Last Rosh Hashana, when The Jerusalem Post interviewed the new chief of staff, Lt.-Gen. Dan Halutz, his message was distinctly upbeat. He pronounced Israel's geostrategic situation to be better than at any previous stage of modern Israeli history. He said the likelihood of conventional war had never been lower. He said the war on terror had given Israel some improbable Arab allies. And he was clearly feeling, if not relief or even satisfaction, at least a sense of "mission accomplished" regarding the relatively smooth handling of the immensely complex pullout from the Gaza Strip. But now, on the first anniversary of his tenure, and no longer overshadowed by former generals like Shaul Mofaz and Ariel Sharon, the Halutz we encountered this week, on the eve of Shavuot - though as generous with his time, as painstaking in formulating his answers and as candid with his assessments - offered a much starker message. "We are inside a virtual roll of film," he said. "The pictures from 2005 are clearer than the pictures from 2006, and the pictures from 2007 are darker than those from 2006." The reason for the heightened concern, he said, was that Islamic fundamentalism was getting stronger and democratization in certain Muslim countries was not exactly working, in terms of bringing moderate elements to power. In arguably the most candid and lengthy interview he has given since taking the job, Halutz, whom we caught in the midst of the furor over the bombshell of planned new defense cuts, blasted the process by which these cuts were mandated and asserted dramatically that the relentless reduction of defense spending ultimately posed the risk of Israel having "a mediocre army," which, he added unnecessarily, the country could hardly afford. He also took aim at some in the settlement movement, who "should stop pretending to be innocent, since their hands are not clean." Though the overall shift to a greater concern and pessimism was plain, Halutz was nonetheless far from apocalyptic. The interim period might be bitter, but ultimately, he argued, the international community would prove capable of prevailing over Islamic extremism. What was the motivation behind Hizbullah's Katyusha attacks in the north on Sunday? On the one hand, Hizbullah wants to preserve its identity as an Islamic and jihad-driven group that sees its job as guardian of Lebanon. On the other hand, it is under pressure in terms of its [internal Lebanese] political identity. UN Resolution 1559 says Hizbullah and Palestinian groups in Lebanon must disarm. One of the motivations of Hizbullah is to maintain a "hot" border as part of an attempt to explain why it would not be right for it to disarm, since it needs to protect Lebanon from Israel. This, of course, is false. We have nothing against Lebanon, and no interest in attacking the country. We want a quiet border. Lebanon as a country is responsible [for ensuring quiet], however, since we don't talk to Hizbullah, which is a terror group. Therefore, when Hizbullah attacks, we respond with all our might. There is no doubt that in the last incident, Hizbullah made a mistake. It opened fire, found us ready and paid a heavy price. It may have thought we would not respond the way we responded. So, after rockets were fired at Israel [early Sunday morning], and since the Hizbullah was in a way behind this fire, we responded. Hizbullah then decided it had the right to conduct a dialogue with us through rocket fire. But when I say that it was surprised by Israel's response, [I mean that] the evidence [of this] was that Hizbullah was behind the Lebanese government's request for a ceasefire. In the six years since Israel's withdrawal from Lebanon, it has been attacked before. Why was the response particularly harsh this time? Hizbullah crossed a line. Without any reason, it shot a soldier, in the back, inside a civilian community, and we cannot allow this to happen. The response came from a desire to make it clear to them that they are not the only ones who determine the height of the flames when they light a fire. We also have control over the fire. There is no [proportionate] formula according to which we respond when attacked, no formula that says, "Do this, and our response will be that." The level of our response is determined by many factors that are not only connected to the initial attack. Did the IDF threaten to bomb Beirut? Is that what achieved the ceasefire? We told them that if they expand their fire, we will operate wherever we find it right to operate. And they understood very well what we meant. They know exactly where their headquarters and their leaders are. We don't need to explain that to them. Do you anticipate quiet in the north now? Quiet is a relative concept in the Middle East. In the immediate aftermath, you need to ask yourself "for how long and how quiet." For now, the shooting has stopped, but I cannot say that it will stay quiet for long from their perspective. I don't know when they will get into their next craze and decide to launch another attack. Why doesn't Israel respond with similar force to Palestinian Kassam fire