(Communicated by the Cabinet Secretariat)

At the weekly Cabinet meeting today (Sunday), 20 May 2007:

1. Prime Minister Ehud Olmert discussed the situation in Sderot and in the other communities around the Gaza Strip: "Since last Tuesday, the city of Sderot and the other communities around the Gaza Strip have been under further attack. Over 120 Kassam rockets were launched from the Gaza Strip in five days. The Hamas terrorist organization, which constitutes a significant part of the Palestinian Authority (PA) government, has again proven to the entire world that it is a murderous terrorist organization through and through. The security establishment is operating against the terrorists responsible for these attacks and dozens of them have been killed in recent days. Hamas members are paying – and will yet pay – for their actions.

We, in the government, bear a heavy responsibility for the peace and welfare of the approximately 40,000 Israelis who live in Sderot and in the other communities around the Gaza Strip. In the last five years, the state has invested over NIS 1 billion in strengthening security components, in economic assistance and in strengthening the communities in the area. Out of this sum, over NIS 300 million has been invested – and is being invested – in protecting educational institutions. As of now, approximately 170 schools and kindergartens have been protected. Beyond the Defense Ministry, which is responsible for dealing with the home front, the Social Welfare and Social Services, Health, Immigrant Absorption, Education and Pensioners’ Affairs ministries are active on the ground in offering special assistance to weaker populations, taking residents on short vacations and in offering psychological help."

Prime Minister Olmert noted that Defense Minister Amir Peretz has decided on the existence of a special home front situation in Sderot and in the other communities around the Gaza Strip and added that he concurred with the Defense Minister. The Prime Minister said that the Government would grant communities around the Gaza Strip the status of confrontation line communities similar to that of communities on the northern border.

Prime Minister Olmert made it clear that in accordance with the decisions that were taken in the framework of implementing the lessons from the fighting in the north – the Defense Ministry is the body responsible for dealing with the home front and for coordinating the activities of all government ministries.

2. Prime Minister Olmert, Foreign Minister Tzipi Livni and Bank of Israel Governor Prof. Stanley Fischer briefed ministers on Israel’s joining the OECD.The Cabinet decided on several steps, including – inter alia – the creation of professional steering committee to oversee the accession process.

3. Defense Minister Peretz and Foreign Minister Livni briefed ministers on security and diplomatic issues regarding the situation in the Gaza Strip.

Defense Minister Peretz said that the Palestinian situation was deteriorating amidst the struggle between Fatah and Hamas and the ineffectualness of the PA government in dealing with the anarchy on the Palestinian street. The Defense Minister referred to the violent clashes in which many Palestinians, mainly Fatah members, have been killed. He said that the escalation was finding expression in increased terrorism from the Gaza Strip toward Sderot and the other communities around the Gaza Strip and added that the dynamic of escalation was liable to lead to an upsurge in Hamas terrorism. The Defense Minister said that while Israel was not interested in intervening in an internal Palestinian conflict, it did not intend to show restraint toward continuing terrorism and missile attacks against its citizens. He detailed the steps being taken by the IDF against Palestinian terrorism and noted that he has instructed the Defense Ministry Director-General to continue providing support for the weaker populations in Sderot.

Foreign Minister Livni said that international attitudes to the situation include the need to deal with the Hamas challenge. She said that the Foreign Ministry was making diplomatic and informational efforts to close the gap in awareness in order to bring about international and Arab pressure on Hamas, to create legitimacy for Israel’s military actions and to put the Kassam fire and the threat posed by a strengthening Hamas atop the agenda.

Prime Minister and Acting Finance Minister Olmert announced that he would send to the Knesset Finance Committee directives enabling the Sderot and Gaza area confrontation line communities to receive property tax assistance regarding indirect compensation.

4. The Cabinet discussed Ashdod Energy Co. Inc.’s authorization to prepare a national infrastructure plan for using natural gas to generate electricity.

5. The Cabinet discussed various proposals for using desalination to increase the water supply.

6. The Cabinet declared various floods that occurred in 2005 and 2006 to be natural disasters in accordance with the 1989 Natural Disaster Compensation Law.