Israeline — Monday, June 30, 2003 —

** Despite Cease-Fire Announcement, Construction Worker Killed in Attack Near Jenin – IDF Starts Redeployment
** Israel and the U.S. Discuss Security Fence
** Pakistani President: We Must Weigh Opening Ties With Israel
** Moti Hod, IAF Commander During Six Day War, Dies At 77
** Other News in Brief
** Eco & Hi-Tech Briefs

Despite Cease-Fire Announcement, Construction Worker Killed in Attack Near Jenin – IDF Starts Redeployment
Just one day after the three main Palestinian terror groups declared a cease-fire, a Bulgarian construction worker was killed today in a shooting attack near the northern West Bank town of Jenin, HA’ARETZ reported. Krastyu Radkov, 46, was hit in the head and died a short time later after efforts to resuscitate him failed. The Al Aqsa Martyrs’ Brigades, a group associated with Yasser Arafat’s Fatah party, claimed responsibility for the attack. Radkov is the first victim of terror since Fatah, Hamas and Islamic Jihad announced the suspension of attacks on Israelis on Sunday. The groups’ joint statement calls for the limited suspension of their "paramilitary activities" for a period of three months, but refrains from using the word "cease-fire" (hudna, in Arabic). The Fatah movement and the Democratic Front for the Liberation of Palestine did not sign the original cease-fire declaration but issued their own text on Sunday evening. The Israel Defense Forces’ intelligence units believe that, of the three terror organizations that pledged a temporary cessassion of violence, Hamas would most closely adhere to the deal. Hamas is considered strictly hierarchical and relatively disciplined, and it seems that the group’s leaders will do all they can to enforce the "hudna". Israeli concerns center on local Fatah groups, which are influenced by various factors and receive funding from Iran and Hezbollah. Both military intelligence and the Israel Security Agency believe that the Palestinian Authority will find it very difficult to control the various Fatah factions.

Several hours after the cease-fire announcement, the IDF began to redeploy its troops from the Beit Hanun area in the northern Gaza Strip and hand over security control in this area to Palestinian Security Minister Mohammed Dahlan. The "Tancher" highway stretch, which was closed to Palestinian motorists, was opened today from the Netzarim Junction to the Gush Katif intersection – two sites of frequent violence in the past. Israeli and Palestinian officials are now finalizing details for a possible IDF redeployment on Wednesday from the West Bank city of Bethlehem.

Israel and the U.S. Discuss Security Fence
Responding to doubts expressed by U.S. National Security Adviser Condoleezza Rice regarding the construction of a security fence separating Israel and the West Bank, Prime Minister Ariel Sharon explained that the fence was by no means an attempt to draw up permanent borders but only served as a deterrent to ongoing Palestinian terrorist infiltration into Israel, HA’ARETZ reported. Rice told cabinet ministers at a meeting held in Jerusalem on Sunday that the United States viewed the fence as "problematic" because it gives the "impression that even if Israel did not intend to, it has set down circumstances that can unilaterally change the border that is meant to be agreed oupon through negotiations with the Palestinians." Sharon told Rice Israel would address the United States’ concerns but added, "Don’t pressure us on security issues, because we have nowhere to go." Sharon stressed that there was one issue Israel would not compromise on – the security of the country and its citizens – and that the fence fulfilled a vital security need.

"In addition to being proactive we also have a need to operate defensively, and that is why we are building the fence," Minister of Finance Benjamin Netanyahu said. "250 Palestinian suicide bombers have entered Israel from the West Bank, but not one from Gaza. Building the fence is not a political move, it is a security move," he added. Minister of Industry and Trade Ehud Olmert asked Rice, "You don’t agree to liquidations, you don’t agree to a security fence. So exactly how is it that you want us to fight terror? You would use the same tactics. So don’t be inflexible on these issues because we can’t concede." Shinui Ministers Yosef Lapid and Avraham Poraz also voiced their support of the fence, claiming that most Israelis do not view it as the basis for setting borders. "The fence is not the future border, but rather security for the present," Lapid said. Israel began building the security fence, which will eventually be nearly 370 miles long a year ago in an attempt to thwart continued terrorist crossings from the West Bank into Israel. The first segment of the fence – some twenty miles of fences, barriers and patrol roads – is due to be turned over to the Israel Defense Forces next month and will prevent terrorist infiltrations from the Jenin area.

Pakistani President: We Must Weigh Opening Ties With Israel
Pakistani President Pervez Musharraf said on Sunday that his country should seriously consider recognizing and establishing diplomatic relations with Israel, HA’ARETZ reported. Interviewed on the Geo Television station upon his return from a two-week tour of Europe and the United States, Musharraf said: "This is the responsibility of the nation to decide. This should be seriously thought over. The media should have a serious, open debate on this. There should be no emotionalism of the extremists. What is our dispute (with Israel)? I have been saying: ‘Should we be more Catholic than the pope or more pious than the pope or more Palestinian than the Palestinians themselves?’ Is this the right attitude or should there be some change in it? There should be national consensus on it."

