TEL AVIV — Fifty-five years is not a very long time in historical terms, especially when talking about a people who have been around for thousands of years. But the balance sheet of those 55 years has certainly been impressive.

Some things, however, were obviously lost on the way, though not altogether — the spirit of egalitarianism, for instance. And some would say there is insufficient concern these days for social justice, though others would reply, correctly, that Israel allocates proportionately more for social and welfare payments than any country in the West. So, why are there still so many poor people?

Which brings me to the first challenge that Israel faces on its 55th anniversary: How to reform its economy and do away with its historical and often politically motivated "baggage" of bureaucracy — so as to make the economy grow and at the same time improve the lot of the underprivileged?

Finance Minister Benjamin Netanyahu is currently trying to do just that. But his — actually our — chances of success will

depend on two things. First is the determination of the government as a whole to overcome the opposition of vested interests. Second, it will depend on two factors that are largely beyond our control: ending the international economic recession, and changing the political and security situation.

Which brings us to the other major challenge facing Israel today: peace and security.

America's important victory in Iraq has removed a major threat to the peace of the world — not least, of course, to Israel. If, indeed, the United States will pursue President Bush's declared aim of fighting all those who engage in or support terror — Syria, Iran and Libya rank first and foremost among those — the Middle East may actually become a less-dangerous neighborhood.

But we are not yet there, and lest one forgets, Arab-Islamist terror — like fascism and communism before it — is not out to reform, but to destroy. Therefore, for the world to breathe more easily, those who preach and perpetuate terror must be destroyed.

Next to America, Israel is one of the terrorists' most hated targets because it represents the values and principles most obnoxious to them — including democracy, human rights and equality for women.

Basically, the United States and Israel have the same strategic interests and the same aims, though there are differing attitudes on one or more issue. Considering the vast amount of mutual goodwill and the understanding that Israel enjoys as to its vital interests with so much of the American public (not least of which is the Bush administration and Congress), such differences should not be allowed to develop into unnecessary and unhelpful disagreements.

Indeed, the close ties between the United States and Israel may be deemed an important American strategic interest as well — especially in light of the unstable internal situation in some of America's traditional Arab allies. As recent events proved, not a few of these traditional allies are fair-weather friends, at best.