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[Reported from Jerusalem]

1. TENSION HEIGHTENS ON ISRAEL-LEBANON BORDER… The Hizbullah terrorist organization launched two barrages of rockets and artillery shells against Israeli positions in the Har Dov/Shib’a Farms area along the border with Lebanon on Monday. For the first time since early 2002, it also targeted an Israeli army position outside of that area with an anti-tank missile. Israel responded by returning artillery fire and launching two air strikes at Hizbullah positions in Southern Lebanon, adjacent to the village of Kfar Shouba. The shelling follows a statement by the Syrian foreign minister threatening to target Jewish communities in the Golan Heights if Israel strikes inside of Syrian territory, as it did recently in response to a suicide bombing. U.S. Secretary of State Colin Powell called on both sides to reduce the tension in the area.

2. U.S. SENATE: NO AID WITHOUT RELIGIOUS FREEDOM… An amendment to the Senate version of the U.S. Foreign Aid Bill will prevent Malaysia from receiving $1.2 million in military aid, unless the State Department determines that Malaysia “supports and promotes religious freedoms, including tolerance for people of the Jewish faith.” The president could still override the provision by claiming national security reasons. The move – which was unanimously approved — comes following remarks by the outgoing Malaysian president in which he averred that “Jews control the world. They fight by proxy and have others die for them.” Mahatir Muhammad then stood firmly by his words in the face of international criticism. Following word of the Senate action – which would have to be matched by the House of Representatives in order to become law – the Malaysian foreign minister complained that his nation is “the next Muslim country” being singled out for discipline by the United States.

3. ISRAELI AIRLINE INSTALLS ANTI-MISSILE SYSTEM AFTER THREATS… El Al Israeli Airlines has become the first carrier to install an anti-missile protection system on some of its planes, according to Israel television. It comes days after an El Al flight was diverted from Toronto’s international airport after a threat was made to bring down the plane with a shoulder-fired missile. The system, called “Flight Guard,” was developed by Israel Aircraft Industries and became a priority to complete when two missiles were fired at an Israeli charter jet over Kenya last November. “Flight Guard” costs nearly one million dollars per unit and is similar to systems used by military jets. It senses approaching heat-seeking missiles and fires flares that cause the missile to alter its course.

4. SHARON RULES OUT KILLING ARAFAT… Israeli Prime Minister Ariel Sharon has ruled out killing Yassir Arafat. His remarks to a group of visiting European Parliamentarians marked the first time Sharon has clarified his position since a government statement triggered an international firestorm of protest. It called Arafat an “obstacle to peace” and said that the government would “remove the obstacle.” Deputy Prime Minister Ehud Olmert increased the level of concern when he said that killing Arafat was definitely an option open to the Israelis. Sharon had recently made two conflicting statements concerning Arafat’s future: telling newspaper interviewers that exiling him would “not be helpful to Israel,” but saying a short time later that it remains his intention to “remove him.” Sharon also used the forum to reaffirm his determination to continue building the controversial security barrier between Israel and Palestinian areas. Even the United States opposes construction of the buffer. New condemnations of the project were triggered by Sharon’s revelation on Friday that he plans to extend the fence into the Jordan Valley.

5. QUREI’ SAYS HE WANTS TO BROKER CEASE-FIRE; ISRAEL SAYS IT’S NOT GOOD ENOUGH… Ahmad Qurei’ says it’s his government’s priority to broker a cease-fire and claims that it has been the subject of discussion with the Hamas and Islamic Jihad terrorist organizations. Israel says nothing short of dismantling the terrorist organizations themselves will suffice. Prime Minister Ariel Sharon cut off all negotiations with the Palestinian Authority following an August 19th bus bombing in Jerusalem and insists that talks with the PA’s prime minister will not resume until Qurei’ “acts to dismantle the terrorist infrastructure.”

6. CHILD POVERTY CRISIS IN ISRAEL… A report released by Israel’s National Insurance Institute – the governmental bureau charged with social service payments – warns that “Israel is on the way to becoming the country with the highest poverty rate in the Western world.” According to the newspaper Yediot Aharonot, which published the findings that will be released by the agency next month, nearly every third child in Israel was below the poverty line as of the end of 2002. “Tens of thousands are suffering from malnutrition, inadequate clothing and lack of text books.” The report predicts that the situation will significantly worsen as a result of Finance Minister Binyamin Netanyahu’s severe austerity budget cutbacks on social services.