Musharraf had made similar comments before setting off on his tour, but Israel interpreted these as a largely meaningless gesture meant to shore up his image in the United States. His latest remarks were however far more forceful than his previous comments and were made after President George Bush had already publicly promised him a $3 million aid package for Pakistan. As a result, a senior Israeli source said, "his intention truly appears to be serious, not aimed merely at conciliating U.S. public opinion." Nevertheless, Israeli officials stressed Musharraf was unlikely to follow through on this opening unless he mustered significant public backing for it.

Musharraf’s remarks were preceded by the visit to Israel last week of a Pakistani businessman who is considered one of President Bush’s close associates. The businessman was apparently sent to "test the waters" as to whether Israel, which has close ties with Pakistan’s traditional foe, India, would be interested in relations with Pakistan as well. Israel currently has no ties of any kind with Pakistan, and Pakistani passports even state that they are valid for entry into any country but Israel.

Moti Hod, IAF Commander During Six Day War, Dies At 77
Maj.-Gen. (res.) Mordechai (Moti) Hod, who as OC Air Force during the Six Day War led the IAF in one of the most spectacular victories in modern warfare, died at 77 on Sunday at Sheba Hospital in Tel Hashomer after a long illness, THE JERUSALEM POST reported. Hod will be buried today at 3 p.m. in the Kiryat Shaul civilian cemetery. Former OC Air Force Maj.-Gen. (res.) Eitan Ben-Eliahu described Hod as a brilliant combat pilot, a founding father of Israel’s air force, and one of the men behind the brilliant strategy that led to victory in the Six Day War.

Creative thinking and a willingness to take chances characterized most of Hod’s adventurous life. A fourth-generation Israeli, Moti Hod (Fein) was born on Kibbutz Deganya in 1926, and at the age of 18 joined the British army, serving in a Jewish Brigade transport company fighting the Nazis on the Italian front. When the brigade disbanded in 1947, he stayed in Europe as a member of the Palmah underground transporting displaced Jews from Europe to Palestine. While working in Italy, Hod, who had no previous interest in flying, became aware of the airplane’s vast potential while watching a group of orphan refugees fly off to Palestine. From there he went to Czechoslovakia where he attended a military flying school. Five months later, he and other Israeli pilots were given the first opportunity to fly Free Czech planes to Israel. Flying a Spitfire, he led the first formation setting off for Lod airport. In the sixties he was appointed the head of the IAF pilots’ school and later became deputy air force commander. He retired from the Air Force in 1973, five months before the Yom Kippur War, during which time he acted as an adviser on air tactics to the military generals of the southern and northern command. He later became deputy defense minister and founded Cargo Airlines, the first independent airline to fly agricultural products from Israel to Europe. In an interview with the Jerusalem Post summing up his life’s ventures, Hod said, "I’ve never been disappointed with what I did, I always had an urge to do things better and more efficiently and do things that were never done before."

Other News in Brief

Leaders of the European Union have rejected a key U.S. demand to cut off funding to Hamas, and to include the civilian-political wing of the organization in the EU’s list of terror organizations, along with its military branch, HA’ARETZ reported. European leaders discussed links with Hamas at a summit meeting in Thessaloniki some 10 days ago. According to reports emerging from the summit, French President Jacques Chirac objected to placing limitations on Hamas, a group he described as "raising money for charitable causes." Chirac tried to persuade his colleagues that they were misreading the situation, and told them "one day you will have to talk with Hamas."

Eco & Hi-Tech Briefs

Start-up Mindguard Medical Devices, which develops medical devices for stroke prevention, announced that it has finalized a financing round with investors, raising $15 million. GLOBES reported. The financing round included Medtronic, Inc. Pitango Venture Capital, Tamir Fishman Ventures, Fantine Europe Fund, Ofer Brothers Hi-Tech, Eucalyptus Ventures, Gemini Venture Capital and The Fuller Foundation. Mindguard also signed an agreement with U.S. based Medtronic for the distribution of its first product, the Diverter. The Diverter system is designed to divert cardioemboli, a plaque-like debris in the arterial system, away from the brain. Without this potential diversion therapy, cardioemboli can flow to the brain, creating blockage that may lead to ischemic stroke.

The IMAX chain of cinemas is opening its first outlet in Israel, THE MARKER reported. IMAX, which operates through franchises, chose Epic Entertainment as its local representative and invested $11 million in building its first cinema in the country, in Eilat. After Eilat, IMAX intends to target Tel Aviv, and if the economic situation improves, the company plans to open a movie house in Jerusalem too. IMAX has today 231 movie halls in 30 countries. The cinema in Eilat will be its first in the Middle East. It is expected to collect $10 million revenues in its first year, based on 750,000 tickets at $10 each.

A Business Data Israel (BDI) survey indicated that most senior executives of major Israeli companies and businesses expect sales and revenue to grow in the second half of 2003, compared with the first half of the year, YEDIOT AHARONOT reported. The survey also showed optimism regarding the general economic situation in the second half of the year. The employment situation is nevertheless not expected to improve this year. The survey indicated that 54 percent of leading Israeli companies and businesses expected more revenue in the second half of the year, compared with 47 percent in an earlier survey who expected more revenue in the first half of the year. The figures show that 32 percent of the companies expected moderate growth of up to 10 percent in revenue, while 22 percent expected impressive growth of 10-30 percent. 36 percent of the companies predicted their revenue would remain unchanged, while only 10 percent predicted their revenue would decline, compared with 18 percent in an earlier survey. 4 percent predicted a decline of up to 10 percent, 4 percent a decline of 10-30 percent, and 2 percent a decline of over 30 percent.

