Speech Transcript:

 This last few months has not been an easy time for any of us. As we
meet tonight, it has never been more clear that the state of our
Union depends on the state of the world. And tonight, as throughout
our own generation, freedom and peace in the world depend on the
state of our Union.

The 1980's have been born in turmoil, strife, and change. This is a
time of challenge to our interests and our values and it's a time
that tests our wisdom and our skills.

At this time in Iran, 50 Americans are still held captive, innocent
victims of terrorism and anarchy. Also at this moment, massive Soviet
troops are attempting to subjugate the fiercely independent and deeply
religious people of Afghanistan. These two acts--one of international
terrorism and one of military aggression--present a serious challenge
to the United States of America and indeed to all the nations of the
world. Together, we will meet these threats to peace.

I'm determined that the United States will remain the strongest of
all nations, but our power will never be used to initiate a threat to
the security of any nation or to the rights of any human being. We
seek to be and to remain secure--a nation at peace in a stable world.
But to be secure we must face the world as it is.

Three basic developments have helped to shape our challenges: the
steady growth and increased projection of Soviet military power
beyond its own borders; the overwhelming dependence of the Western
democracies on oil supplies from the Middle East; and the press of
social and religious and economic and political change in the many
nations of the developing world, exemplified by the revolution in
Iran.

Each of these factors is important in its own right. Each interacts
with the others. All must be faced together, squarely and
courageously. We will face these challenges, and we will meet them
with the best that is in us. And we will not fail.

In response to the abhorrent act in Iran, our Nation has never been
aroused and unified so greatly in peacetime. Our position is clear.
The United States will not yield to blackmail.

We continue to pursue these specific goals: first, to protect the
present and long-range interests of the United States; secondly, to
preserve the lives of the American hostages and to secure, as quickly
as possible, their safe release, if possible, to avoid bloodshed which
might further endanger the lives of our fellow citizens; to enlist the
help of other nations in condemning this act of violence, which is
shocking and violates the moral and the legal standards of a
civilized world; and also to convince and to persuade the Iranian
leaders that the real danger to their nation lies in the north, in
the Soviet Union and from the Soviet troops now in Afghanistan, and
that the unwarranted Iranian quarrel with the United States hampers
their response to this far greater danger to them.

If the American hostages are harmed, a severe price will be paid. We
will never rest until every one of the American hostages are
released.

But now we face a broader and more fundamental challenge in this
region because of the recent military action of the Soviet Union.

Now, as during the last 3 1/2 decades, the relationship between our
country, the United States of America, and the Soviet Union is the
most critical factor in determining whether the world will live at
peace or be engulfed in global conflict.

Since the end of the Second World War, America has led other nations
in meeting the challenge of mounting Soviet power. This has not been
a simple or a static relationship. Between us there has been
cooperation, there has been competition, and at times there has been
confrontation.

In the 1940's we took the lead in creating the Atlantic Alliance in
response to the Soviet Union's suppression and then consolidation of
its East European empire and the resulting threat of the Warsaw Pact
to Western Europe.

In the 1950's we helped to contain further Soviet challenges in Korea
and in the Middle East, and we rearmed to assure the continuation of
that containment.

In the 1960's we met the Soviet challenges in Berlin, and we faced
the Cuban missile crisis. And we sought to engage the Soviet Union in
the important task of moving beyond the cold war and away from
confrontation.

And in the 1970's three American Presidents negotiated with the
Soviet leaders in attempts to halt the growth of the nuclear arms
race. We sought to establish rules of behavior that would reduce the
risks of conflict, and we searched for areas of cooperation that
could make our relations reciprocal and productive, not only for the
sake of our two nations but for the security and peace of the entire
world.

In all these actions, we have maintained two commitments: to be ready
to meet any challenge by Soviet military power, and to develop ways to
resolve disputes and to keep the peace.

