(Communicated by the Cabinet Secretariat)

At the weekly Cabinet meeting today (Sunday), 27 March 2005:

1. Vice Premier Shimon Peres briefed ministers on issues that fall under the purview of his office.  He noted that within the context of the establishment of the government, Prime Minister Ariel Sharon assigned to him the responsibility of dealing with the economic aspects of the disengagement from the Gaza Strip and with the development of the Negev and the Galilee.

Regarding the Gaza Strip, Vice Premier Peres said when one analyzes what is happening there, one quickly sees the immediate problems related, first of all, to the economic situation of the population. In light of this situation, in relation to the upcoming Palestinian parliamentary elections and the impending Israeli departure from the Gaza Strip, it has been agreed to enlist the global community in order to deal with the economic problems. Vice Premier Peres said that Hamas’s strength does not only stem from terrorism but also from the network of social assistance that it operates, which is very developed and assists a great many families. A plan has thus been created to enable the establishment of a fund for providing immediate assistance to Palestinians in the Gaza Strip.

The Palestinian Authority (PA) Finance Minister, in consultation with Israeli officials, has reached the conclusion that a $120 million fund must be created in order to provide immediate assistance to 100,000 families in need of aid, with each family receiving $100 a month for one year. The following will enable more to be done in order to improve the situation as much as possible: Facilitating more efficient passage at crossing points, this with the assistance of the World Bank; removing roadblocks; and facilitating freer movement within the Gaza Strip by opening transportation routes. Moreover, a new economy must be built since financial assistance has its limits.  Accordingly, a new economy means creating jobs both in Gaza and in Judea and Samaria. There is a proposal that American and European companies will establish manufacturing branches in the West Bank and the Gaza Strip. Vice Premier Peres said that at Davos, he met with representatives of dozens of companies that expressed the willingness to do so. There is a chance to begin developing Gaza for tourism; our proposal at the Davos conference to establish a young entrepreneurs conference in the Middle East was accepted.

Regarding the Galilee and the Negev, Vice Premier Peres said that unemployment and negative migration were serious problems.  In the Galilee, it was possible to solve the problems as follows:
1) Extending highways to the north;
2) Establishing a university along the lines of Ben-Gurion University of the Negev; and
3) Extensively developing tourism.

The IDF and Defense Minister Shaul Mofaz were prepared to transfer technological infrastructures and instruction bases to the Negev. Ben-Gurion University should be expanded as a high-tech center. Industrial parks should be developed.  Unemployment is a serious problem in the Negev; government ministries, including the Finance Ministry, are dealing with the issue.

2. Defense Minister Mofaz briefed ministers on current security issues and issues regarding Israel’s foreign relations. Defense Minister Mofaz said that while PA Chairman Abu Mazen was facing domestic challenges, he has benefited from the credit for moving forward in the process of transferring responsibility for West Bank towns, beginning to implement an arrangement for fugitives and for securing the consent of the Palestinian organizations to a “relaxation” until the end of 2005. In the polls, he is winning widespread support among the Palestinian public. However, Abu Mazen is facing a series of domestic Palestinian challenges and problems that emphasize the difficulty in making and implementing decisions. Hamas’s declaration that it would participate in the July 2005 parliamentary elections and the potential for Hamas to make further gains in the May 2005 municipal elections are likely to create a situation for Abu Mazen in which Hamas is the strongest political force in the PA. Since the Sharm el-Sheikh summit, while the ‘relaxation’ has been generally adhered to and there has been a considerable drop in the number of terrorist incidents, attacks have continued; recently there has been a sharp increase in the number of mortar attacks in the Gaza Strip. Thus, the PA must act with greater vigor against the terrorist organizations.

The Defense Minister has passed sharp messages to this effect to senior PA officials on more than one occasion, including in recent days. While the Palestinian security services have stepped up their activities as a result, this has been insufficient and a substantial change in the manner in which they deal with terrorism is still required. The security establishment’s working assumption is that terrorist acts will continue and the security forces will continue to be ready to respond to any threat in order to prevent the next terrorist attack.

Foreign Minister Silvan Shalom briefed ministers on diplomatic issues. Regarding US Ambassador Daniel Kurtzer’s meeting with Foreign Ministry cadets, the Foreign Minister expressed regret at the media reports about the Ambassador’s remarks. Foreign Minister Shalom emphasized that the remarks were made in a closed forum and were not for public consumption; the published remarks do not gibe with the transcript that he saw this morning. He noted that we have recently witnessed a series of damaging leaks aimed at harming Israel’s interests. Therefore, and in order to remove all doubt on the issue, mainly in light of the ugly and damaging insinuations, Foreign Minister Shalom today asked Civil Service Commissioner Shmuel Hollander and Attorney General Meni Mazuz to investigate the matter; the Foreign Minister also asked Foreign Ministry Director-General Ron Prosor and the Foreign Ministry Legal Adviser to provide such assistance to the investigation as may be necessary. “I will be the first who is ready to be checked and investigated,” the Foreign Minister said.

