(Communicated by the Cabinet Secretariat)

1. Prime Minister Ariel Sharon commented on the terrorist attacks in Sinai and reiterated that despite the fact that the attacks took place in Egypt and hurt it, they were directed against Israeli citizens; given the inflammatory reactions among the Palestinian leadership, this issue becomes even more cogent.  The Prime Minister – both on his behalf and that of the entire Cabinet – commended the Home Front Command personnel and the many volunteers, who have been at work from last Thursday night up until today, in efforts to find survivors.

Prime Minister Sharon thanked Egyptian President Hosni Mubarak and the Egyptian government for the close cooperation and sent his condolences to the families of the victims, one of whom, Michal Alexander, worked at the Prime Minister’s Office, and his best wishes for a speedy recovery to the wounded.

Prime Minister Sharon said that in the State of Israel, joy and sadness have been mixed together more than once.  Last week, Professor Aaron Ciechanover and Professor Avraham Hershko, together with Professor Irwin Rose, won the Nobel Prize in Chemistry.The Prime Minister said that he had phoned the Israeli laureates immediately upon hearing the news and added that he plans to meet with them.  He told them that the entire State of Israel is proud of them and their achievement.  He said that Prof. Ciechanover’s and Prof. Hershko’s achievement underscores the need to invest as much as possible in science and education, which are Israel’s future.

Science and Technology Minister Ilan Shalgi commended Prof. Ciechanover and Prof. Hershko.

IDF Chief-of-Staff Lt.-Gen. Moshe Yaalon briefed ministers on current security affairs, especially the terrorist attacks in Sinai, as well as the rescue efforts and identifying the victims.  He also discussed the cooperation with Egyptian officials regarding the operation of Israeli rescue forces in Sinai. The Chief-of-Staff also briefed ministers on Operation “Days of Penitence”, especially the scope of Palestinian casualties and the IDF’s counter-terrorism efforts.

Social Welfare Minister Zevulon Orlev briefed ministers on the activity of the welfare services in caring for the families of the victims of the Sinai terrorist attacks and on the activity of the National Insurance Institute’s Rehabilitation Unit vis-a-vis the families of the victims.

Foreign Minister Silvan Shalom said that many sovereign states have condemned the Sinai terrorist attacks and have sent messages of solidarity with the families of the victims and with the citizens of Israel.

Foreign Minister Shalom briefed ministers on the UN Security Council’s decision regarding terrorism, Israel-UNRWA relations and UN Secretary-General Kofi Annan’s report on the Syrian presence in Lebanon.

Prime Minister Sharon asserted that the struggle against terrorism must continue unabated, without compromise, everywhere, and emphasized that there is no room for any compromises or concessions regarding terrorism.

2. The Cabinet decided to accept Foreign Minister Shalom’s recommendation and – in accordance with the 1959 Civil Service Law – appoint Ron Prosor as Foreign Ministry Director-General in place of the retiring Yoav Biran.  Ron Prosor was born in Israel, is married and the father of three.  He has previously served as Acting Foreign Ministry Director-General.

3. The Cabinet decided – in accordance with the 1959 Civil Service Law – to accept the recommendation of the Civil Service Committee and exempt from public tender the position of Director of the Industry, Trade and Employment Ministry Unit for Foreign Workers, on the condition that a special Candidate Search Committee is formed, the principles of which have been formulated by the Cabinet, and which will be composed of the Civil Service Commissioner (or his representative), the Interior Ministry Director-General (or his representative), a public figure with relevant backgrounds and a senior academic.

4. The Cabinet noted Finance Minister Benjamin Netanyahu’s announcement that in keeping with the Cabinet’s 15 August 2004 decision regarding workers’ contributions to budgetary pensions, he has been charged with the immediate opening of negotiations with the Histadrut in order to secure an agreement regarding increasing workers’ payments to budgetary pensions, and that if the negotiations do not bear fruit by 20 September 2004, the Finance Minister will table a bill specifying that deductions from these workers’ wages will be gradually raised to 5.5% of their wages.

It has been decided – in contacts between the Finance Ministry and the Histadrut – that the foregoing will not be implemented in 2005.

5. The Cabinet decided to accept Defense minister Shaul Mofaz’s recommendation and propose that the Knesset declare a State of Emergency – in accordance with Article 35 of Basic Law: The Government – for a period of one year, pursuant to the Knesset’s 24 May 2004 declaration extending the State of Emergency until 13 December 2004.

A State of Emergency has existed in Israel continuously since May 1948.  Due to the prevailing security-diplomatic situation, the Cabinet has decided to propose the foregoing to the Knesset.