Preventing nuclear war is the foremost responsibility of the two
superpowers. That's why we've negotiated the strategic arms
limitation treaties-- SALT I and SALT II. Especially now, in a time
of great tension, observing the mutual constraints imposed by the
terms of these treaties will be in the best interest of both
countries and will help to preserve world peace. I will consult very
closely with the Congress on this matter as we strive to control
nuclear weapons. That effort to control nuclear weapons will not be
abandoned.

We superpowers also have the responsibility to exercise restraint in
the use of our great military force. The integrity and the
independence of weaker nations must not be threatened. They must know
that in our presence they are secure.

But now the Soviet Union has taken a radical and an aggressive new
step. It's using its great military power against a relatively
defenseless nation. The implications of the Soviet invasion of
Afghanistan could pose the most serious threat to the peace since the
Second World War.

The vast majority of nations on Earth have condemned this latest
Soviet attempt to extend its colonial domination of others and have
demanded the immediate withdrawal of Soviet troops. The Moslem world
is especially and justifiably outraged by this aggression against an
Islamic people. No action of a world power has ever been so quickly
and so overwhelmingly condemned. But verbal condemnation is not
enough. The Soviet Union must pay a concrete price for their
aggression.

While this invasion continues, we and the other nations of the world
cannot conduct business as usual with the Soviet Union. That's why
the United States has imposed stiff economic penalties on the Soviet
Union. I will not issue any permits for Soviet ships to fish in the
coastal waters of the United States. I've cut Soviet access to
high-technology equipment and to agricultural products. I've limited
other commerce with the Soviet Union, and I've asked our allies and
friends to join with us in restraining their own trade with the
Soviets and not to replace our own embargoed items. And I have
notified the Olympic Committee that with Soviet invading forces in
Afghanistan, neither the American people nor I will support sending
an Olympic team to Moscow.

The Soviet Union is going to have to answer some basic questions:
Will it help promote a more stable international environment in which
its own legitimate, peaceful concerns can be pursued? Or will it
continue to expand its military power far beyond its genuine security
needs, and use that power for colonial conquest? The Soviet Union must
realize that its decision to use military force in Afghanistan will be
costly to every political and economic relationship it values.

The region which is now threatened by Soviet troops in Afghanistan is
of great strategic importance: It contains more than two-thirds of the
world's exportable oil. The Soviet effort to dominate Afghanistan has
brought Soviet military forces to within 300 miles of the Indian
Ocean and close to the Straits of Hormuz, a waterway through which
most of the world's oil must flow. The Soviet Union is now attempting
to consolidate a strategic position, therefore, that poses a grave
threat to the free movement of Middle East oil.

This situation demands careful thought, steady nerves, and resolute
action, not only for this year but for many years to come. It demands
collective efforts to meet this new threat to security in the Persian
Gulf and in Southwest Asia. It demands the participation of all those
who rely on oil from the Middle East and who are concerned with global
peace and stability. And it demands consultation and close cooperation
with countries in the area which might be threatened.

Meeting this challenge will take national will, diplomatic and
political wisdom, economic sacrifice, and, of course, military
capability. We must call on the best that is in us to preserve the
security of this crucial region.

Let our position be absolutely clear: An attempt by any outside force
to gain control of the Persian Gulf region will be regarded as an
assault on the vital interests of the United States of America, and
such an assault will be repelled by any means necessary, including
military force.

During the past 3 years, you have joined with me to improve our own
security and the prospects for peace, not only in the vital
oil-producing area of the Persian Gulf region but around the world.
We've increased annually our real commitment for defense, and we will
sustain this increase of effort throughout the Five Year Defense
Program. It's imperative that Congress approve this strong defense
budget for 1981, encompassing a 5-percent real growth in
authorizations, without any reduction.

We are also improving our capability to deploy U.S. military forces
rapidly to distant areas. We've helped to strengthen NATO and our
other alliances, and recently we and other NATO members have decided
to develop and to deploy modernized, intermediate-range nuclear
forces to meet an unwarranted and increased threat from the nuclear
weapons of the Soviet Union.

