(Communicated by the Cabinet Secretariat)

At the weekly Cabinet meeting today (Sunday), 10 September 2006:

1. GOC Intelligence Maj.-Gen. Amos Yedlin, the Deputy Director of the ISA and Foreign Minister Tzipi Livni briefed ministers on current diplomatic and security matters. They noted that the Middle East is still digesting the results of Israel’s fighting in the north against Hizbullah. They also discussed the Iranian nuclear issue; and the Syrian and Lebanese arenas, including the deployment of international forces and the Lebanese Army, which is enabling the withdrawal of IDF forces from southern Lebanon; Palestinian affairs and the gap between Palestinian positions and those of Israel; internal Palestinian affairs and terrorism; Palestinian humanitarian and economic affairs and counter-terrorist actions by Israel’s security forces. Ministers were also briefed on the talks between Hamas and Fatah regarding a unity government, the various strikes in the Palestinian Authority and the tension between Hamas and Fatah members, which is bordering on anarchy. It was noted that there has been a decline in the scope of terrorist attacks against Israel.

Foreign Minister Tzipi Livni briefed ministers on the processes necessary to implement UN Security Council Resolution #1701 in Lebanon and those involved in these processes. Regarding UNSC Resolution #1701, there is wall-to-wall recognition that this is a test for the international community. There is understanding regarding the implementation of the resolution and the need for cooperation to that end.

Foreign Minister Livni discussed preparations for the UN General Assembly later this month. It is expected that the Lebanese, Iranian and Palestinian issues will be on its agenda. Regarding the latter, there are already several initiatives in the international community. The UNGA also has implications for Abu Mazen who would like to attend without the burden of the international community’s unfulfilled demands. Some activity is expected on his part in order to win support in New York.

Foreign Minister Livni briefed ministers on the recent visits of Russian Foreign Minister Sergey Lavrov, Italian Foreign Minister Massimo D’Alema and German Foreign Minister Frank-Walter Steinmeier.

Prime Minister Ehud Olmert said that the full implementation of UNSC #1701 is to Israel’s benefit as long as the spirit of the resolution – and not just its technical wording – is strictly adhered to.

Regarding the lifting of the blockade, Prime Minister Olmert said: “The blockade of Lebanon has not been lifted. On the contrary, it is now being enforced by an international military force. It was not Israel’s place to enforce a blockade on Lebanon; this appears nowhere. We determined a fact and said: Until the arrival of the international military force, Israel will not move from its ceasefire positions. Therefore, we remained in southern Lebanon but we determined that we would leave when the international forces took up its positions in order to prevent a vacuum that would enable Hizbullah to return to the positions it had been ousted from. The sea blockade is also now being enforced by Italian, French and Greek naval units, as well as by German marines. This also applies to supervision over airports.”

Prime Minister Olmert referred to Palestinian affairs and said that in the circumstances that have been created following the fighting in the north,“The issue of convergence, certainly in its previous format, in the patterns that have been hitherto discussed, must be re-examined. This is an unavoidable consequence of assessments of the situation that has prevailed after the fighting.”

2. The Cabinet discussed development projects in the Lod neighborhood of Remez.

3. The Cabinet discussed laws regarding rents and tenants rights.

4. The Cabinet appointed new members to the Bank of Israel Advisory Committee and the Bank of Israel Advisory Council.

5. The Cabinet approved Prime Minister Ehud Olmert’s proposal to establish National Economics Council in the Prime Minister’s Office. Among the Council’s responsibilities will be: Formulating policy initiatives for achieving growth while reducing social gaps, and preparing both opinions on the state budget prior to its submission to the Cabinet and alternatives to the budget, to the extent necessary. The Council will also deal with the following long-term issues: The state budget preparation process; government policy in the labor market; social policy in Israel; and the necessary systemic civil service reforms.

The Council will have a Research and Information Department to be chaired by the Council’s Vice-Chairman and to be composed of at least five senior economists that specialize in macroeconomics, taxation and budgets, labor markets, pensions and capital markets. The Prime Minister will appoint an advisory committee for the Council to be composed of senior, experienced public sector economists. In order to assure a high level of professionalism, the Council Chairman and the Research and Information Dept. staff will devote several hours a week to academic activities.

Prof. Manuel Trajtenberg of Tel Aviv University’s Eitan Berglas School of Economics will chair the Council.

6. The Cabinet decided to establish a unit for pensioners’ affairs within the Prime Minister’s Office.

7. Pursuant to the 1959 Civil Service Law (Appointments) and in accordance with the recommendation of the Civil Service Committee on Exemptions From Public Tenders, the Cabinet decided to so exempt the position of Industry, Trade and Labor Ministry Director of Consumer Affairs and Fair Trade.

8. The Cabinet also decided to exempt the position of Public Security Ministry Witness Protection Authority Director.

9. Pursuant to the 1959 Civil Service Law (Appointments), the Cabinet decided to extend the term of office of Acting Justice Ministry Director-General Moshe Shilo until 4 December 2006 or until the appointment of a permanent Director-General, whichever comes first.