Today’s Israel Line was prepared by Victor Chemtob at the Consulate General of Israel in New York.

Israeline — Tuesday, July 1, 2003 —

** Sharon to Abbas: Israel Does Not Want to Rule the Palestinians
** U.S. to Monitor Dismantling of Palestinian Terror Groups
** Temple Mount Re-Opened to Jewish, Christian Visitors
** New Israeli Company Further Expands Anti-Cancer Treatment
** Other News in Brief
** Eco & Hi-Tech Briefs

Sharon to Abbas: Israel Does Not Want to Rule the Palestinians
In their third meeting together and their first since the Aqaba Summit on June 4, Prime Minister Ariel Sharon and Palestinian Prime Minister Mahmoud Abbas pledged to continue on the road to peace and reasserted their commitment to fight terrorism, MA’ARIV reported. In a joint press conference at Sharon’s Jerusalem office, Abbas said, "every day that passes without accord with Israel is a lost day and Palestinians want to end conflict with Israel." He added, "enough killing, enough death, enough pain. Let’s head together courageously without hesitation to the future that we all deserve."

Sharon expressed his commitment to fight terror without compromise and his determination to enhance the peace process. "Israel wants to live with the Palestinians side by side," he said. "Israel does not want to rule the Palestinian people." He added, "however, we must not forget that in addition to the hope and the chances, there are also many risks and dangers. There are many people who still want to see this process — any process defeated." Sharon and Abbas expressed hope that both sides were facing a new possibility for the future of both people and pledged to make every diplomatic effort to reach an agreement.

According to HA’ARETZ, Sharon and Abbas were accompanied by their respective delegations and worked to advance the road map. The talks centered on the issues of the redeployment of Israel Defense Forces from West Bank cities, the release of Palestinian prisoners and security cooperation. The meeting was a much wider forum than their previous sessions. On the Israeli side, Minister of Foreign Affairs Silvan Shalom, Minister of Defense Shaul Mofaz, Minister of Industry Ehud Olmert and Minister of Justice Yosef Lapid attended the talk. The Palestinian delegation was composed of Ahmed Qereia (Abu Ala), the Speaker of the Palestinian Legislative Council, Minister of Security Mohammed Dahlan, Minister of External Affairs Nabil Sha’ath and Minister of Finance Minister Salam Fayyad.

Meanwhile, Israel and the PA have finalized plans for handing over security control inside Bethlehem to the Palestinians following a successful handover in Gaza on Monday. The Bethlehem deal was worked out by Major General Amos Gilad and Dahlan, with more meetings slated for today with senior commanders on the ground. Military sources said Israel’s major concern was that homicide bombers would use the proximity of Bethlehem to Jerusalem to try to attack the capital. As part of the deal, Israel will give control to Palestinian security forces within the city, while the IDF will maintain control on city’s perimeters.

In other news, Minister of Foreign Affairs Silvan Shalom is dispatching eleven special envoys to key foreign capitals in Europe, Canada, Asia and the Arab world, in an effort to win support for Israel’s demand that the Palestinians crack down on terrorism and halt incitement against Israel in the Palestinian media. Included in envoy delegation are industrialist Stef Wertheimer, former ambassadors David Ivry and Yehuda Lancry, MK Gilad Arden, former IDF generals Amos Malka, Oren Shahor, Yossi Peled, as well as high ranking foreign ministry officials.

U.S. to Monitor Dismantling of Palestinian Terror Groups
Heeding Israeli concerns that the three-month intra-Palestinian cease-fire (hudna) may be used by Hamas to regroup and rearm, the United States is dispatching two generals to Israel to monitor the Palestinian Authority’s action to dismantle the terrorist organizations, THE JERUSALEM POST reported. According to senior Israeli officials, the generals will be able to pass on to Washington an independent military assessment of whether steps are taken during the cease-fire period to dismantle the terrorist military infrastructure, and whether the organizations are continuing recruitment and the smuggling of weapons.

The generals, who will augment the U.S. monitoring team here headed by US special envoy John Wolf, are expected to arrive by the end of the week. According to officials in Jerusalem, the dispatch of the generals is important for Israel because it shows the United States’ commitment to pursuing the demand repeated recently by US President George W. Bush that the terrorist infrastructure be completely dismantled.

According to HA’ARETZ, Israeli Security Agency Chief Avi Dichter said that unless the Palestinian Authority began disarming terror organizations in the Gaza Strip within two or three weeks, Israel would freeze further handovers of security authority in the West Bank. Speaking in his first public appearance as Secret Service director, Dichter told a Tel Aviv University conference today that he was convinced of the Palestinian Authority’s capabilities in a direct confrontation with Hamas. "Hamas has no chance in a direct confrontation with the Fatah, and Hamas knows that better than all of us," Dichter said. Yasser Arafat’s Fatah movement is the backbone of the PA security apparatus which includes at least 10,000-armed men. Dichter added that Hamas represented a life-or-death threat to the PA, which could not survive if Hamas retained its current strength and size. "This is an abscess which the Authority cannot live with," he continued. "The Authority must bring Hamas to heel."

