(Communicated by the Cabinet Secretariat)

At the weekly Cabinet meeting today (Sunday), 26 September 2004:

1. Defense Minister Shaul Mofaz and Foreign Minister Silvan Shalom briefed ministers on current security and diplomatic issues.

The Defense Minister said that there has been a noticeable increase in the number of attempts to perpetrate terror attacks and other atrocities in Israel, and in Judea and Samaria and the Gaza Strip, and cited the attacks in French Hill in Jerusalem, the infiltration into Morag and mortar fire at Neve Dekalim, all of which resulted in Israeli fatalities. At the same time, the Israeli security establishment continues its operations to foil attacks.  The Defense Minister noted that since the beginning of 2004, 125 terror attacks have been thwarted or disrupted and remarked that the major aim at present is to allow Israeli civilians to celebrate the upcoming Jewish holiday of Sukkot in security.  In order to achieve this, the IDF and the security services have special operations and preparations, and are continuing with initiatives to thwart suicide terrorists and widening efforts to prevent Kassam fire.  The general closure of Gaza and Judea and Samaria continues.

Defense Minister Mofaz also commented on regional events, specifically the Iranian nuclear program and Egypt’s activities relating to preventing weapons smuggling from its territories to the Gaza strip and the Negev.

Prime Minister Sharon said that operations against terrorist organizations must be stepped up, especially in light of the countless attempts to perpetrate attacks, and due to the fact that the Palestinian Authority is making no efforts to stop the terror.  Prime Minister Sharon praised the security services for their efforts in this area, and said that he had instructed that the war against terror be increased and that there be no compromise with terror.

Foreign Minister Shalom briefed the Cabinet on his participation in the 59th United Nations General Assembly, where he met with US President Bush, the UN Secretary Kofi Annan, Japanese Prime Minister Junichiro Koizumi and with a number of foreign ministers from Arab countries and other states.  The Foreign Minister remarked that Israel came to the assembly with a list of aims:

a. Bringing up the issue of Iranian nuclear weapons before the Security Council as soon as possible.
b. Increasing international pressure on Syria.
c. Receiving assurances from European states and other countries that they will not support Palestinian efforts against the security fence.
d. Reducing the number of anti-Israel resolutions in the UN and ending the exaggerated interest in Israel’s affairs, which succumbs to the Palestinian attempt to internationalize the conflict.
e. Advancing the fight against anti-Semitism.

Foreign Minister Shalom discussed with his Arab counterparts the need to support diplomatic efforts in the region and to improve diplomatic – as well as economic – relations between states.

The Foreign Minister said that the partial withdrawal of Syrian troops from Lebanon was a cosmetic process alone and added that when he met with European Foreign Ministers he noted that despite their understanding of the difficulties terror places before everyone, and despite their agreement on the danger posed by the Iranian nuclear program, they broadcast mixed messages in reality.

2. The Cabinet noted the recommendation by Housing and Construction Minister Tzipi Livni not to reduce salaries due to a drop in prices from July 2002 to July 2004, which was published on 15 August 2004.

3. The cabinet decided to increase the various benefits given to approved enterprises under the 1989 Capital investment Encouragement Law.

4. The Cabinet decided to adopt Industry, Trade and Employment Minister Ehud Olmert’s and Finance Minister Benjamin Netanyahu’s (hereinafter “the ministers”) policy and to amend the 1984 Industrial Research and Development Encouragement Law accordingly:

a) To authorize the Research Committee to approve the transfer of knowledge developed in approved research and development (hereinafter “R&D”) programs, whether entirely or in part, outside Israel, whether via sale of the knowledge only or in the framework of the sale of a company’s assets, subject to payment.

b) To authorize the ministers to set regulations regarding the calculation of depreciation and arrangements for payment for the sale of knowledge use licenses.

c) The amounts that will be paid as per the foregoing will serve to encourage industrial research and development, according to the law.

d) To set regulations so that the depreciation period will begin three years after the end of the R&D plan, and will continue for seven years.

e) To authorize the research Committee to approve the export of the knowledge from Israel in exchange for alternative knowledge that will be transferred to the party receiving the approval, or for cooperation in developing new knowledge, even without payment as per the foregoing, if the Research Committee is convinced of the significant worthwhileness of the deal to the economy.

f) To authorize the Research Committee to approve requests to transfer trademark rights outside Israel in exchange for a commitment to manufacture a product at a similar or higher technological level, provided that employment and job creation in Israel, value added in Israel and the scope of marketing the product on the world market, are not less than the transferred production or the transferred trademark rights.
Approvals per articles 4a, 4e & 4f will be issued on the basis of criteria set by the Research Committee, with the ministers’ approval.

g) To authorize the Research Committee to approve R&D cooperation between Israeli and foreign companies, provided that it concerns contact between Israeli and multi-national firms for the purpose of making joint R&D investments, under similar conditions to those existing in the context of parallel support agreements and joint funds with other countries according to the law.

h) To authorize the Research Committee subcommittee to approve changes in the royalty definitions and to correct mistakes in the approval given to the company.

i) To charge the Finance Ministry with the responsibility of disseminating a memorandum on the law, which will include the legislative amendments required by this decision, that will be submitted to the Knesset in the framework of the draft Economic Arrangements Law.

5. The Cabinet discussed Minister Zevulon Orlev’s motion against the Ministerial Committee on Legislation’s decision to approve a draft law that would extend daylight savings time (“summer time”) all year round.  Minister Orlev claimed that there was a reasonable basis to assume that this draft law would harm those who pray before leaving for work in the morning and would, in effect, not enable them to pray as they do today, and added that this law would not enable the religious public to have cultural activities after the Sabbath.  The Cabinet decided to accept Minister Orlev’s motion.

6. The Cabinet – in accordance with the 1959 Civil Service Law – decided to appoint Eli Cohen as Director-General of the Tourism Ministry (in place of Aharon Domb).  The appointment will enter into effect on 15.11.04.  Eli Cohen was born in 1970 and has an academic background.  He most recently served as a senior adviser to Finance Minister Benjamin Netanyahu.

7. The ministers were briefed on the incitement against Prime Minister Ariel Sharon and others.  Speaking for the Cabinet, Justice Minister Joseph Lapid said: “We all feel outraged by the extremist, outrageous and appalling incitement against you personally.  We believe that this is one of the ugliest phenomena to have marked Israeli public life in recent years and we offer you our support.”

Prime Minister Sharon thanked the Justice Minister and said that he would not be deterred and that he views incitement as very severe and a danger to Israeli democracy.  The Prime Minister stressed that this phenomenon does not affect his position and reiterated that he will not be deterred by it; he said that he will act in accordance with government decisions.