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The advent of the New Year is a good time to draw up a balance sheet for the State of Israel and set the agenda for the coming year. As of now, the bottom line looks pretty good.

Palestinian terrorism, which only a few years ago was taking a drastic toll on Israeli civilians on a daily basis and seemed to be threatening the very fabric of Israeli society, has been dramatically reduced due to the efforts of the IDF and the security services. The chief of staff, Dan Halutz, in a New Year's interview with The Jerusalem Post debunks the commonly-held dogma that there can be no military victory of terrorism. We're well on the way there and have already proven that we have the capability to do so.

The potential nuclear threat from Iran, which Israel seemed to face alone for many years, has in recent years become the common concern of the U.S. and the nations of Europe. The pressure exerted by them on Tehran will most likely slow down the Iranian race for a nuclear bomb, and may yet stop it in its tracks before they reach that goal. In any case, Israel is no longer facing this danger alone.

All the economic data indicate that Israel has left behind the recession that had plagued it for a number of years and is now in the process of achieving healthy growth and a reduction in unemployment. Although there are some who hate to admit it and would rather forget it, the reforms introduced by former finance minister Benjamin Netanyahu had a great deal to do with bringing this about.

On the positive side of the ledger, many would add Israel's unilateral withdrawal from Gush Katif and the subsequent approval Israel is receiving in much of the world. Whether what is likely to turn out be a short-term gain was worth the forced evacuation of thousands of Israeli citizens from their homes is a subject of strong disagreement among the people of Israel at this time. This very painful move may well turn out to have been an unnecessary and harmful move.

The new year should be the time to put at the top of our agenda what has been a badly neglected problem for many years - the integration of Israel's Arab citizens into Israel's society. More than 20 percent of Israel's citizens still live in a world apart, feeling disadvantaged and discriminated against. This by any account is a major problem, probably the greatest problem facing the country at this time.

Although the prime minister has announced that the fight against poverty will now receive the highest priority, he should recall that Israel's Arab population makes up a disproportionate share of Israel's poor. They, as well as others stricken by poverty, are not being provided with the level of education that would allow them to catch up with the rest of the population and take their proper place in the work force in Israel's advanced technological economy. This phenomenon is apparent in all modern societies for those lacking the relevant skills, but it is particularly jarring in Israel because of its prevalence among Israel's Arab citizens.

The most disadvantaged of all, in the greatest distress, are the Bedouin of the Negev. Close to a 100,000 in number, most of them suffer from inadequate housing, health care, education and general standard of living. They are caught up in a process of urbanization, abandoning their traditional life style, and are not being prepared for absorption into a modern economy. Unless a quantum jump can be achieved in their youngsters' education, the gap between them and the rest of Israel will only grow with time. This is not their problem alone; this is Israel's problem.

Here and there, there are signs that something is being done. The scholarship programs for Bedouin students at Ben-Gurion University and the IDF's recruitment of Bedouin youngsters are probably the most significant.

But all this is a far cry from what is really needed. Establishment of a network of nursery schools and kindergartens for Bedouin children is probably the most urgent task at hand. Using soldiers doing their compulsory military service as teachers might be the quickest way of making an impact in this important area, until such time as Bedouin schools and teacher seminaries can provide the required number of teachers.

All this is only a beginning. Until such time as a cabinet minister is put in charge of integrating Israel's minority population, the government's activities in this important area are bound to be piecemeal and inadequate. Concentrating authority and responsibility in one dedicated ministry is a necessary precondition for progress in this area.