into Israel from the Gaza Strip? We have killed 103 Palestinian terrorists in the Gaza Strip since disengagement nine months ago. To say we haven't been responding there is to underestimate what we have been doing. We have been attacking targets and striking at the terror infrastructure. We don't attack there like we do in Lebanon. The difference is that in Gaza, most of the terrorists move around among the civilian population. Gaza is a very dense area. You can't hit the terrorists freely. We need to find them when they are not next to civilians. So suggesting that in Gaza we are not doing the same [as in the north] depends on your perspective. If you ask me, in Gaza we are doing a lot. Yet despite IDF operations in Gaza, the Kassam fire continues. You cannot compare the two situations merely based on the IDF's response to them. Rather, you need to compare the situations in a more absolute way, while asking questions like, "What is prompting Hizbullah to attack us from Lebanon?" and "What is motivating terrorists in Gaza to operate there?" We are not talking about the same family of problems, solutions or organizations. These are all different. And when the context is different, the behavior is different. So what do you see as a solution on the Gaza front with regard to the Kassam threat? We are working on a technological concept that will provide some sort of solution, and we are also launching military operations. It is not safe to be a terrorist in the Gaza Strip. They know that we are always after them, and that though we may not always succeed, we will not stop. We will continue to hunt down those who manufacture [rockets], shoot and are involved in launching attacks against Israel. There is no instant plan. I don't have rabbits up my sleeve. This is hard work that demands a lot of intelligence and patience, as well as large numbers of people who are sitting and working on this problem all the time. When I say "patience," I don't mean that we are not in a rush to find a solution. What I mean is that, on the way to searching for the right solutions, I don't want us to make mistakes that will set us back. Isn't there a danger of a Kassam rocket falling on a sensitive installation, say in Ashkelon, which could alter the whole situation? You are right on the theoretical level. On the practical level, however, as a state we are obligated first and foremost to keep our citizens safe, and only then to protect the infrastructure and property of the state. I do not put both of those obligations on the same scale, since property can always be restored, while a lost life cannot. Are we succeeding in guaranteeing citizens' safety 100 percent? The answer is no. Unfortunately - and I say this with much sadness - I don't know how to make a 100% guarantee, but I can say that we are making 100% effort, without crossing certain lines we must not cross. We do not want to hurt innocent civilians. I am not saying that there are not mistakes once in a while, due to the intensity of the operations and because the terrorists and the civilians live together under the same roof. But as a method, we do not want [to harm civilians]. We are therefore walking a thin line between the security we are supposed to provide and the operations we are supposed to execute. This tension is always there, since we don't want to launch operations that will take us to a place where we don't want to be. We are not holding back on soldiers, resources or anything. Everything we have, we are investing there. A final question about the North: Can Israel live with Hizbullah along the fence, with all its missiles threatening us? Remember that Israel is also along the fence, threatening Hizbullah. One of the anomalies of our reality is that the rules of the game are so different for each player. Both sides are playing on a chessboard, but one side is playing checkers and the other chess. It is the same board, but one player has 16 pieces and the other has 12. One jumps around the board, and the other moves one step at a time. There are moral, cultural, religious and normative differences. This is the reality we live in, and this is who our adversary is. We can complain, but I suggest that we not lower our [moral] standards to meet theirs. I hope and believe that we will be able to maintain that difference, and that we are better off if we do. I do not want to see myself in a situation in which Israel loses the high value it places on life. I don't think this is the type of society we would want to live in. In your last interview with the 'Post' - around Rosh Hashana - you assessed Israel's overall geostrategic situation as good. We spoke in 2005, and then it was true. Now I'm saying that we're in the midst of a process. We are inside a virtual roll of film. The pictures from 2005 are clearer than the pictures from 2006, and the pictures from 2007 are darker than those from 2006. The reason is that Islamic fundamentalism is getting stronger, and democratization in certain Muslim countries is not necessarily bringing moderate elements to power. In some cases, it has had the opposite effect - bringing to power extreme elements instead. This has to do with the fact that global jihad does not feel threatened enough by the entire international community. So far, the one country leading the war against global jihad is the United States, and they should be commended for conducting their wars on terror in Afghanistan and Iraq. But it also has to do with the fact that the Iranians are determined to obtain nuclear weapons. These are what make the pictures come out darker. They could clear up, however, if many different things happen along the way. We don't know yet what will be with the Iranians and whether the world will succeed in convincing them to give up their idea of nuclear weapons. You don't believe it's too late to stop Iran then? No. The concept of "too late" is not applicable here, since this is a decision that can be reversed and retracted. They [Iran] can change their minds. Is there no "point of no return?" There is, but we need to make a distinction. There is a technical line that, once they cross it, they have the technical ability. But they can still decide to retract from that line - which doesn't mean they lose the information but does mean that they surrender the ability. Countries like South Africa have given up nuclear capability in the past. Has Iran reached the tech line yet? They are close, but not yet. Despite reports that they have already succeeded in enriching uranium? That is not enough. The fact that you succeed [in enriching uranium] in a laboratory doesn't mean anything. It is like proving that you can lose weight in a laboratory, In real life it is pretty difficult [laughs]. Not that I was referring to you two. Many things have happened in laboratories. They have cured cancer and turned us all into blondes, but there is a distance and time from the development-laboratory stage to the stage when you begin production on an industrial level. The Prime Minister [Ehud Olmert] said that the distance [between these stages for Iran now] is something like a year and I agree with that declaration which is based on our estimates. Can diplomatic efforts deter Iran? Diplomatic efforts need to be fully utilized. We need to wait and see what will happen. The Iranians might understand that they have much more to lose with a nuclear plan than to gain. They might see that they will lose more, when it comes to their economy and accessibility to the world, depending on the type of sanctions imposed on them. And theoretically there is, of course, the aggressive military option - not by us, however, since there is a whole world [involved] here. Does Israel have the ability to strike Iran? I said that alongside the diplomatic efforts there is also at the end of the day a military option. Not one that will be launched by us, however, since this is a worldwide issue. The state of Israel is not the address to solve all of the world's problems. This is a global problem and not just an Israeli problem. Can Israel accept a reality in which the current regime in Iran has nuclear weapons? Ask me that question at the relevant time. Any answer I give now would be a mistake. What is Iran's involvement on the Hizbullah front? When people speak to me about Iran I remember two things: that my father came from there and that in 1972 I trained there and flew there. I always say "never say never" regarding the possibility that things might change, since the Iranian leadership and the Iranian people are not necessarily the same. It is true that leadership molds the people and it is unfortunate that it is not the opposite and the people don't form and mold the leadership. However, illusions are not a work plan, and we look at the reality. We see that the Iranians are pulling the strings when it comes to Hizbullah and Islamic Jihad in the territories and also assisting Hamas. They are deep in terror up to their ears and they have a record of involvement in terror. The terrorism needs to concern us more than anything, not the nuclear [issue], where there is time. They have hosted Hamas leaders. They train some of the Palestinian terror groups as well as fund, host and arm Hizbullah. This Iran-Syria-Lebanon axis is a fundamentalist line of extreme and radical Islam. The Iranians encourage terror against Israel. This can be seen in their declarations, especially those of the current president [Mahmoud Ahmadinejad] who does not believe the State of Israel should exist in the Middle East - that we need to go back to Europe or Canada or wherever else he sends us in his speeches. He denies that the Holocaust ever happened. This is a man we need to take seriously. It would have been good if he would stop being the Iranian leader, but that is their choice, not ours. Has the world internalized the Iranian threat? America is eye-to-eye with Israel in the way it sees the threat. The Europeans also understand the threat in the same way. The question is whether they act according to that understanding. I don't think there is an argument among the developed countries about the facts. We can argue about when exactly it will happen [that Iran goes nuclear], a