Foreign Minister Shalom said that US President George bush’s commitment on the issues in question was well known. This commitment was one of the main things that led to his decision to support the Disengagement Plan.  The Foreign Minister said: “As far as I know, the US continues to stand behind this commitment.  Since taking office, I have worked to promote bilateral relations, which I view as a national asset of the highest order. I will never do anything to harm them.”

Foreign Minister Shalom commented on the changes in the region, which continue to gather momentum. Both American and European pressure on Syria is strengthening. The UN report on the circumstances surrounding the assassination of Rafik Hariri has increased this pressure. The report determines that Syria bears the main responsibility for the political tension in Lebanon which led to the assassination as well as for the absence of security and law and order in Lebanon.

In recent weeks, there has been progress in Europe’s position regarding defining Hizbullah as a terrorist organization. The European Parliament passed an unprecedented decision this month in which it defined Hizbullah as a terrorist organization for the first time.

Prime Minister Sharon said that, “In wake of the Israeli media reports over the weekend to the effect that there are no understandings with the US on Israeli settlement blocs in Judea and Samaria, I would like to clarify the following.  In his 14 April 2004 letter to me, US President Bush wrote, inter alia, that, ‘In light of new realities on the ground, including already existing major Israeli populations centers, it is unrealistic to expect that the outcome of final status negotiations will be a full and complete return to the armistice lines of 1949, and all previous efforts to negotiate a two-state solution have reached the same conclusion. It is realistic to expect that any final status agreement will only be achieved on the basis of mutually agreed changes that reflect these realities.’

The meaning of these remarks is that the US supports the Israeli position, according to which large Israeli settlement blocs will remain in Israeli hands in any future settlement with the Palestinians. This position won the unprecedented backing of the entire American government. The US House of Representatives adopted this position in a 22 July 2004 decision by a 407-9 vote; the US Senate adopted this position in a 23 July 2004 decision by a 95-3 vote.

The attempt by political elements in Israel over the weekend to create cracks in this American position and cast doubt on the understandings which have been reached with the US administration were strongly rejected by US Ambassador to Israel Daniel Kurtzer who made the following remarks to the Israeli media: ‘I reiterate what the President said last April, that there is a new reality on the ground, that there are major Israeli population centers and it is realistic to expect that the negotiations will not lead to an Israeli withdrawal to the 1967 lines. The President said this clearly last April. This remains US policy and I will say nothing to the contrary in either open or closed conversations…After all, this is a letter that the President sent to the Prime Minister, it’s public, anyone can read it and the understandings between the two countries are very clear… I hope that those in Israel and in the Israeli government understand the US’s commitment to Israel, our commitment to disengagement and the understandings that the Prime Minister and the President reached last April remain completely valid. ’

US Secretary of State Dr. Condoleeza Rice made it clear that the American position has not changed. She referred to the issue in an interview with the Israeli media: ‘While we are not determining the permanent settlement in advance, the changes on the ground and the fact that there are large settlement blocs, must be taken into account in any permanent settlement negotiations… I regret that people have tried to sow confusion but there is no confusion here, there are political issues in Israel regarding everything related to this, but nobody can say that there is no agreement between the two governments.  There is an agreement, it was achieved on 14 April 2004 and I hope that I have clarified matters.’

The remarks by all American officials are clear. We would not need clarifications, we clearly know what we have achieved. But those who want clarifications, in any case are not willing to accept them.

I regret that political elements in Israel – as part of a political campaign – did not hesitate to try to harm the State of Israel’s greatest diplomatic asset and tried to sabotage Israel’s relations with our greatest friend, the US.”

3. In accordance with the 1959 Civil Service Law (Appointments), the Cabinet decided to appoint Efrat Duvdevani as the Director-General of Vice Premier Shimon Peres’s Office. The appointments committee chaired by Civil Service Commissioner Hollander recommended Ms. Duvdevani’s appointment to the Cabinet. She has a BA in International Relations from Hebrew University of Jerusalem and an MA in Public Policy from Tel Aviv University and has previously served both former Prime Minister the late Yitzhak Rabin and Vice Premier Peres in various capacities.

4. In accordance with both Communications Minister Dalia Itzik’s recommendation and the 1982 Communications Law (Bezek and Broadcasts), the Cabinet decided to appoint Menashe Noy to represent Israeli artists and creators on the Cable and Satellite Broadcast Council, in place of Ilan Avisar. Mr. Noy’s appointment was approved by the appropriate committee as provided for by the 1975 Government Companies Law.

5. In accordance with the 1959 Civil Service Law (Appointments) and the Civil Service Commission, the Cabinet decided to exempt from public tender the position of Health Ministry Public Complaints Commissioner.

6. The Cabinet discussed the draft law on issuing state-held shares of Bank Leumi to the public, which was approved by the Ministerial Committee on Legislation. The Cabinet will continue its discussions at its next

7. In accordance with the 1965 Planning and Construction Law, the Cabinet decided to authorize Solver Energy, Ltd. to prepare a plan on the construction of a combined electrical and geothermal power plant and present it to the National Infrastructures Planning and Construction Committee.