Temple Mount Re-Opened to Jewish, Christian Visitors
Nearly three years after Jerusalem’s Temple Mount was declared off limits to non-Muslims, Jerusalem police have begun permitting some small groups of Jewish and Christian tourists, as well as Israelis, to re-enter the site, THE JERUSALEM POST reported. Jerusalem police spokesman Shmuel Ben-Ruby said that about twenty groups had been allowed over the past few weeks to visit the area under police escort. However, the visitors did not enter the mosques on the site. The Waqf Religious Trust, responsible for the mosques, has objected to the visits and Palestinian officials warned they could trigger a renewed wave of violence. The police said that the decision to allow groups to enter the site was made with the approval of Prime Minister Ariel Sharon, Minister of Internal Security Tzahi Hanegbi and Israel Police Chief, Insp-Gen Shlomo Aharonishky.

New Israeli Company Further Expands Anti-Cancer Treatment
A new company, CellFeed Medical, is being founded on the basis of the result of a cancer research carried out by Tel Aviv University human microbiology Prof. Yona Keisari and his colleagues, ISRAEL21C reported. CellFeed Medical is based on Keisari’s research over the past five years, which combined stimulation by a low-charge electric field with chemotherapy in an attempt to eliminate malignant tumors. The research team also included Tel Aviv University biophysicist Prof. Rafi Korenstein, and Sheba Medical Center at Tel-Hashomer biophysicist Dr. Yossi Rosenberg.

The three men watched how in five different models of cancerous growths in animals, the growths shrank and disappeared to varying degrees ("averaging 50%"). "Chemotherapy does not cure most tumors; it only retards their growth to some extent. In order to cure and get rid of the tumor, surgery or radiotherapy is currently required. Our treatment is as effective as surgery in eliminating the initial tumor. Its added value is the anti-cancer response it creates, which also affects the metastasis," Keisari declares. The technique has been tested on no fewer than five types of cancer: melanoma, intestinal cancer, carcinoma, prostate cancer, and breast cancer.

What CellFeed Medical – the company’s temporary name – is doing now is to look for new combinations with chemotherapy, in order to discover the most effective combination with electric treatment. Keisari explains that the researchers are extending the types of cancer they are treating, and are on the verge of a pre-clinical trial. The start of this trial depends to a great extent on how much capital the company manages to raise. RAMOT University Authority for Applied Research & Industrial Development owns the development rights, and an agreement is in the works to enable the company to conduct a financing round. David Furst, who formerly worked at Israel Phoenix subsidiary Atara Technology Ventures, is "initiating the entrepreneurs into the mysteries of the industry," as Keisari puts it. Furst says the company currently needs $1.5 million "which will be enough for the first stage, creating a prototype of perishable components for starting on phase II clinical trials, plus a little breathing room before the second financing round."

Other News in Brief

Seven people were killed and six were injured on Monday when a cooking gas canister exploded, causing a two-story house to collapse in the Hatikva neighborhood in Tel Aviv, HA’ARETZ reported. Among the fatalities were a five-year-old girl and a woman who was nine months pregnant. Rescue workers were unsuccessful in saving the unborn baby. Residents throughout southern Tel Aviv heard the huge explosion, which occurred in the early hours of the morning.

Prime Minister Ariel Sharon will make a first-ever visit to Norway on July 16, exactly a decade after Israeli and Palestinian negotiators held secret talks in Oslo, which led to the formulation of the Oslo accords, HA’ARETZ reported. Sharon accepted the invitation of Prime Minister Kjell Magne Bondevik who invited him to discuss Middle East peace efforts, and revitalize Norway’s role in the process.

In a pre-dawn operation, bulldozers sent in by the Ministry of Interior destroyed the foundations of the unauthorized Shahib al-Din mosque near the Basilica of the Annunciation church in Nazareth, HA’ARETZ reported. Minister of Internal Security Tzachi Hanegbi said the demolition was based on a court decision, adding that Israel was bound by the rule of law "and we cannot accept an illegal structure, especially on the second holiest site of Christendom." Construction of the mosque was a "provocation against the whole of the Christian world," Hanegbi told Army Radio.

Eco & Hi-Tech Briefs

Minister of Finance Benjamin Netanyahu instructed Treasury official to speed up the privatization process for Bank Leumi in order to float shares on the Tel Aviv Stock Exchange (TASE) by the end of this year, THE JERUSALEM POST reported. Nessuah Zannex analyst Ronit Goodman said privatization would help the nation’s second-largest bank improve its operations and efficiency, although she noted that it would also drive down the bank’s stock price in the short term. Netanyahu has said he plans to increase efforts to privatize other government-owned companies including Bezeq Telecommunications, Israel Electric, Oil Refineries – BAZAN, Israel Aircraft Industries, TAAS-Israel Military Industries, and Israel Discount Bank.

Teva announced today that GlaxoSmithKline had granted it product rights for the leukemia-treating drug Purinethol in the United States, Puerto Rico, and Canada, GLOBES reported. Teva will record a one-time gain of $100 million from the deal, which will be reflected in the company’s earnings for the just completed second quarter ended June 30, 2003. Teva and GSK will share gross profits from the sale of Purinethol going forward at rates that may vary according to the terms of the agreement. Further details about the settlement were confidential, Teva said.