year here or a year there. But the main goal is clear and there is no doubt that the combination of a fanatical leader like they have with nuclear weapons is not a reason for joy. But that does not mean that a bomb, a leader and a button all meet once there is a bomb. All it means is that it is not a good combination. An irrational man who has non-conventional weapons is more dangerous than when he doesn't have non-conventional weapons. Do you believe Ahmadinejad to be irrational? What I mean to say is that he is irrational according to my rational perspective. But yes he is a rational man. What he says is not a slip of the tongue. You don't make the same mistake in what you say 10 times. This is already policy. He is talking about policies that are motivated by religious and ideological motifs and he is clearly rational. It could be that he needs to undergo other diagnoses but he speaks clearly and says things that other people in the area closer [to Israel] think but are afraid to say. Hamas is not so ideologically far from Ahmadinejad. They also think that Israel doesn't have the right to exist and that the sea is the right place for us to live. Some Israeli intelligence officers have recently said that Israel does not know everything it needs to know about the Iranian nuclear program. Is that true? We know what we know. [Our] intelligence doesn't know everything. We know enough to formulate our positions, to look for solutions and to evaluate the situation. Of course we'd like to know more. But they don't hide their desire to obtain nuclear power. We might like to know more about the detailed technical status [of the program]. So we don't know. Okay. At the same time there are intelligence efforts going on all the time. What you said before about the virtual film getting darker sounds a little like what [former Military Intelligence chief Maj.-Gen. Aharon (res.)] Farkash said recently about Israel being on the verge of being hit by a Global Jihad tsunami. No. I do not use irrelevant metaphors. A tsunami is a wave that you can't deal with unless you run away from it. We deal with terror without running away. We stand up against it. In the past five years Israel and its security forces have developed the endurance and the ability to deal sharp blows to the terror infrastructure. Israel is not a miracle from the heavens even though there are people who want to attribute its existence to miracles and wonders. It is about the daily work of tens of thousands of people who invest all their strength, intellect and soul in looking for solutions to terrorism. Global Jihad is no different in the arsenal of terror that it presents. What they are doing in Iraq is more of the same of what we have gotten to know in Lebanon and in our dealings with the Palestinians. Where does Global Jihad get its "credit"? From the mega terror that it carried out in the US, Madrid and London. But Global Jihad is getting closer to Israel. They were behind attacks in the Sinai and Jordan. Let me remind you that the  Park Hotel suicide bombing happened in Israel and 30 Israelis were killed on Passover night - not by Global Jihad but by Palestinians from Tulkarm. We don't need to look for the Global Jihad to scare ourselves with terror. We have enough [terror] of our own. I could easily scare everyone but I don't see that as my job. I could easily begin marking on a map where there are circles [of Global Jihad] around us. But there have been circles around us for 3,000 years already. What is the [particular] problem presented by Global Jihad? That there is not an address that you can go to. Palestinian terror is here on the other side of the fence. There is an address. We know where they are. And if they are not here, then some are in Damascus and Lebanon and we know where they are and if needed we will get to them. Global Jihad is a consortium that does not have one head. It is made up of many groups that got together under a common idea. There is Global Jihad in the Philippines and in Thailand and they don't speak the same language. Their common language is radical Islam. There is Global Jihad in India, the US and Britain. How do we know? We saw them blow up in Britain. They were British [nationals]. They weren't Global Jihad exports from Afghanistan but British nationals who were born in the UK, grew up there and are Muslims and they switched over to the wrong political party. When you tell an average person on the street that al-Qaida is in Gaza what do they think? That 10 Afghans with turbans are galloping on the backs of camels into Gaza. In reality there are some Palestinians who identify with the al-Qaida ideology and they declare themselves part of the group. We need to see what dangers these people pose to Israel. That is my job as the person in charge of the security of the state. Global Jihad is different since they engage in mega terror attacks. That is what we need to prepare ourselves for and work to prevent. How has Hamas's election victory changed the IDF's war on terror? Hamas in principle is not involved in terror but at the same time it is building up its