SECRETARY POWELL: You�ll have to forgive me because of the background noise, I have a hearing loss from my infantry days. So with the background noise I�ll have to ask you to repeat.

QUESTION: I said what did you accomplish today, you saw Sharon, you saw Arafat?

SECRETARY POWELL: I had a good series of discussions with everyone, with Ehud Barak last night, with Mr. Sharon this morning, with the President, and then with Chairman Arafat. I come away concerned about the region because of the level of violence, but at the same time somewhat encouraged that the Prime Minister-elect understands the challenge that is before him: that he has a short period of time ahead to form a government and that he has taken upon his shoulders great responsibility, not only for the people of Israel but for the people of the region. I think you heard at the press conference -- and it�s what I heard in my conversations with him -- that he is going to do everything he can to reach out to the other side and get the violence down, which is really the sine qua non (if I�m pronouncing that correctly) to move forward. The violence must be reduced, and when the violence is reduced I think he is anxious, and I think he expressed that anxiety in the press conference, he certainly did to me, to try to get the economic activity moving forward. But as he indicated, raw materials get in because he knows that if he doesn�t allow those people to earn a living, if he doesn�t allow cross-boundary traffic to begin again, he is creating a problem that will become worse in the future.

So I tried to convey that message in full measure to Chairman Arafat, who listened carefully and as one would expect, provided his side of the story with respect to violence, and his concern about what the Israelis are doing. We had a good exchange; it was solemn and it was to the point, there were no holds barred. I�ve known him for many years, and I kind of made the point, only when we get past this barrier can we begin building confidence among the two sides. You�ve heard me saying this now repeatedly, and I know I may be boring you, but it�s true. When you�ve done that, and when people start to see hope again, because they�re seeing economic improvement, then we can get back to peace. It doesn�t mean you can�t explore ideas in the meantime. It doesn�t mean that it all has to happen absolutely seriatum.

Based on what Ive seen over the last twenty-four hours of my visit, it does begin with the lowering of the violence. As I described it to him, we are at the beginning of a new long hallway that is waiting for you. At the end is a negotiation for peace. Well, we�ve got to get the door open; it is going to take two keys. Both of you are going to have to turn. And both of you are going to have to figure out who sticks the key in first, or can you do it together, or how do you do it. But there has got to be a demonstration of reduced violence or we are not going to get out of the conundrum we find ourselves in. We acknowledge that this goes back, we had some interesting exchanges as to how they can perhaps get started again. I don�t want to get into those details because the two sides are in touch with each other exploring some ideas with respect to security, consultations; whether that will bear fruit or not I don�t know. So many previous starts have not led anywhere, but I don�t want to mislead you. I come away concerned but at the same time with some hope that they understand the position they are in.

QUESTION: I believe you said that your understanding was that Sharon was agreeing there should be a reduction in violence and then talks can begin, but he keeps saying an end to the violence. Are we missing something?

SECRETARY POWELL: I don�t want to put words in his mouth. my impression of the day was if they see a reduction, something that looks like � not just a reduction � more than a reduction, what I heard was not only a reduction but clear signals coming from the other side, the Palestinian side. Clear signal that is coming from the leadership and it is not just spoken to us but it is put out to his side as well. I think he is looking for a reduction of the violence and symbols of that reduction, that make it clear a political judgment has been made.

What I heard from him, and what I think he said at the press conference is when he sees that, then he can begin responding. It is going to be some time before they can get back to the negotiations, it seems to me, and as I use my hand example again, they�re still now quite a bit apart. They keep saying where do we start it? Do we go back to Sharm Al-Sheikh? Do we go back to Wye? Is Taba there? I am trying to be fairly candid, and Taba as they knew it was not accepted. I have said that to you previously. So all we can hope for right now and what I think is the necessary and first step and precondition to improvement is the reduction of the level of violence, SOmething we have been lecturing everybody on for the last several weeks.

QUESTION: Were you disappointed that Sharon didn�t immediately say but we will release this $57 million in tax revenue? Were you disappointed that Sharon didn�t take any sort of immediate steps or give you some sort of guarantee that he would try to ease economic restrictions right away/

SECRETARY POWELL: I wasn�t expecting him to do that.

QUESTION: Did you ask him?

SECRETARY POWELL: I wasn�t expecting him to do that and I didn�t ask him directly because in our conversation it was made clear that his position was there had to be a reduction of the violence. I made it clear in our conversations that there has to be -- at some point, the money has to start flowing again. And he made it just as clear almost in an instantaneous response that it�s hard to do that in a situation he finds himself in with an escalating, rising spiral of violence.

QUESTION: Did you see some signs that Sharon was being more thoughtful about it than he indicated in his public ceremony, in his public comment?

SECRETARY POWELL: I found him very reflective, very thoughtful, very engaged on the issue � yes, Sharon � and realizing the enormity of the problem that he has on his hands. And he also, I think, understands that people are remembering him from another day; and I think he now knows that he is Prime Minister of a country and he has responsibility for all the lands under his stewardship at the moment and not just Israeli land.

QUESTION: Did you see a similar kind of open mindedness on some level in Arafat, anything there?

SECRETARY POWELL: He held to positions that he has held all along; the conversation was brisk on a number of occasions if I can use that word. We had a good discussion. I know him well enough to speak candidly to him and he knows me well enough to speak very very candidly back. And we did that, and I think he understands the situation. But did I see somebody that I have never seen before? No.

QUESTION: Secretary Colin Powell, do you think that he can control the violence? We were told a year ago by George Tenet that there was sort of a sense that he could do it if he wanted to.

