Former Israel Defense Forces chief of staff Moshe Ya'alon said on Monday in a speech at the Herzliya Conference he was sure the IDF would "come back to itself with the changes now." Ya'alon was referring to the expected appointment of Major General (res.) Gabi Ashkenazi to the post, replacing Lieutenant General Dan Halutz.

Ya'alon, who had recommended Ashkenazi to Prime Minister Ehud Olmert when the latter asked his advice at the beginning of the week, said "the difficulties in war are not a fundamental problem of the IDF, but rather the result of failed political and military conduct."

Ya'alon called for international action against Iran. "Only an Iranian defeat will bring regional stability to the Middle East," he said. According to Ya'alon, "the regime of the ayatollahs is not natural in Iran and is not accepted by most of the Iranian people."

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He also said: "If the West wants life, there is no choice but a confrontation with the Iranian regime."

The former chief of staff said international pressure on Israel to make concessions to the Palestinians encouraged the Iranians and extremist Islamic groups in the region.

Also speaking at the conference on Monday, Defense Minister Amir Peretz said he intended to change the IDF's policy at roadblocks in the territories to ease restrictions on movement for Palestinian residents "to strengthen the Palestinian people."

Peretz presented a diplomatic plan that envisioned progress in talks between the Israel and the Palestinian Authority within six months. He said part of the plan would be a deal to return abducted soldier Gilad Shalit, and for Israel to dismantle illegal West Bank outposts established after 2001, as was promised to the United States, after which the two sides would negotiate a final-status agreement.

Foreign Minister Tzipi Livni called on Monday at the conference for dialogue with moderates in the PA. "Dialogue is part of the war against extremists and terror," she said, adding, "a distinction must be made between talking and concessions." Livni said, "Israel prefers an agreement," and that any agreement must ensure security for Israel, and that the Palestinian state would not be a terror state."

Livni told the conference that the Palestinian state would have to be the complete solution to the Palestinian refugee problem. She said its borders would take into consideration Israel's security needs as well the need to keep sites of historic and religious importance and areas where most of the settlers were living.

Vice Premier Shimon Peres said on Monday at the conference with regard to Iran that the threat should not be exaggerated in view of the poverty and weakness of the regime. "Even if they do enrich uranium, what will they give the children of Tehran for breakfast - enriched uranium?"

Peres added that Iran could be brought to its "natural proportions" by diplomatic and economic measures.