force. One needs to make a distinction between the Hamas organization and the Hamas Authority, the official PA which is led by Hamas. Hamas is continuing to build its terror organization. It is working to develop new capabilities, rockets, to smuggle in weapons and ammunitions. I don't think the military threat has increased, but there is no doubt that if Hamas returns to terror activity, that will increase the volume of what we have to deal with. There could be rockets that can fly another 2 kilometers. But that doesn't cause the pot to spill over. Since 2005, as I said, Hamas has not entirely eschewed terror, but formally they are no longer involved. There have been reports that Abu Mazen's life in danger. Is that so? I don't have [specific] intelligence, but he has lately been demonstrating leadership and a priori someone who swims against the current sometimes can get scratched or hit. But to say that his life is in danger? I can't say that. I think he has the personal respect of the people. Is he still relevant within the PA? It wouldn't be polite on my part to comment on the relevance of a foreign leader. The problem is that he is moderate, as opposed to Hamas which makes up and controls the legislative body and the parliament even though the president under the Palestinian system has certain override authorities. At the moment, Hamas is setting the diplomatic agenda and no one can promise, even if we were to an understanding with Abu Mazen, that he would be able to implement it since the main political body is anti-Abu Mazen and is Hamas. There is no question that he sincerely means what he says. But I did not say that he acts on what he says, since he is not in charge. Israel has said several times that it will not accept a two-headed PA [one led by Abu Mazen it talks to, and one by Hamas it doesn't talk to] and that it sees the PA as one entity. Nevertheless, Abu Mazen does receive far more international credit than Hamas, which does not receive any credit. Did our withdrawal from Gaza strengthen Hamas? We need to decide which parameters to check that question against. Hamas would have won even if we had not left Gaza. The main parameter is that there have not been any Israelis killed since we left Gaza. This is not [necessarily] the main consideration but this is a fact. Since we left there have only been two Bedouin kids killed after picking up a mortar shell. Before we left Gaza there were some 30 civilians and soldiers killed a year. Now there are more Kassams fired than when we were in Gaza - less now than in the beginning, but more than when we there. We do not have responsibility over Gaza and our freedom of operation there has increased and we know how to use more resources for a longer time against the Palestinians. We also have wider international tolerance. One example of our freedom of operation is artillery fire, which was not used when we were in the Gaza Strip. We also did not allow sonic booms since this would have affected the [civilian] Israelis and soldiers there. Olmert returned last week from the US, where he discussed "realignment" and other matters with President Bush. Could the IDF handle the planned withdrawal and evacuation of settlers from the West Bank? Do you know how many settlers will be evacuated? No. Neither do I. The smallest estimates speak about 40,000. Is this something the IDF can handle? They have yet to speak to me and there's a long way between an idea and a formulated plan. Once there is plan it will not be a secret. I will say this: In a democratic state, when the government takes a decision that falls within the range of decisions that it is entitled to take, the various state bodies need to carry it out. You have appointed Brig.-Gen. Tal Ruso to maintain a dialogue with the national-religious camp and to try and bridge the gaps. What does he report to you? What do you feel about the so-called rift? Tal is doing a wonderful job. The word bridge makes it seem as if there is an abyss and you need to build a bridge to connect the sides. There is no abyss. I do not accept these generalizations, since it is not everyone in the camp but only a small extreme group [with whom there is dispute], and there have always been extremists in Israel. The relationship between the national-religious camp and the IDF is excellent. Many of the national religious youth serve in the best-of-the-best units and I want that to continue. They are in the elite units and in command posts. Unfortunately part of the younger generation that has yet to enlist is influenced by certain leaders, some more radical than others. Before disengagement, the IDF was held in the highest esteem among the settlers and the army did not do anything wrong and certainly did not intend to be cruel towards the settlers. The IDF followed the government's orders. As for settler expectations that the army would refuse orders, this will never happen, unless there is an order that has a "black flag hanging over it." And the government would never give such an order. I define the relationship [between the IDF and the national-religious camp] as