We are working with our allies to prevent conflict in the Middle
East. The peace treaty between Egypt and Israel is a notable
achievement which represents a strategic asset for America and which
also enhances prospects for regional and world peace. We are now
engaged in further negotiations to provide full autonomy for the
people of the West Bank and Gaza, to resolve the Palestinian issue in
all its aspects, and to preserve the peace and security of Israel. Let
no one doubt our commitment to the security of Israel. In a few days
we will observe an historic event when Israel makes another major
withdrawal from the Sinai and when Ambassadors will be exchanged
between Israel and Egypt.

We've also expanded our own sphere of friendship. Our deep commitment
to human rights and to meeting human needs has improved our
relationship with much of the Third World. Our decision to normalize
relations with the People's Republic of China will help to preserve
peace and stability in Asia and in the Western Pacific.

We've increased and strengthened our naval presence in the Indian
Ocean, and we are now making arrangements for key naval and air
facilities to be used by our forces in the region of northeast Africa
and the Persian Gulf.

We've reconfirmed our 1959 agreement to help Pakistan preserve its
independence and its integrity. The United States will take action
consistent with our own laws to assist Pakistan in resisting any
outside aggression. And I'm asking the Congress specifically to
reaffirm this agreement. I'm also working, along with the leaders of
other nations, to provide additional military and economic aid for
Pakistan. That request will come to you in just a few days.

Finally, we are prepared to work with other countries in the region
to share a cooperative security framework that respects differing
values and political beliefs, yet which enhances the independence,
security, and prosperity of all.

All these efforts combined emphasize our dedication to defend and
preserve the vital interests of the region and of the nation which we
represent and those of our allies--in Europe and the Pacific, and also
in the parts of the world which have such great strategic importance
to us, stretching especially through the Middle East and Southwest
Asia. With your help, I will pursue these efforts with vigor and with
determination. You and I will act as necessary to protect and to
preserve our Nation's security.

The men and women of America's Armed Forces are on duty tonight in
many parts of the world. I'm proud of the job they are doing, and I
know you share that pride. I believe that our volunteer forces are
adequate for current defense needs, and I hope that it will not
become necessary to impose a draft. However, we must be prepared for
that possibility. For this reason, I have determined that the
Selective Service System must now be revitalized. I will send
legislation and budget proposals to the Congress next month so that
we can begin registration and then meet future mobilization needs
rapidly if they arise.

We also need clear and quick passage of a new charter to define the
legal authority and accountability of our intelligence agencies. We
will guarantee that abuses do not recur, but we must tighten our
controls on sensitive intelligence information, and we need to remove
unwarranted restraints on America's ability to collect intelligence.

The decade ahead will be a time of rapid change, as nations
everywhere seek to deal with new problems and age-old tensions. But
America need have no fear. We can thrive in a world of change if we
remain true to our values and actively engaged in promoting world
peace. We will continue to work as we have for peace in the Middle
East and southern Africa. We will continue to build our ties with
developing nations, respecting and helping to strengthen their
national independence which they have struggled so hard to achieve.
And we will continue to support the growth of democracy and the
protection of human rights.

In repressive regimes, popular frustrations often have no outlet
except through violence. But when peoples and their governments can
approach their problems together through open, democratic methods,
the basis for stability and peace is far more solid and far more
enduring. That is why our support for human rights in other countries
is in our own national interest as well as part of our own national
character.

Peace--a peace that preserves freedom--remains America's first goal.
In the coming years, as a mighty nation we will continue to pursue
peace. But to be strong abroad we must be strong at home. And in
order to be strong, we must continue to face up to the difficult
issues that confront us as a nation today.

The crises in Iran and Afghanistan have dramatized a very important
lesson: Our excessive dependence on foreign oil is a clear and
present danger to our Nation's security. The need has never been more
urgent. At long last, we must have a clear, comprehensive energy
policy for the United States.

