1. U.S., ISRAEL TO DRAFT UNDERSTANDING ON MILITARY EXPORTS… The United States and Israel are drafting a formal memo of understanding that is intended to end what senior Israeli officials called a “crisis” in the relationship between the two nations. Some of the most severe bumps in what is normally characterized as a smooth relationship between allies stems from Israel’s sale of military goods and services, particularly to China. Five years ago, the U.S. forced Israel to renege on the sale of the Phalcon early warning system at a cost of about $1 billion in restitution and penalties. The relationship continued to deteriorate as the U.S. pressured Israel to renege on another contract — this one to upgrade Harpy unmanned aircraft belonging to China. American and Israeli teams are now working to draft an agreement that gives the U.S. the ability to sign off on proposed Israeli arms deals. Nevertheless, the Israelis are claiming that the pact will open the American market to Israeli companies, a market Israel’s Ambassador to the United States called “mammoth” and said “is much bigger than the Chinese market.”
2. THE MIDEAST PRESS CLUB HEARS RAJOUB, AYALON ON THE GAZA PULLOUT… The Mideast Press Club, an initiative of The Media Line news agency, heard Palestinian national security adviser Jibril Rajoub call the pending Israeli unilateral withdrawal from the Gaza Strip “the turning point in the bilateral [Israel-Palestinian] relationship.” Responding to a question on security during the pullout, Rajoub said that “most violations take place by people who are in security mechanisms” and “that is why we [the P.A.] want to control them.” Ami Ayalon, one-time head of Israel’s Shin Bet security agency, said the Jews who live in post-1967 areas are “pioneers of the Zionist camp” to whom the nation is saying, “your mission is over.” He said that it is not enough to tell those being evacuated from Gaza “how to uproot them and how much compensation to give them.” According to Ayalon, the evacuees have not been told “why.”
3. ISRAEL’S LABOR PARTY BRAWLS OVER VOTE FRAUD INVESTIGATION… Three of four candidates for leadership of Israel’s Labor Party accepted a suggestion by the new party secretary to delay primaries until an investigation into what appears to be widespread vote fraud is complete. Brawls involving the fourth, Amir Peretz who heads organized labor, broke out as a Peretz loyalist rushed former prime minister Ehud Barak before being restrained by Barak’s bodyguards. Barak, elder party chief Shimon Peres, fellow challengers for leadership Matan Vilnai and Benjamin Ben Eliezer accepted the suggestion by General Secretary Eitan Cabel that the investigation into irregularities that saw names of dead party members on the voting logs be completed before a date is set for the primary election.
4. U.S. TURNS UP HEAT ON POST-1967 CONSTRUCTION… Apparently seeking to head off plans by the Sharon administration to move significant amounts of Jews evacuated from the Gaza Strip to other post-1967 areas, U.S. Secretary of State Condoleezza Rice warned Israeli leaders last week to stop building in those areas. Israeli sources said that during her visit, Rice told Israeli leaders that the United States will not accept what she called ‘new conditions Israel is creating in its effort to influence a final peace.’ When Sharon first introduced the idea of a Gaza pullout, he stressed that the concept was to “strengthen settlement blocs” – the post-1967 communities that he maintains will remain in Israel as part of any final agreement.