Minister takes cover from firing

MATTHEW KALMAN

JERUSALEM — Special to The Globe and Mail

Published Saturday, Jun. 05, 2004

Jerusalem was transformed into the setting for a real-life political "Where's Waldo?" yesterday as two right-wing cabinet ministers took evasive action in an effort to sabotage Prime Minister Ariel Sharon's plans to dismiss them.

Mr. Sharon sent letters of dismissal to Avigdor Lieberman and Benny Elon of the right-wing National Union Party in an effort make sure his proposal to withdraw from the Gaza Strip would pass a cabinet vote planned for tomorrow. Both ministers are fiercely opposed to the plan.

Mr. Elon went into hiding to evade the letter of dismissal, which only takes effect 48 hours after it is delivered to him personally, and so complicates the cabinet vote.

"By the end of 2005 there will be no Jew in Gaza," Mr. Sharon told supporters this week. "I plan to uphold my commitments and pass the decision Sunday."

The dismissal of the two ministers would leave a cabinet majority in favour of Mr. Sharon's pullout plan, but puts his coalition government at risk of collapse.

He invited the two National Union ministers to his office at 9 a.m. yesterday to receive the dismissal letters, but they refused to attend. Cabinet Secretary Yisrael Maimon dispatched envoys to their homes, but they weren't there.

Messengers caught up with Mr. Lieberman as he exercised in a gym, but Mr. Elon, who lives in the West Bank settlement of Bet El near Ramallah, was in hiding last night.

Speaking to Israel Radio yesterday by telephone, Mr. Elon vowed to avoid being served with the letter and threatened to attend tomorrow's cabinet meeting and vote against the plan.

He described Mr. Sharon's moves as undemocratic and a step "that disgraces the government and efforts at maintaining a legitimate law-abiding government." He added that Mr. Sharon had informed him by phone that he was fired, but that wasn't good enough.

Mr. Sharon's decision to get tough with opponents within the cabinet of his coalition government followed a week of fruitless talks with his main Likud rival, Finance Minister Benjamin Netanyahu, and other Likud hard-liners aimed at finding a compromise formula for the Gaza withdrawal plan.

Mr. Sharon wants to remove all 7,500 Israeli settlers and the hundreds of soldiers guarding them from the Gaza Strip by the end of next year and says he will push ahead although members of his own party voted against the plan last month.

"He feels confident enough to push this thing to the breaking point," said Mark Heller of the Jaffee Centre for Strategic Studies at Tel Aviv University. "It's an indication of Sharon's determination to push through and let the chips fall where they may."

The Prime Minister has taken a major risk in firing the two ministers. Their departure from the cabinet leaves him with only 61 seats in the 120-seat Knesset. Either the firings or a cabinet vote in favour of the pullout plan could lead to the departure of the National Religious Party, which has six seats, causing the collapse of Mr. Sharon's coalition government.

But his determination to withdraw from Gaza could win the support of Shimon Peres's Labour opposition, which might even join a national unity government to get the job done.

A Gaza pullout would be hugely popular with the wider Israeli public. A poll published yesterday by Haaretz newspaper showed 60 per cent in favour and only 34 per cent opposed.

There is also talk of Mr. Sharon calling a general election and joining Mr. Peres in a new, broad-based centre party that could dominate Israeli politics and rescue the country from years of instability caused by dependence on tiny fringe parties.

After initial skepticism, Palestinian and Arab leaders are also warming to the pullout idea. Last week, Egyptian President Hosni Mubarak signalled for the first time that Egypt would be willing to guarantee security in the Gaza Strip after an Israeli withdrawal. Until now, Mr. Mubarak has been careful not to get directly involved in the murky and dangerous world of Gaza's warring militias.

Palestinian security chief Mohammed Dahlan said he would be pleased to take control of any area vacated by Israel. After initial doubts, Palestinian prime minister Ahmed Qureia has adopted the same policy.

Bodyguards assigned to Jerusalem mayor after he allows gay pride parade

MATTHEW KALMAN

JERUSALEM — Special to the Globe and Mail

Published Friday, Jun. 04, 2004

Israel's secret service assigned two bodyguards to Jerusalem Mayor Uri Lupolianski yesterday after ultrareligious groups threatened him for permitting the city's Gay Pride march to go ahead.

At the same time, event organizers accused Mr. Lupolianski, the city's first ultra-Orthodox Jewish mayor, of undermining the event by not giving it the level of municipal support it has enjoyed in the past.

About 3,000 homosexual, lesbian and bisexual Israelis, some in army uniform and others in full drag, marched through the city centre to a lively party in a park, under a banner proclaiming "Love Without Borders."

"This is exactly the message this city needs: that we can have a pluralistic society in which all people can co-exist," said Noa Sattath, head of Open House, the city's gay and lesbian centre, which organized the third annual event.

A small group of protesters heckled the parade-goers, while some ultraorthodox Jewish leaders condemned the event as "ugly" and unsuitable for the holy city.

Dozens of armed police escorted the marchers, who carried rainbow banners and large clusters of balloons. Many participants wore large rabbit ears, a response to remarks by David Basri, a well-known Kabbalistic rabbi, who has derided gays as "subhuman" and said they would be reincarnated as rabbits.

