(Communicated by the Cabinet Secretariat)

1. IDF Chief-of-Staff Lt.-Gen. Moshe Yaalon briefed ministers on security events of the past week. He discussed the funeral and burial of Yasser Arafat and the ceremonies that were held in Ramallah. The Chief-of-Staff noted that the security establishment was prepared, according to instructions, to enable the funeral and burial to be held as smoothly as possible, without friction, while preventing terrorism since the threat of terrorism has continued unabated. The Chief-of-Staff said that coordination between the IDF and the Palestinians enabled the latter to receive security responsibility for Ramallah, including armed policemen in the city of Ramallah only. The Chief-of-Staff emphasized that the permission for them to carry weapons is valid until tomorrow morning when the situation will revert to what it was before the burial ceremony.

The Chief-of-Staff also discussed the penetration of a Hezbollah UAV into northern Israel.

Following the Chief-of-Staff’s briefing, Prime Minister Ariel Sharon made the following remarks:

“Arafat’s illness, his departure for Europe, his death and burial in Ramallah, created high diplomatic and security sensitivity and presented us with a challenge that had to be dealt with both precision and consideration. We had to make complex decisions and it is my understanding that we gave due consideration to the full range of diplomatic and security factors. As a result, we decided to allow the entry of doctors and medical equipment to the Mukata, according to the Palestinians’ requests. We enabled Arafat to depart for treatment in Europe and committed ourselves to his return upon recovery, this also in accordance with Palestinian requests and Abu Ala’s appeal to me. In the end, alongside our determined position that Arafat would not be buried in Jerusalem, we enabled – as per the request of the PA – Arafat’s burial in Ramallah.  In my opinion, we made the correct decisions in the delicate situation that arose as a result of Arafat’s illness; we carried out our decisions properly.”

Prime Minister Sharon thanked Defense Minister Shaul Mofaz, Public Security Minister Gideon Ezra, the Chief-of-Staff, ISA Director Avi Dichter, Police commissioner Moshe Karadi and all those who worked under their command, for their considered, responsible and organized action, which enabled quiet, security and stability be maintained in the delicate situation that had been created.

Prime Minister Sharon thanked the five ministers who appeared before the media and presented the Government’s position on the issue, and MK Majalli Whbee for appearing before the Arabic media.

2. The Cabinet discussed the issue of capital market reform (the Bachar Committee report). Prime Minister Sharon made the following remarks:

“For the past six months, this professional team has worked intensively with the goal of improving Israel capital market.  I would like to emphasize that I support the proposed reform’s main principles and I intend to advance them.  However, we will continue to examine several issues in order to verify that the public’s savings are assured.

Since capital market reform has far-reaching implications for the public’s assets and savings, I have held a series of advance meetings with academics, businesspeople and bankers in order to hear a range of views and consider the reform’s long-range consequences.

The goal is to implement genuine change in the Israeli capital market via effective and thorough legislation that will lead to the reduction of concentrations in the capital market and – above all – improve things for consumers.

The original report was circulated to ministers approximately one week ago and today we will hold a detailed discussion.  Since the team’s recommendations have been submitted to the public, any changes will be fully transparent.

I believe in the principle of implementing the reform by consensus.  While such a significant and substantive economic reform cannot be delayed by, or made conditional on, the need to reach a consensus, it is possible to aspire to it and this secure cooperation and fewer struggles, thus enabling the reform to be enacted more quickly.  Our responsibility is to maintain and assure public assets in a process initiated by the Government; therefore, we must legislate an appropriate provident fund law as a condition to making it easier for savers to move between the various funds before and after the sale, in order to allow consumers to make free and considered decisions.”

The Cabinet decided to adopt the recommendations of the interministerial team on capital market reform.  Since the proposed reform specifies significant steps (reducing concentrations in the capital market, reducing conflicts of interests, fostering greater competition, increasing sources of credit, reducing costs on credit to the public and improving services to consumers), the Cabinet directed Prime Minister’s Office Director-General Ilan Cohen and Finance Ministry Director-General Yossi Bachar to formulate a plan on implementing the reform, after considering comments by ministers and the public, and after consulting with the members of the Bachar Committee. The necessary recommendations are to be submitted to Prime Minister Sharon and Finance Minister Benjamin Netanyahu by 15 December 2004; the Cabinet authorized the aforementioned ministers to approve said recommendations.  The Cabinet also authorized Finance Minister Netanyahu to prepare a draft law on implementing the reform, by 15 January 2005, and to submit it to the Ministerial Committee on Legislation.

3. The Cabinet decided to amend its previous decision regarding the unification of television and radio broadcast systems and instructed an interministerial team headed by the communications ministry Director-General and the Finance Ministry Budget Director to formulate appropriate recommendations.

4. The Cabinet decided to postpone the implementation of the 2004 Shipping and Ports Authority Law by 90 days in order to enable ongoing discussions with the Histadrut – as per the 5 August 2004 National Labor Court memorandum – to continue in a positive atmosphere.