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Jerusalem, 2 July 2006

Cabinet Communique
(Communicated by the Cabinet Secretariat)

At the weekly Cabinet meeting today (Sunday), 2 July 2006:

1. Prime Minister Ehud Olmert made the following remarks:

"A few minutes ago, I spoke with Gilad Shalit's father and updated him and the Shalit family on the actions we are taking to bring Gilad back home.
The entire Jewish People support Noam, Aviva, Yoel and Hadas, the Shalit family, who are showing admirable restraint and equanimity.

My government has instructed the IDF and the security establishment to do everything in order to bring Gilad back home to his family safe and sound, and when I say everything, I mean everything, whatever is possible, whatever is necessary.

We and the international community know that Gilad is being held by a bloodthirsty gang of terrorists who are causing us much suffering but who are mainly hurting the Palestinian population, which is bearing the results of this terrorist activity.

The Government of Israel has no interest in harming the Palestinian population. Defense Minister Amir Peretz has instructed that the Karni crossing be opened today to facilitate the passage of fuel and essential supplies. While we regret any harm to the Palestinian population, we are responsible for the peace of the State of Israel and its citizens; it is out of this responsibility that we will strike at anyone who tries to hurt us, nobody will be exempt.

I have instructed the security establishment and the IDF to increase the strength of their actions in order to pursue these terrorists, those who dispatch them, their ideologues and those who sponsor them. As I said, nobody will be exempt.

These are not easy days for the State of Israel but we have no intention of capitulating to blackmail. Everyone knows that capitulating to terrorism today means inviting the next act of terrorism. We will not do this.

Defense Minister Peretz, I ask that you, IDF Chief-of-Staff Lt.-Gen. Dan Halutz, ISA Director Yuval Diskin and the other security force representatives, convey both the Government's and my gratitude to the commanders and soldiers in the field and to all those who are involved in this important activity, which I believe will aid in bringing Gilad back home."

2. Defense Minister Peretz, IDF Chief-of-Staff Lt.-Gen. Halutz, GOC Intelligence Maj.-Gen. Amos Yedlin, GOC Operations Maj.-Gen. Gadi Eizenkot and Israel Security Agency (ISA) Director Yuval Diskin briefed ministers on the latest developments regarding Operation Summer Rains, including - inter alia - its purpose, strategic concept, achievements, and accompanying rules and principles.

Foreign Minister Tzipi Livni briefed ministers on her ministry's activity in the international sphere and noted that there is understanding for the steps that Israel is taking to free Cpl. Shalit and to foil terrorism, as well as the aspiration to prevent an escalation on the ground and a humanitarian crisis, and leave a chance for the diplomatic process.

Prime Minister Olmert again thanked the security establishment for its actions since the events of 25 June 2006 (http://tinyurl.com/zvqux): "This very complex and ramified activity, which is continuing day and night, demands a high degree of professionalism, sagacity and caution. All of the security services are acting in a very impressive manner."

The Prime Minister made it clear that from the outset Israel intended to act in response to the events of 25.6.06 even though those events were not simply military. "The starting point is that since Israel has completely withdrawn from the Gaza Strip, any action directed at military or civilian elements, the moment it crosses the border, it is a terrorist action by definition and we cannot - in any way - countenance it or regard it with forbearance. This action deserved a very sharp response." Opportunity was given to all international and Palestinian elements to resolve the immediate problem related to Cpl. Shalit's abduction.

Prime Minister Olmert added: "I want to say something about Cpl. Shalit's release. We will not conduct any negotiations with Hamas on a prisoner release, whether directly or indirectly. Regarding continued actions, they will continue on two tracks. The first is to bring about Cpl. Shalit's release; here, we are doing everything possible. The second is to halt the firing of Kassam rockets. We cannot countenance Kassam fire at our southern communities. The IDF and the security services will continue actions in the appropriate format. Regarding humanitarian affairs, Israel will act to prevent a crisis. We will not allow the existence of a humanitarian crisis. We will do our utmost in this regard because we are not fighting the Palestinian population and we will not allow it to be harmed."

The Prime Minister expressed special appreciation for Egyptian President Hosni Mubarak's efforts to bring about Cpl. Shalit's release (http://tinyurl.com/hj3ld).

3. The Cabinet discussed the reinforcing of educational institutions in communities near the Gaza Strip as per the recommendations of the directors-general committee on the matter and decided to approve the plan that has been prepared by the IDF Home Front Command for the committee. The main points of the plan include:

* Two-thirds of schools will be reinforced ahead of the beginning of the
2006-2007 school year. The remaining one-third will be reinforced by the end of the autumn holidays.

* NIS 75 million will be allocated, in equal amounts, by the Defense, Education and finance ministries to the IDF Home Front Command.

* Prime Minister's Office Director-General Ra'anan Dinur will be authorized to deduct the aforesaid amounts following the completion of preliminary work by the IDF Home Front Command.

* IDF Home Front Command will supervise the implementation of the project, including an informational campaign among students, teachers, principals, parents and local council heads.

4. Senior Finance Ministry and Bank of Israel officials briefed ministers on the economic situation and on macro-economic forecasts ahead of discussions on the 2007 budget. 5.3% growth, which is higher than comparable figures in many western countries, is forecast for 2006. This growth is supported by expanding world trade, structural reforms in the Israeli economy, fiscal policy that meets expenditure targets, a continuing surplus in the balance of payments, a decline in public debt relative to economic output and the absence of significant inflationary pressures. The Cabinet will hold a discussion at its next meeting.

5. The Cabinet approved certain amendments to the draft Courts Law (Rules of Ethics).

6. The Cabinet approved the principles of the draft 2006 Voluntary National Service for Men and authorized the Ministerial Committee on Legislation to approve the bill's final wording so that it might be submitted to the Knesset forthwith.

7. Pursuant to its authority under the 1965 Planning and Construction Law, the Cabinet approved certain amendments to the planning laws regarding the digging of a tunnel under Mt. Carmel in Haifa.

8. The Cabinet noted Transportation Minister Shaul Mofaz's proposal to the Airports Authority Council to extend Director-General Gabi Ofir's contract for additional term.

9. Pursuant to its authority under the 1959 Civil Service law (Appointments), the Cabinet decided to appoint Yael Shealtieli as Director-General of the Agriculture and Rural Development Ministry, to replace Yosi Yishai.

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