The country needs to prepare for the possibility of an escalation in Palestinian violence following Wednesday's elections, especially if Hamas emerges victorious, Chief of General Staff Lt.-Gen. Dan Halutz warned Sunday. "This possibility exists," he said in his address to the sixth annual Herzliya Conference. "It is not dependent on us, however, but on what they do." The outcome, Halutz said, depended on the elections and the possibility that chaos would erupt if Hamas won a significant part of the vote. "Fatah will win, Hamas will win or anarchy will win," he said. A Hamas victory, he warned, would set the Palestinian Authority back by years. "I don't see how Fatah will allow Hamas to enter the government," he said. "On the other hand, maybe democracy is strong there." Israel's major problem, Halutz said, was terrorism. "I can confidently say it is closing in on us from every front," he said. "It can't beat us, yet it can be a heavy burden. I am talking about the global jihad that has no address, but is a virtual organization that includes groups which share a common ideology." Palestinian terror, he said, could be reduced even more than it already has. "I am convinced that we can do more," he said. "Is it possible to beat terrorism? I won't use that term, but I feel that it can be drastically reduced." Turning to Teheran - the focus of Defense Minister Shaul Mofaz's speech Saturday night - Halutz called Iran's nuclear plans "Israel's sole existential threat." As to solutions, he said that when the "situation reaches the stage that it requires a response, by then we will have found a response." Moving to the implications terrorism has had on Israeli society, Halutz said: "The feeling of existential threat is declining... The immediate existential threat does not stand before each and every citizen. The threat to personal security is what keeps people awake at night much more than the threat to national existence." Another by-product of the recent decline in terrorism was an increasingly critical examination of the military. Halutz said that this reexamination of the IDF's role, of military spending and of resource allocation was a natural occurrence when people felt increased stability. On the subject of a mandatory draft, Halutz said he would do everything in his power to prevent the IDF from becoming a career army based on volunteers. "In my opinion, there is no way Israel can have a non-compulsory military," he said. "If this happens, we will have an army filled with mediocre people, and I will do everything I can to prevent this plan from getting off the ground."