Jerusalem, July 2, 2003

Cabinet Communique
(Communicated by the Cabinet Secretariat)

At the weekly Cabinet meeting today (Wednesday), July 2, 2003:

1. Defense Minister Shaul Mofaz briefed ministers on current security matters and noted that after approximately 1,000 days of a severe terror onslaught, a new chapter – full of hopes and concerns – has been opened in the Israeli-Palestinian conflict. He said that the fact that the Palestinian side has – at this stage – decided on a halt in terror is, first and foremost, a result of the strength of Israeli society and the Israeli security services’ determined and effective war. He added that following a detailed dialogue led by Coordinator of Government Activities in the Territories Maj.-Gen. Amos Gilad, it has been agreed to transfer security responsibility over the Gaza Strip and Bethlehem to the Palestinians. As per the agreement, Israel is committed to transferring security responsibility over certain areas in accordance with agreed-upon security procedures designed to maintain its security interests, and take civil-economic measures to ease conditions for the Palestinian public. The Palestinian side has committed itself to halting terror, stopping the launching of Kassam rockets and mortar rounds, dealing with warnings and attacks, and collecting illegal weapons.

Defense Minister Mofaz stressed that Israel is not a party to the hudna and that it demands that the Palestinian Authority move – after a certain period of time – from stopping terror to uprooting its infrastructures. He noted that the agreement on the transfer of responsibility was made possible, to a large extent, by Israel’s success – during the previous week – in foiling a serious of severe suicide attacks that were planned for inside Israel, including the foiling of a suicide squad that was on its way to Haifa and Petah Tikva. He added that Israel is closely monitoring the implementation of the Palestinians’ commitments and asserted that despite the drop in the volume of warnings and violent activity on the ground, there are still warnings of planned attacks, mainly by those who oppose the ceasefire and who are drawing on external elements.

Defense Minister Mofaz said that Israel was giving the diplomatic process a chance and intends to move it forward, while paying strict attention to the security issue.

Foreign Minister Silvan Shalom discussed diplomatic issues related to the ceasefire (hudna) negotiations among the Palestinians and the seam zone fence. He briefed ministers on his meetings with King Abdullah, UN Secy.-Gen. Kofi Annan, US Secy. of State Colin Powell and various foreign ministers at the World Economic Forum, which was held in Jordan on June 21-23, 2003. He reminded ministers that he had demanded the return of Arab ambassadors to Israel.

Prime Minister Ariel Sharon briefed ministers on his important meeting yesterday with Palestinian Prime Minister Abu Mazen. He reminded ministers that he had demanded the dismantling of the terrorist organizations, a halt to incitement and a transition to education for peace. It was agreed to establish joint committees to discuss a range of issues that came up during the meeting. In response to the request of the Palestinian delegation regarding the movements of PA Chairman Yasser Arafat, Prime Minister Sharon said that while Arafat could make a one-time passage to Gaza in order to stay there, Arafat could not be allowed to move around because such movements would make it more difficult to take the necessary steps against terror.

On the prisoners issue, Prime Minister Sharon said that the matter was under consideration.

Regarding Israel-US relations, Prime Minister Sharon said that the two countries enjoyed a deep and good bilateral relationship. He made it clear that while there is no bilateral consensus on the seam zone fence, the fence is a security issue on which Israel cannot compromise.

2. The Cabinet – in accordance with Article 18 of Basic Law: The President of the State – authorized President Moshe Katsav’s upcoming state visits to Moldova, Croatia and Slovakia, according to invitations from their respective presidents. President Katsav will meet national, economic and local Jewish community leaders in each country.

3. Finance Minister Benjamin Netanyahu briefed ministers on the raising of foreign capital and on his recent trip abroad for this purpose, including his meetings with investors and analysts.