Drug maker Agis Industries announced that it has received U.S. Food and Drug Administration (FDA) approval to market Promethazine, which is used in the treatment of motion sickness, GLOBES reported. Promethezine is the generic version of Phenergan, which is marketed by U.S. drug maker Wyeth. The sales of Phenergan and its other generic versions approved for sale in the U.S. in the last twelve months are estimated at $90 million.

Today’s Israel Line was prepared by Adina Kay, David Nekrutman, Biranit Zarmon and Victor Chemtob at the Consulate General of Israel in New York.

Israeline — Wednesday, July 2, 2003 —

** IDF Redeployment Underway in Bethlehem as PA Assumes Security Control
** Sharon, Abbas to Meet Again Next Week
** U.S. Resumes Direct Aid to PA With Transfer of $30 Million
** Israeli Tennis Pair Reaches Historic Semifinal at Wimbledon
** Other News in Brief
** Eco & Hi-Tech Briefs

IDF Redeployment Underway in Bethlehem as PA Assumes Security Control
Israel transferred security responsibilities in the West Bank city of Bethlehem to the Palestinian Authority today, as Israel Defense Forces troops redeployed out of the city, clearing the way for the Palestinians to resume security control, Israel Radio, KOL ISRAEL reported. IDF troops will maintain positions around the city. The PA already assumed security control in the Gaza Strip a few days ago.

According to HA’ARETZ, details of the transfer in Bethlehem were finalized Tuesday at a meeting between senior security officials from both sides. No major disagreements emerged during the meeting, which was headed on the Israeli side by the IDF’s commander in the West Bank, Brigadier General Gadi Eisencott, and on the Palestinian side by General Haj Ismail, the commander of the National Security Service in the West Bank. However, Israel did reject one Palestinian request: that Route 60, the West Bank’s main north-south artery, which runs from Hebron in the south through Bethlehem and eventually north to Nablus, be reopened to Palestinian traffic.

Addressing the cabinet today, Minister of Defense Shaul Mofaz said that the coming weeks would be critical and that the defense establishment would closely be following whether the Palestinians were fulfilling their part of the agreements. Mofaz noted that, "there has been a decrease in the amount of terror warnings and violent activities," but that "there are still warnings of intentions to carry out violent attacks by elements supported by external agents and opposing the cease-fire" – a hint at the terror cells supported by Iran, Syria and Lebanon.

In today’s incidents, an Israeli security guard was lightly injured in a shooting attack against workers building the security fence close to the West Bank town of Tul Karm. A bomb also exploded close to the fence near the town of Qalqilyah, while a Palestinian opened fire on IDF troops in Nablus; no one was injured in either incident. IDF troops arrested today six wanted Palestinians in a number of West Bank towns.

Sharon, Abbas to Meet Again Next Week
Prime Minister Ariel Sharon and Palestinian Prime Minister Mahmoud Abbas will hold another meeting next week, following their positive talks on Tuesday at the Prime Minister’s Office in Jerusalem, HA’ARETZ reported. Sharon promised Abbas that he would give him an answer regarding the release of prisoners during their meeting next week. The issue of prisoners’ release was one of the Palestinians’ key demands during Tuesday’s discussions. Abbas gave Sharon a letter from Palestinian prisoners asking to be released, and Minister for Prisoner Affairs Hisham Abdel Razeq urged that at least minors and the elderly be freed. Sharon responded that Israel would certainly free some prisoners, but not murderers. The Palestinians also asked that the curfews be lifted – a request that Sharon instructed Defense Minister Shaul Mofaz to consider with Palestinian Security Minister Mohammed Dahlan as soon as possible.

However, Sharon rejected a third Palestinian demand – that complete freedom of movement be granted to Palestinian Authority Chairman Yasser Arafat. Sharon explained that Arafat was welcome to go from Ramallah to Gaza "as long as he stays there." The two prime ministers also agreed to establish several cooperation committees: a security committee, to be headed by Mofaz and Dahlan; a committee to prevent incitement, to be headed by Minister of Foreign Affairs Silvan Shalom and Palestinian Information Minister Nabil Amer; and committees on commerce and legal aid, whose chairmen will be appointed at next week’s meeting.

U.S. Resumes Direct Aid to PA With Transfer of $30 Million
The United States resumed direct economic aid to the Palestinian Authority today with the U.S. Agency for International Development (USAID) transferring $30 million for rebuilding infrastructure in the West Bank and Gaza Strip, HA’ARETZ reported. Jeffrey Feltman, acting U.S. consul-general in East Jerusalem, said the aid went "hand in hand" with the Palestinian Authority’s "aggressive pursuit of an ambitious reform agenda," as required by the U.S.-backed "road map" peace plan. For years, the United States has bypassed PA Chairman Yasser Arafat and the PA and has assisted Palestinians through the United Nations and private groups. However, the European Union and the Arab League have given more than $1 billion directly to Arafat and the PA this year alone.

Noting that the Palestinians had a new finance minister, Salam Fayad, Ari Fleischer, the White House spokesman said, "This president [George W. Bush] would never provide money if he thought the same corrupt leaders would do with the money what they’ve done in the past." USAID director Larry Grabber said the $30 million would be earmarked for repairing roads, water works and other infrastructure damaged by the current Israeli conflict with Palestinian terrorists. Now, State Department spokesman Richard Boucher said, "the finances are under the stewardship of a new finance minister and now largely transparent and therefore accountable to the Palestinian people."