one that requires treatment but I would not define it as being in a terrible state. [A relationship] is terrible when you come to the conclusion that you can't fix it, and then it is still a question of proportions: If it is 100 people, then it is not so bad, but if it is 100,000 people, then it is horrible. So what I am saying is that it is not terrible, but yes it requires treatment. There is a lot that needs to be done in this field. There are some yeshiva heads who say that you, personally, don't help the situation - that you deepened the rift with your comment that the 'we'll never forgive or forget' slogan used by the settlers in Gaza was cheapening the Holocaust. Some of what had already happened enlarged the rift. When they called me a Nazi, did they not enlarge the fissure? They called me a Nazi! When I stood at the Kissufim Crossing, two insolent kids called the chief of staff a Nazi. They widened the rift. When kids left their homes with their hands raised [in surrender], isn't that an image from the Holocaust? Or when they walked around with a yellow star? So when they said 'We will not forgive or forget' that is also from the Holocaust. They can look it up in [the works of] Gideon Hausner [the former Israeli attorney general best known for prosecuting Adolf Eichmann in 1961]. They should stop pretending to be innocent and to wash their hands clean since their hands are not clean. I will continue speaking my truth even if it does not find favor in the eyes of Rabbi A, C or D or Z or others since there are too many. Not rabbis, I think there should be as many as possible, but I am against the phenomenon that every rabbi sets the policy. It is impossible that we would conduct a dialogue with each and every yeshiva rabbi. A yeshiva that has four students and one that has 400 think they are equal. Therefore I will say whatever I want. My truth is my truth and I say it without any intention to hurt anyone, especially not the soldiers in service. And I have always extended my hand to everyone. And how did you feel when St.-Sgt. Hananel Meged refused to shake your hand at a Beit Hanassi ceremony last month in a protest against disengagement? I felt sorry for him, that his teachers had brought him to this reality. And all those who complain should first look at themselves in the mirror and ask if they did everything they should have done and correctly. I do not intend to apologize to anyone or to give explanations except to those to whom I am committed to give explanations. I am ready to talk to anyone and to hear criticism and even apologize if needed but only if I hurt someone. I have apologized in the past more than once. But I will not withdraw from my positions since they are backed up legally and ideologically. I do not need to agree with everyone. How troubling are the impending cuts in defense budget? Are they dangerous for Israel? Yes they are. Overall, the way the defense budget is handled by people outside the defense establishment is unprofessional. I say this with a lot of sadness. I think that the budget is smaller than our needs. I don't want to sound apocalyptic but the way the budget is now and the way they want it to be will turn the defense establishment into a mediocre establishment. That sounds drastic. Yes. But we will turn into a mediocre army since, in the final analysis, what makes up a good military is the people, and people don't know how to serve in a place that they think does not appreciate them. How do you appreciate an organization? By accepting its professional opinions and by adequately supporting it so it can fulfill its missions. Of course you have to oppose the cuts, don't you? That is your job as chief of staff. I don't have to object to the cuts. I was one of those who thought we needed to cut back the budget, but that was when it was higher. I even wrote this, in March 2003. So there was room to cut - to restructure and to make the IDF more efficient? Yes but you can't go on making the IDF more efficient all the time. Remember the joke about the horse they tied up to a train. He became more efficient, then died. What is it like working with two "civilians" for the first time - Prime Minister Ehud Olmert and Defense Minister Amir Peretz? I enjoy working with both of them; this has nothing to do with what I said about the budget. I just enjoy working with them both. The defense minister has also given us his full backing on the budget issue. Can Israel allow itself to have a mediocre military? No. What insults me is that they behave unprofessionally towards us. The other day I was sitting opposite my computer following the developments in the North when on my other screen I saw in the news that the Treasury had decided to cut NIS 500 million from the budget. I began to wonder when this happened and who decided on it. It was all unilateral. What does this budget cut mean, practically? I don't know. By making decisions this way they hurt what they can and not what they need to. What can they hurt? Reserve training, some of the military operations, defense industry contracts. There will be people laid off.