. Hamas' leader condemned the killing of Osama bin Laden and praised him as a holy warrior. Now again I want to make this clear. Israel is prepared to sit down today and negotiate peace with the Palestinian Authority. I believe we can fashion a brilliant future of peace for our children. But Israel will not negotiate with a Palestinian government backed by the Palestinian version of Al Qaeda.

So I say to President Abbas: Tear up your pact with Hamas! Sit down and negotiate! Make peace with the Jewish state! And if you do, I promise you this. Israel will not be the last country to welcome a Palestinian state as a new member of the United Nations. It will be the first to do so.

My friends, the momentous trials of the last century, and the unfolding events of this century, attest to the decisive role of the United States in advancing peace and defending freedom. Providence entrusted the United States to be the guardian of liberty. All peoples who cherish freedom owe a profound debt of gratitude to your great nation. Among the most grateful nations is my nation, the people of Israel, who have fought for their liberty and survival against impossible odds, in ancient and modern times alike.

I speak on behalf of the Jewish people and the Jewish state when I say to you, representatives of America, Thank you. Thank you for your unwavering support for Israel. Thank you for ensuring that the flame of freedom burns bright throughout the world. May God bless all of you. And may God forever bless the United States of America.