In other events, U.S. Secretary of State Colin Powell cautioned Tuesday that the cease-fire announced by Hamas, Islamic Jihad and Yasser Arafat’s mainstream faction Fatah "is a start but it cannot be the end." Powell said in four separate interviews with American television networks the institution of a Palestinian state demanded that all organizations with capabilities of terrorism be dismantled. "The cease-fire alone won’t be enough. We ultimately have to reach a point where the capability for terrorism that exists in these organizations is removed," Powell said. "You can’t have people with guns, armed militias, inside a state. So if we are going to have a Palestinian state, all the weapons, all the force within that state, has to be under the government and these terrorist organizations have to be dismantled."

Israeli Tennis Pair Reaches Historic Semifinal at Wimbledon
In the best achievement so far by Israeli tennis players at Wimbledon, Yoni Erlich and Andy Ram advanced to the semifinal round of the men’s doubles at Wimbledon on Tuesday, HA’ARETZ reported. The pair defeated the second-seeded duo of Mark Knowles of the Bahamas and the Canadian Daniel Nestor in straight sets (7-6 7-6 7-6) in the quarterfinals. Pairing up only at the last moment, the two defeated the sixth and the second seeds on their way to the semifinals. "We both have good serves and volleys and we kept it all together today, it simply didn’t fall apart for us," Erlich said. "We have been playing our best, we both have the right game for doubles," Ram added. The Israelis out-aced their opponents 20 to seven.

Up next for them are the Australian Tod Woodbridge – considered one of the strongest doubles players in the world – and the Swede Jonas Bjorkman, who is ranked fourth in the tournament. "We will go on court and, sure at the beginning, our legs will tremble a little, but this has been the case in all the matches, now we will go out there feeling we have a chance, we can beat anybody if we play as we have been during the tournament," Ram declared. Israeli Shahar Peer also had a successful day at Wimbledon on Tueday, advancing to the final 16 of the women’s tournament.

Other News in Brief

Britain’s Jewish community has called on their government to ban all of the operations, military and political, of Hamas and Hizbullah in Britain, THE JERUSALEM POST reported. While the "military" wings of these organizations have been outlawed under anti-terrorism legislation here, their "political" wings are still able to operate without restriction. In a letter to Home Secretary David Blunkett, the director-general of the Board of Deputies of British Jews, Neville Nagler, noted that Hamas and Hizbullah "make no significant distinction between their political and military wings." He noted that Foreign Secretary Jack Straw recently called on other European Union states to ban Hamas following the condemnation by US President George W. Bush and said "it would seem completely anomalous for the UK to continue to allow these two terrorist organizations to operate freely within the UK."

Italian Prime Minister Silvio Berlusconi stated today that as European Union President, he would pursue a great Middle East peace conference HA’ARETZ reported. "Our presidency, along with the United States, the Russian Federation and the United Nations will work to support the road map so that we can work out a timetable and the means for the launching of an international peace conference," he said. Berlusconi told the European Parliament that the EU needed to build "a relationship of greater trust with Israel, but must also implement plans to reconstruct the Palestinian economy."

Eco & Hi-Tech Briefs

Minister of Finance Benjamin Netanyahu said today that he was working to amend a law forbidding Israeli exporters to sell goods to Iraq, THE JERUSALEM POST reported. Israel still classifies Iraq as an enemy state, but once the law is amended, Israeli exporters will be allowed to do business in the country. The amendment would be limited to a period of one year after which it will have to be renewed. Iraq would not be removed from Israel’s list of enemy states for now, and Israelis will still not be allowed to visit the country.

Minister of Finance Benjamin Netanyahu opened the Israel Democracy Institute’s 11th Annual Economic Conference, GLOBES reported. Netanyahu said the conference was being held at a time of "revolutionary change in Israel’s economy, the main purpose of which is to achieve a high level of competitiveness." Netanyahu said monopolies were being broken up and the country was going through a difficult transition from a culture of welfare to a culture of work that was "painful for many sectors of the population." He added, "I and others believe this transition must take place so Israel can thrive and succeed."

More than a 100 of the world’s leading chemists including Nobel Prize winners will arrive in Israel next week to celebrate the 70th birthday of Israel’s leading chemist, Prof. Joshua Jortner, at an international scientific symposium at Tel Aviv University, THE JERUSALEM POST reported. Jortner, a physical chemist who has won the Israel prize and Wolf Prize and was president of the Israel Academy of Sciences, is among the elite of the "World’s Most Outstanding Chemists, " list compiled by the Institute of Scientific Information. His contributions to the field include accumulation and use of energy produced in chemical reactions, the principles of chemical dynamics, characteristics of nanoparticles and the application of physical chemistry principles for the understanding of biological processes.

Today’s Israel Line was prepared by Victor Chemtob, David Dorfman, Matthew Miller and David Prince at the Consulate General of Israel in New York.

