We have agreed on the need to increase our cooperation in areas where our interests coincide, particularly in the political and military area. And I am pleased to announce that we have agreed to establish a joint political-military group to examine ways in which we can enhance U.S.-Israeli cooperation. This group will give priority attention to the threat to our mutual interest posed by increased Soviet involvement in the Middle East. Among the specific areas to be considered are combined planning, joint exercises, and requirements for prepositioning of U.S. equipment in Israel.

We've agreed to take a number of other concrete steps aimed at bolstering Israel's economy and security. These include asking Congress for improved terms for our security assistance to Israel; using military assistance for development of the Lavi aircraft in the United States and for offshore procurement of Lavi components manufactured in Israel; permitting U.S. contractors to enter into contracts with the Government of Israel consistent with U.S. law, which would allow Israeli industry to participate in the production of U.S. weapons systems procured with foreign military sales credits; offering to negotiate a free trade area with Israel.

A main focus of our meetings was the agony of Lebanon and the threats there to our common interests. We examined, together, Soviet activities in the Middle East and found a common concern with the Soviet presence and arms buildup in Syria. We reaffirmed our commonly held goals of a sovereign, independent Lebanon free of all foreign forces, and of security for Israel's northern border.

We agreed that every effort must be made to expedite implementation of the May 17th agreement between Israel and Lebanon. Adequate security arrangements for Israel's northern border must be assigned the highest priority. We're hopeful that such arrangements can be concluded soon.

We, of course, discussed the broader goal of peace between Israel and its Arab neighbors. The Egyptian-Israeli peace treaty remains the cornerstone of the peace process. I reaffirmed my commitment to the September 1 initiative as the best way to realize the promise of Camp David and the U.N.S.C. Resolutions 242 and 338 upon which it was built.

As you can see, our 2 days together have revealed substantial areas of agreement and resulted in a number of specific concrete steps that we'll take to strengthen our ties. We have also discussed some issues on which we do not see eye to eye. But disagreements between good friends do not alter the unique and sturdy foundation of our relationship.

I know that Prime Minister Shamir shares with me the renewed conviction that the warm friendship between the United States and Israel will endure and strengthen.

The Prime Minister. I am grateful for the invitation extended to me by President Reagan to come here to Washington for these discussions. The Minister of Defense and I have had the opportunity to conduct very thorough discussions with the President, the Secretary of State, the Secretary of Defense, and their senior colleagues and advisers. These discussions have been carried out in the spirit of the traditional friendship and the common bonds of mutual understanding that bind our two countries.

We reaffirmed our determination to ensure the withdrawal of all foreign forces from Lebanon. The only basis for a settlement of the Lebanese problem is the full implementation of the May 17, 1983, agreement in all its parts. We have discussed with the President and the Secretaries the necessary steps that could facilitate the carrying out of this agreement. Syria constitutes today a major threat to the peace in our area by occupying more than 60 percent of Lebanon and by its massive concentration of Soviet arms and personnel on Syrian territory.

Israel is ready to renew the peace process and discuss the final status of Judea and Samaria, following the autonomy period in the framework of the sole agreed basis for negotiations, namely the Camp David accords. We discussed during our visit here the major threat that terrorism constitutes to the peace, and we shall pursue our fight against it in close cooperation with the United States.

Due to the need to ensure our security, a large part of our budget is spent on defense. We hope that the American administration will increase their assistance program, taking into account the great sacrifices made by Israel in the peace treaty, by relinquishing the oil wells and building new installations as a result of the withdrawal from Sinai. New measures designed to encourage the development of our economy by establishing a free trade area, by sharing new technology will enhance Israel's strength and enable us to pursue our economic program so vital to the well-being of our society.

In order to advance the search for peace and to strengthen the ties between our two countries, we decided to establish the mechanism necessary to determine the details of the nature and scope of our cooperation inter alia in the fields of prepositioning of equipment for military readiness, joint exercises, and other relevant fields. We have agreed to establish a joint political-military committee to work on the details of these agreed matters. The aim of this cooperation is to strengthen Israel and deter threats to the region. The group will hold periodic meetings, starting the first week of January 1984.

I wish to once again thank the President and the people of the United States for their strong support of Israel and for the warm feelings conveyed to the Minister of Defense and myself by the President, the Vice President, the Secretary of State, and the Secretary of Defense. We will proceed on the road to peace with increased vigor. I return to Jerusalem strengthened in my conviction that with the aid of the United States of America and fortified by the friendship of its people and government, a strong Israel can indeed achieve peace.

Thank you.

Note: The President spoke at 1:24 p.m. to reporters assembled at the South Portico of the White House.

Earlier, the President and the Prime Minister, together with the Vice President and Israeli Defense Minister Moshe Arens, met in the Oval Office. They then met with U.S. and Israeli advisers in the Cabinet Room and attended a luncheon in the State Dining Room.

On November 28 the President and the Prime Minister met in the Oval Office. They were accompanied by the Vice President, Secretary of State George P. Shultz, Secretary of Defense Caspar W. Weinberger, Ambassador Donald Rumsfeld, the President's Personal Representative in the Middle East, and Israeli Defense Minister Arens.