The Fifth Herzliya Conference on the Balance of Israel’s National Security took place during Hanukah 2004. The discussions of the conference were a reflection of the central dilemmas faced by Israel today in the political, security, economic, social and cultural spheres, and produced strategies and options for issues on the national agenda. Israel’s strategic environment has improved in the last year, in part due to decreased Palestinian terror, the death of Yassir Arafat, the re-election of President Bush, the Disengagement Plan, the warming of relations with Egypt, and the newfound determination of the international community to block Iran’s military nuclear program. Iran, however, on its part, is determined to continue its program, and to promote Palestinian terror and undermine efforts at conciliation. Israel’s economy has turned a corner, though poverty and inequality continue to rise, as does the alienation of the public from its political institutions, which takes on considerable significance as the Disengagement Plan draws closer.