Well, distinguished friends, we are privileged indeed to honor tonight President and Mrs. Mubarak.

Now, I bring you the regrets of Mrs. Reagan, but she can't be here, as she said to me on a phone call from Arizona, where she is tonight.

As you all know, Vice President Bush could not be here tonight, and it's a pleasure to serve as his stand-in. [Laughter] Come to think of it, he's doing that for me right now. [Laughter]

President Mubarak's visit here underscores the special bonds of friendship that have developed over many years between Egypt and the United States. Our two countries are partners in a broad range of endeavors, most notably as full partners in the search for a lasting Middle East peace. Today there's a renewal of hope that the peace process can be broadened and invigorated.

Egypt's indispensable leadership position in the area is reflected in its important dialogs with two key countries -- Israel and Jordan. And, after all, we're engaged in a process that can only advance with the support of those directly concerned. In this respect, Egypt is uniquely equipped to help reconcile differing points of view and build the solid bridge of confidence necessary for progress.

Mr. President, as you recently emphasized, the path to a peace that recognizes the legitimate rights of the Palestinian people is through direct negotiations. The inescapable basis for such negotiations is U.N. Security Council Resolution 242, which provides both for the restoration of Arab land and for the right of Israel and all states to live in peace within secure and recognized borders. The challenge now is to clear the way so that negotiations can begin. We shouldn't underestimate the obstacles -- we never have -- but we shouldn't be daunted by them either.

One question that we must address forthrightly is how the Palestinians should be represented. And, Mr. President, you've wisely stressed the need for practicality. In our quest for peace, we reaffirm with you that in all stages of the negotiating process there should be Palestinian participation. As we've said many times before, these Palestinians should include representatives from the West Bank and Gaza and other Palestinians as mutually agreed to by the parties.

Now, these are wide parameters; they provide ample scope, and they should be put to use. And in this context we especially welcome the improvement in the Egyptian-Israeli dialog. And the integrity of this relationship is the cornerstone of the peace process.

With realism as our guide, let us seize this moment to rededicate ourselves to the task of peace. And with your continued help and commitment, Mr. President, I feel sure that we will make great progress.

In this spirit, ladies and gentlemen, please join me in a toast to President Mubarak and Mrs. Mubarak and to a broadening of the process of peace to which Egypt has so courageously contributed.

President Mubarak. Mr. President, dear friends, really, I'm very touched by your kind words, Mr. President. And we are very happy to be with you tonight, again.

Today we had a working session and a working lunch. I pursued the work by having two sessions in the Congress, where I met with friends in both the Senate and the House. It was a full working day, and I take it that you thought that we deserve to have this dinner and to see this magnificent, newly redecorated quarters in the State Department -- another good piece of work of my friend, George Shultz.

President Reagan, in my remarks today, as we departed after lunch, I referred to the establishment of formal Egyptian-American relations 150 years ago. There is, however, another aspect to this event: the role of individual Americans who began to visit Egypt since the early years of last century. Most of them were fascinated by the history of our people and of our land. They wanted to unravel the mystery of all the Egyptian civilizations. They sailed down the Nile. They lived by the monuments. They recorded their observations in articles and in letters. Some of them returned home with samples of antiquities, and some even remained and were employed by the Egyptian Government. The Washington Monument, which stands marvelously in your capital, was inspired by those early Americans who came to admire Egyptian obelisks. Thus, many achievements in American-Egyptian relations took place particularly on the human and the cultural levels.

The movement has not been confined to Americans traveling to Egypt; but Egyptians also traveled and even settled in America. In fact, a new phenomenon was born: the immigrant Egyptian settling in America. I am happy and proud to see many of them, all walks of American life: university professors, doctors, scientists, engineers, workers, et cetera. I am sure, Mr. President, that you would agree with me that it was the pure individual initiative which brought about these achievements.

There is also something else to it that brings our peoples together. It could be a certain sense of optimism about life whose root is faith in God. I was touched during this visit by a distinguished Congressman who told me that he noticed the warmest friendly relations between the Americans and the Egyptian peoples even when our former relations were under strain for a brief period in the past.

Today Egyptian-American relations provide in their intensity an ever-greater example of solid friendship, based on mutual respect and whose objective is nothing more noble than strengthening the cause of peace in our part of the world. We both share an irreversible commitment to bring total peace to an area whose peoples have long suffered from conflicts and violence. Nothing is more worthwhile than an investment in peace. In the interdependent world in which we live, such an investment becomes even more precious, if not indispensable. It is in that sense that the American-Egyptian partnership is a partnership for peace in the Middle East and, as such, offers the greatest contribution to the world peace.

Mr. President, let me once again congratulate you on the fact that you have been reelected the President of the great Nation by such an impressive majority of the American people. What stands behind that are great American values: faith in God, faith in human ingenuity, courage, and enlightened patriotism.

Let me also express our admiration for Vice President George Bush, who I know did all the best and planned his travels in such a way that he would have made it possible for us to meet with him here during the trip. But, as the saying goes in Arabic, ``Man plans and God determines.''

Dear President and dear friends, may I ask you to rise in a tribute of admiration and respect for the President of the United States, President Ronald Reagan, and for his great country, the United States, and the great American people. And thank you.

Note: The President spoke at 9:30 p.m. in the Thomas Jefferson Room at the Department of State.