SECRETARY POWELL: I don�t know the answer to that question. He certainly has some level of control over much of the activity. But can he control all of it? I don�t know anybody who can control all of it. The question is, is he exercising as much control as he can? That remains to be seen. And we will only know the answer to this question not through interviews such as this but from what happens in the days ahead. Ramallah was quite a bit quieter than we thought it would be.

QUESTION: When you saw the West Bank, you know, we went down into that valley, that very brutal crossing and then�.

SECRETARY POWELL: I didn�t expect it to be quite so steep. I was taken aback. But I had never quite seen settlements like that, how closely packed it all is. And when you take out some of the land that really I guess you can�t hold on -- how packed it is and how difficult it is to sort out that whole situation. And I saw people who were in need, many of whom were in need and many of whom were doing quite well.

QUESTION: What should we understand by the use of the word �siege� and by your argument that the economic restrictions do not affect security, do not improve the security?

SECRETARY POWELL: The impression I got from him was that as he was responding -- in our discussion about violence -- he felt that he was under some condition of siege by the Israeli presence, tanks on street corners, Israelis near by. He made the point, as he did in the press conference, he has to fly into his own headquarters, borrowing helicopters. It was in that context that I was using the word �siege�. If people are not able to get to their jobs, they are not able to earn a living, they become more frustrated. Frustration leads to anger. Anger leads ultimately to acting out that anger in violence. So I think all the pieces are linked together, and I don�t think any of the gentlemen I spoke to over the last 24 hours does not understand that.

QUESTION: Secretary Powell, why is this event tonight not being televised by the Kuwaitis? Is there some reason why they don�t want what is going on tonight to be seen in the region?

SECRETARY POWELL: I don�t know. I think it is essentially a private event. My judgment is that it is not a Kuwait Government performance. It is a private function by certain people in Kuwait and it is very much above board, I can assure you.

QUESTION: What about Jordan? What does the King have to say about sanctions against Iraq? Did he have any ideas about how you might solve this dilemma?

SECRETARY POWELL: I was very pleased with the conversation with King Abdullah and his Prime Minister and Foreign Minister. What impressed me is that they have clear understanding that Iraq�s programs of developing weapons of mass destruction have to be dealt with. There is no confusion in their minds. So I think they are solemnly behind what the UN has been doing for the last ten years, and so I found a receptive audience in making sure those sanctions continue to serve the purpose that they were intended to serve, which is not to hurt the Iraqi people but to contain this development of weapons of mass destruction.

QUESTION: (inaudible) So they kicked out Lloyds of London, so there is nobody watching what goes across the Iraqi- Jordanian border. Did you talk about putting something new there?

SECRETARY POWELL: We raised with him the reality that if we were going to review the sanctions, we had to review where the sanctions tend to leak. He responded by noting that he agreed that everybody had to look and no one front-line state can be at a disadvantage to the other front line states in this regard, but that he understood this concern.

QUESTION: I just wondered whether, on the oil question, they had indicated they were willing to stop buying oil from Iraq.

SECRETARY POWELL: Right now, they understand that they have a great dependency on Iraqi oil. And interestingly they are looking to compensate for any revenue lost that way through increased trade in other parts of the region, say with the West Bank. And of course, I responded by saying I also hope to help improve their situation by moving forward on a free trade agreement.

QUESTION: �..(Iraq)

SECRETARY POWELL: Didn�t come up.

QUESTION: Getting back to Gen. Sharon, or Prime Minister-elect Sharon, do you have any sense in an overarching way that it could be like Nixon and China, only Sharon can bring peace? Is there any sense like that, or it�s too early?

SECRETARY POWELL: I have that hope. I have that prayer. But I think it would be a wild speculation for me to think we are in that kind of a mode. I mean, this is the Middle East and nobody would have predicted that about Nixon to China thirty years ago either, and I think I won�t now.

QUESTION: How much does the conflict in Israel and what you�ve seen in the last 24 hours complicate your other mission, which is that of pushing the new consensus on Iraq.

SECRETARY POWELL: To the extent that Saddam Hussein can play on that conflict and perform these gestures of solidarity with those folks who were suffering in the West Bank and Gaza., it complicates the whole situation. It gives them an audience to play to, and I think that makes it even more important that we focus our attention on the problem that we�re really trying to solve, and that is weapons of mass destruction and trying to deny him that argument of the feeling to the Arab street.

QUESTION: Back to Kuwait, any thoughts on this tenth anniversary?

SECRETARY POWELL: It hasn�t been very long. (laughter) No, I am pleased to be going back. We will do this. I will talk again later. It is going to be good to see President Bush, Mrs. Thatcher, Norm and some of the other commanders who I know will be there. Norm�s my buddy. We all had a marvelous and demanding shared experience and in the ten years that have past we have we�ve all talked to each other from time to time. It will be good to see them again and it�ll be good to reflect on what we accomplished and to remind everybody this was a guy who invaded a country that was not doing anything to him; and we did exactly what President Bush said. The aggression did not stand, and Iraq is trapped in a prison of its own making and Kuwait has many friends that are coming to celebrate its freedom tomorrow.

QUESTION: Are you stunned that he is still in power after all these years?

SECRETARY POWELL: Stunned isn�t the word. I never ever have underestimated the power of a dictator, and I don�t think you�ll find me on the record ever predicting his demise at that time. But I also thought that we had pretty much removed his stings and frankly for ten years we really have.

Thank you.

[End.]