Israeline — Thursday, July 3, 2003 —

** Four Israelis Injured in Rocket Attack in Gaza
** Israel Releases Palestinian Prisoners; Bush Commends Israeli Pullback
** IDF Protests Lax Egyptian Security Against Infiltration
** PA Expected to Crack Down on Hamas’s "Social" Network
** Other News in Brief
** Economic & Hi-Tech Briefs

Four Israelis Injured in Rocket Attack in Gaza
Four Israelis were wounded when rockets were fired at the Jewish community of Kfar Darom from the Palestinian town of Dir al-Balah Wednesday night, HA’ARETZ reported. In addition, Palestinian terrorists fired at the Israel Defense Forces from the Israel-Egypt border area in the Gaza Strip and threw grenades at them, causing no injuries.

Meanwhile, the army reopened the Gush Katif Junction in the Gaza Strip to Palestinian traffic early this afternoon after temporarily closing it in the morning following the rocket attack in the area. The junction is on the main north-south road in the Strip, which had been closed since Palestinian violence erupted, but was reopened earlier this week following the declaration of a truce by the leading Palestinian terror organizations. Israel has demanded that the Palestinian Authority arrest the militants who fired the rockets. Moreover, in the wake of the latest terror incidents, the IDF filed a formal complaint with the PA today alleging violations of their recent agreements.

Palestinian Prime Minister Mahmoud Abbas condemned Wednesday night’s rocket attack as well as Monday’s shooting in the northern West Bank, in which a foreign worker from Bulgaria was shot dead. Abbas, who toured today the northern Gaza town of Beit Hanun from where the IDF recently withdrew, called them both "acts of terror." Palestinian Minister of Security Affairs Mohammed Dahlan said today the PA was seeking the members of the group responsible. Echoing a statement Abbas made Wednesday, Dahlan said the PA would pursue anyone who violates the cease-fire agreement.

In other news, Border Police forces arrested Ibrahim Mansour, the leader of the Al-Aqsa Martyrs Brigades in the West Bank city of Qalqilyah, and killed his assistant, Mahmoud Shawer, when he tried to elude capture early this morning.

Israel Releases Palestinian Prisoners; Bush Commends Israeli Pullback
Israeli officials announced today that the government would halt the expulsion of close family members of homicide bombers from the West Bank to the Gaza Strip, HA’ARETZ reported. The decision to suspend the expulsions was made following the transfer of security control in the Gaza Strip to the Palestinians, which went into effect Sunday. A similar handover took place in Bethlehem on Wednesday.

According to Israel Radio, KOL ISRAEL, the government plans to release a total of 10 prisoners today, and sources in the Prime Minister’s Office said more would be released soon. The sources explained that the total of 19 prisoners released on both Wednesday and today were not part of any confidence-building measures, but had completed their terms or were no longer held for a valid reason. During their meeting this past Tuesday, Prime Minister Ariel Sharon promised Palestinian Prime Minister Mahmoud Abbas that he would give him an answer regarding the release of prisoners when the two met again next week. Sharon made it clear that no murderers would be left out of jail.

The Israeli governmental security committee, headed by Minister of Defense Shaul Mofaz, is expected to meet today to discuss transferring more cities to Palestinian control. Such a transfer does not appear likely to take place immediately as Mofaz stated on Wednesday that Israel would be closely watching how the Palestinians manage security in Bethlehem and Gaza over the coming weeks, before deciding on further redeployments.

Meanwhile, U.S. President George W. Bush spoke by telephone to Sharon on Wednesday and commended him for the Israeli troop pullback from Bethlehem and parts of the Gaza Strip. During the call, Bush invited Sharon to Washington in September. Speaking to reporters at the White House on Wednesday, Bush said Israel and the Palestinian Authority were making progress on the road to peace. But he cautioned that militant groups like Hamas "may be willing to attack" to spoil the positive trend. "They hate Israel, they hate the idea of peace," Bush said of Hamas. Bush also urged the Palestinians to work to develop institutions of peace. "The Palestinian people must know that by accepting a peaceful government, there’s a better day ahead for them when it comes to making a living," he said. "And so we will work with all parties to promote economic development and a secure environment." Bush’s remarks came as his administration was considering increasing economic aid to the Palestinian Authority and for the first time providing it directly, rather than through international groups that bypass the authority. Administration officials have said this was made possible by the sidelining of Palestinian Authority Chairman Yasser Arafat and the naming of a reformist prime minister, Abbas, and Finance Minister Salam Fayyad.

IDF Protests Lax Egyptian Security Against Infiltration
Israel Defense Forces officers have passed on a protest to the Egyptian military with regard to the numerous infiltrations of terrorists – mostly Palestinians – from Egypt into Israel over the past two years, HA’ARETZ reported. The protest was voiced during the most recent periodic meeting between officers from the two armies. In 2002, the IDF counted some 1,000 incidents of infiltrations across the border with Egypt – between the Rafah border post and Eilat.

This year has seen a slight fall-off in the infiltrations. Some 80 percent of the infiltrations have occurred in the northern section of the border, and most have been criminally motivated. In many cases, drugs and commodities were smuggled, and women were brought into the country on prostitution rackets. Nevertheless, some of the infiltrations have been security-related. Since 2001, the IDF has reported six incidents in which terrorists have infiltrated across the border with Egypt for the purpose of carrying out attacks. For the most part, the infiltrators were apprehended close to the border fence following confrontations with IDF patrols. In most of these incidents, the infiltrators turned out to be Palestinian residents of the Gaza Strip who were unable to carry out terror attacks inside the Green Line due to the perimeter fence around the Strip, and chose instead to cross over from Rafah into Egypt, head south and then attempt to re-enter Israel across the Sinai and Negev border, which is less protected. The last infiltration of this kind, in January, led to the death of an Israeli soldier in the Nitzana region. Two terrorists were shot and killed in the incident.

