Jerusalem, 12 July 1998

CABINET COMMUNIQUE

Communicated by the Cabinet Secretariat)

At the Cabinet meeting today (Sunday), 12.7.98:

1. The Cabinet was briefed by the Defense Minister and the Coordinator of Activities in the Territories. The Coordinator of Activities pointed to significant improvements in the Palestinian economy:

i) The quotas on Palestinian workers permitted to work in Israel were cancelled, and plans in the sphere of employment were advanced. Palestinian Authority income from employment in Israel constitutes 40% of all PA income.

ii) Israel currently grants 18,000 entry permits to Israel for businessmen and merchants in contrast to only 1,000 in September 1996.

iii) The average number of Palestinian trucks passing through the various crossings has risen from 12,000 in 1996 to 15,500 in 1998.

iv) During 1993-97, the GNP of Judea, Samaria and Gaza areas rose from $3.4 billion in 1993 to $4.4 billion in 1997 as a result of, among other things, the openness of the Israeli government regarding aid to the Palestinian economy.

v) The Prime Minister emphasized that, if there has been a pattern of positive development in the Palestinian economy, this is purely a result of Israeli policy. What is preventing even more extensive growth in the Palestinian economy is the centralist economic policy of the Palestinian Authority.

The Prime Minister added that Israeli policy is balanced and correct creating a correct relationship between the Palestinian economy and security considerations.

vi) The Defense Minister stated that Israeli policy is influenced by the security situation, and its intention is to allow the Palestinian economy to function in as free a way as possible within the limits imposed by security considerations. At the same time, the success of this policy also influences the security situation by preventing residents from despair.

vii) The Communications Minister reported on Palestinian violations in the area of radio and television broadcasting. In these broadcasts, there has been incitement against the State of Israel, in contravention of the Interim Agreement. Within the Palestinian Authority, there have also been pirate broadcasts, which have interfered with permitted ones.

2. The Prime Minister informed the Cabinet of the resignation of Science Minister Michael Eitan, effective from 9.7.98.

3. The Cabinet appointed Attorney Yitzhak Kimhe as Consumer Protection Supervisor to replace Ovadia Shragai. Mr. Kimhe met the conditions of the Ministry of Industry and Trade’s tender for the post.

4. The Cabinet decided to approve the draft bill for housing loans

(amendment no. 3) 1998 and to immediately submit it to the Knesset. The practical effect of the decision is an increase in mortgages to entitled needy groups in a more provident manner, and allocating resources from the state budget for this purpose as well as transferring financial resources from relatively well-off entitled groups. The existing law will be amended so that housing loans will be fully linked to the COL index instead of the 80% rate used today.

5. The Cabinet decided to implement the sale of public sector apartments to their residents. The operation will last for three years. MK Meir Shitreet (Likud), who initiated the operation, presented it to the government. According to the decision, legal residents in government owned or government company owned public apartments, (which are not reserved for the elderly), who are eligible for housing assistance according to the regulations of the Ministry of Housing, will have the right to purchase the apartment in which they reside, under various preferred conditions. Overall preferences for apartment residents will amount to 75% of the apartment’s price in national priority areas along the Confrontation Line, and up to 70% in the rest of the country.

The conditions for the implementation of the plan is that a team named by the Prime Minister will prepare recommendations that will guarantee long-range housing solutions for needy people with reference to the results of the operation. The recommendations will be brought to the Cabinet for approval. The team will try to reach an understanding with the Jewish Agency on all matters regarding their Amigur public housing apartments.