As you well know, I have been working with the Congress in a
concentrated and persistent way over the past 3 years to meet this
need. We have made progress together. But Congress must act promptly
now to complete final action on this vital energy legislation. Our
Nation will then have a major conservation effort, important
initiatives to develop solar power, realistic pricing based on the
true value of oil, strong incentives for the production of coal and
other fossil fuels in the United States, and our Nation's most
massive peacetime investment in the development of synthetic fuels.

The American people are making progress in energy conservation. Last
year we reduced overall petroleum consumption by 8 percent and
gasoline consumption by 5 percent below what it was the year before.
Now we must do more.

After consultation with the Governors, we will set gasoline
conservation goals for each of the 50 States, and I will make them
mandatory if these goals are not met.

I've established an import ceiling for 1980 of 8.2 million barrels a
day--well below the level of foreign oil purchases in 1977. I expect
our imports to be much lower than this, but the ceiling will be
enforced by an oil import fee if necessary. I'm prepared to lower
these imports still further if the other oil-consuming countries will
join us in a fair and mutual reduction. If we have a serious shortage,
I will not hesitate to impose mandatory gasoline rationing
immediately.

The single biggest factor in the inflation rate last year, the
increase in the inflation rate last year, was from one cause: the
skyrocketing prices of OPEC oil. We must take whatever actions are
necessary to reduce our dependence on foreign oil--and at the same
time reduce inflation.

As individuals and as families, few of us can produce energy by
ourselves. But all of us can conserve energy--every one of us, every
day of our lives. Tonight I call on you--in fact, all the people of
America--to help our Nation. Conserve energy. Eliminate waste. Make
1980 indeed a year of energy conservation.

Of course, we must take other actions to strengthen our Nation's
economy.

First, we will continue to reduce the deficit and then to balance the
Federal budget.

Second, as we continue to work with business to hold down prices,
we'll build also on the historic national accord with organized labor
to restrain pay increases in a fair fight against inflation.

Third, we will continue our successful efforts to cut paperwork and
to dismantle unnecessary Government regulation.

Fourth, we will continue our progress in providing jobs for America,
concentrating on a major new program to provide training and work for
our young people, especially minority youth. It has been said that "a
mind is a terrible thing to waste." We will give our young people new
hope for jobs and a better life in the 1980's.

And fifth, we must use the decade of the 1980's to attack the basic
structural weaknesses and problems in our economy through measures to
increase productivity, savings, and investment.

With these energy and economic policies, we will make America even
stronger at home in this decade--just as our foreign and defense
policies will make us stronger and safer throughout the world. We
will never abandon our struggle for a just and a decent society here
at home. That's the heart of America--and it's the source of our
ability to inspire other people to defend their own rights abroad.

Our material resources, great as they are, are limited. Our problems
are too complex for simple slogans or for quick solutions. We cannot
solve them without effort and sacrifice. Walter Lippmann once
reminded us, "You took the good things for granted. Now you must earn
them again. For every right that you cherish, you have a duty which
you must fulfill. For every good which you wish to preserve, you will
have to sacrifice your comfort and your ease. There is nothing for
nothing any longer."

Our challenges are formidable. But there's a new spirit of unity and
resolve in our country. We move into the 1980's with confidence and
hope and a bright vision of the America we want: an America strong
and free, an America at peace, an America with equal rights for all
citizens-- and for women, guaranteed in the United States
Constitution -- an America with jobs and good health and good
education for every citizen, an America with a clean and bountiful
life in our cities and on our farms, an America that helps to feed
the world, an America secure in filling its own energy needs, an
America of justice, tolerance, and compassion. For this vision to
come true, we must sacrifice, but this national commitment will be an
exciting enterprise that will unify our people.

Together as one people, let us work to build our strength at home,
and together as one indivisible union, let us seek peace and security
throughout the world.

Together let us make of this time of challenge and danger a decade of
national resolve and of brave achievement.

Thank you very much.