During the last security coordination meeting, the Egyptian officers spoke of their intentions to deploy an additional 200 policemen along the border with Israel. According to the IDF officers, Egypt does not conduct sufficient security checks at the Cairo Airport and the Suez crossing, does not filter out individuals with ties to terror organizations, and does not prevent such individuals from approaching the border with Israel. The defense establishment believes that pressure on Cairo from Washington will lead to an improvement in cooperation in this area.

PA Expected to Crack Down on Hamas’s "Social" Network
While the Palestinian Authority is expected to work to disarm Hamas in the weeks following the cease-fire, Israel and the United States request that, in the long term, Hamas be also compelled to halt its "civilian" support network, which includes charity organizations and specializes in providing assistance to the population in the fields of welfare, health and education. HA’ARETZ reported. U.S. National Security Adviser Condoleezza Rice presented a proposal to channel large sums of money (hundreds of millions of dollars, according to one version) to the PA for the purpose of setting up social welfare infrastructures to compete with those of Hamas. Rice’s statements indicate that, when it comes to civilian aid to the Palestinian population, the tables have been turned: The PA is the underdog in the competition with Hamas. Recently, Hamas charity organizations have broadened their scope of activities and are investing much effort to provide assistance to the families of terrorists who have been killed or arrested. "The aid to the families," the report says, "facilitates the ongoing nurturing of the campaign to win over hearts in favor of the terror attacks, and helps to generate a supportive and encouraging mood for the murder industry. The economic support helps to strengthen a social alternative to the PA’s rule and perpetuate the undermining of its public standing." Israel Security Agency chief Avi Dichter estimated Tuesday that around $1 million flows into the territories each month for Hamas and that "only a fraction" of this sum goes to the organization’s military wing.

Other News in Brief

* Minister of Foreign Affairs Silvan Shalom urged Egypt and Jordan on Wednesday to return their ambassadors to Israel in the wake of the progress in relations with Palestinian Authority Prime Minister Mahmoud Abbas, THE JERUSALEM POST reported. He said that Egypt and Jordan would send a "positive signal" to the Palestinians and the rest of the Arab world by restoring ambassadorial relations. Shalom also called on Morocco, Tunisia, and Qatar to restore interest offices to help the peace effort. Long-time Egyptian ambassador Muhammad Bassiouny was recalled in November 2000 following the outbreak of violence with the Palestinians, and Jordan declined to replace Omar Rifai who was transferred to a new posting.

Economic & Hi-Tech Briefs

* Representatives of India’s 15 largest high-tech companies will visit Israel at the end of the week as guests of the Israel Export Institute and the Indian Embassy in Israel, GLOBES reported. The Export Institute predicts that Israeli high-tech exports to India will grow 20 percent to reach $120 million this year, Israel Export and International Cooperation Institute director Yechiel Assia said on Wednesday. The Indian delegation will meet with representatives of Israeli companies, including Comverse Technology, AudioCodes, Alvarion, and MRV Communications. They will also meet with representatives of venture capital funds, such as Apax Partners (Israel), Vertex Management Israel, Deloitte and Touche, and Jerusalem Venture Partners (JVP). A reciprocal delegation of Israeli communication companies is due to visit India in November.

* Governor of the Bank of Israel David Klein commended Minister of Finance Benjamin Netanyahu and his economic policy, GLOBES reported. He said the economic picture has begun to change significantly, with the demonstration of economic leadership. Previously, the government appeared to have lost control of the economy, starting in the second half of 2000. The repeated efforts to halt the rapid rise in the budget deficit and government debt had failed, raising doubts in the markets and among international institutions about Israel’s financial stability. Klein said that things look differently this year. The elections at the beginning of the year have made an economically more stable and homogenous coalition possible. Personal and structural changes in the cabinet and the Knesset have made it possible to use the enhanced political stability to make prudent economic decisions.

* Israel’s security exports are expected to double to $1 billion per year over the next three years, Israel Export Institute chairman Shraga Brosh said at the opening of the Security Israel 2003 exhibition in Tel Aviv, GLOBES reported. Brosh added that security exports were likely to reach $2 billion a year by 2010. Brosh has approached the Minister of Trade, Industry, and Labor for a special five-year budget of $500,000 per year to promote security exports in the U.S.

* Minister of Finance Benjamin Netanyahu unveiled a four-point plan Wednesday to assist single mothers and other welfare recipients to return to the job market, THE JERUSALEM POST reported. Under the plan, the government will subsidize the employment of low-income compensation recipients by giving them NIS 1,000 (approximately $240) per month in increased wages. Additionally, the Treasury will shift tens of millions of shekels to finance the professional training of people requiring supplementary income in the nation’s factories and large firms. Single mothers will also benefit from the aid package, in the form of NIS 25 million (approximately $6 million) for day-care subsidies in order to make working more worthwhile. A similar amount will be earmarked to subsidize academic studies of low-income compensation recipients.