One Israeli soldier in full uniform, who gave her name as Reuma, said she was not gay but wanted to add her support to the marchers.

"Kudos to them," she said. "I'm very proud to support them and very pleased they want to express their identity in this way."

Sharon Omer, a 27-year-old software programmer from Tel Aviv, said it is difficult to be gay in Jerusalem because of the city's "heavy religious presence."

"In Tel Aviv people pay no notice if gay people walk hand in hand or kiss in public, but Jerusalem is such a conservative city," said Ms. Omer.

Still, Jerusalem is planning to host the World Pride international gathering next summer.

Israel seeks return of body parts

MATTHEW KALMAN

JERUSALEM — Special to The Globe and Mail

Published Wednesday, May 12, 2004

The Israeli Red Cross was at the centre of a grim tug of war over the body parts of six soldiers last night after Palestinian forces destroyed an Israeli armoured personnel carrier in Gaza City, then paraded the dismembered remains before the cameras.

"We possess the remains of your bodies that were thrown into the streets of Gaza. We have our demands to hand them over to the Zionist occupier," said a joint statement from Islamic Jihad and the al-Aqsa Martyrs Brigade, which claimed the operation along with members of Hamas. Israeli Prime Minister Ariel Sharon described the militants as "cruel, inhuman."

The skirmish began before daybreak, when Israeli troops and tanks backed by helicopter gun ships stormed into the Zaitoun neighbourhood on the southern outskirts of Gaza City for what the army said was an operation to destroy two large workshops used to build rockets launched against Israeli settlements.

Eight Palestinians were killed, and more than 100 others were wounded.

The soldiers were blown to pieces shortly after 6 a.m., when Hamas forces exploded a 45-kilogram bomb underneath their vehicle as they headed back to Israel. The blast set off explosives the soldiers were carrying inside the vehicle to destroy the workshops.

Soldiers involved in the mission said the force of the blast destroyed the vehicle and sent parts of bodies flying over a 300-metre radius. They tried to seal off the area and recover the bodies under fire from Palestinian forces, but it proved impossible.

The Qatar-based satellite channel Al-Jazeera broadcast a video of two masked Islamic Jihad activists displaying what they said was the head of an Israeli soldier on a table. The Palestinian Authority tried to ban broadcast of the images and called on the militant groups to return the soldiers' remains unconditionally. But officials also criticized the operation that started the fighting.

"We condemn with the strongest possible terms the Israeli military escalation," cabinet minister Saeb Erekat said. "The escalation is only a part of Israel's campaign to continue the path of violence and confrontation."

Israelis reeled in horror at the result of the ambush, the army's worst losses in more than a year. In Judaism and Islam, the failure to bury any part of a body is considered a desecration.

"Today we received a painful reminder of the heavy price we are paying in the struggle to defend our country and the security of our citizens," Mr. Sharon told the Israeli parliament, the Knesset.

"We are fighting a cruel, inhuman enemy, and we won't stop fighting it and hurting it no matter where it hides."

The government said it refused to negotiate for the return of the body parts, but the Red Cross confirmed that it had been asked to assist in having the remains returned.

"We are in contact with all the Palestinian groups in an effort to recover the remains," Israeli Red Cross spokesman Uriel Massad said. "I hope this will be settled. There is an obligation to respect the bodies of soldiers."

Late last night, Israeli troops were still engaged in house-to-house searches for the body parts. Major-General Dan Harel said his troops would remain in Gaza City until the remains were recovered.

Foreign Minister Benjamin Netanyahu suggested at an emergency meeting of the Israeli security cabinet that water and electricity supplies to Gaza be cut until the remains were returned.

Israeli forces later launched a missile strike into another part of the city. Hamas said its militants were targeted but escaped unhurt. Medics said an 18-year-old bystander was killed and five people were wounded.

Israeli military officials noted that the earlier operation had been conducted using ground forces instead of missiles in order to minimize Palestinian civilian casualties.

Mr. Sharon is trying to push through a plan to withdraw all Israeli forces from the Gaza Strip, but his governing Likud Party rejected the move in a vote last week.

Commentators pointed yesterday to the "Lebanonization" of the resistance to the Israeli army in Gaza, likening the growing wave of Palestinian attacks to the attacks of Hezbollah against Israeli troops in south Lebanon before Israel's withdrawal in 2000.

"The disaster in Gaza will accelerate Israel's disengagement from the Palestinians," Israeli analyst Amos Harel said.

Teen charged with recruiting suicide bombers

MATTHEW KALMAN

JERUSALEM — Special to The Globe and Mail

Published Wednesday, May 05, 2004

He is only 15, an age at which most boys are out playing soccer after school or studying for exams. But according to charges filed in an Israeli military court yesterday, Nasser Awartani has spent the past year busying himself with more deadly matters.

The Nablus student was charged in an Israeli military court yesterday with recruiting teenagers to become suicide bombers for militant groups, the first time such charges have been levelled against a Palestinian youth.

Israel's military court in the northern West Bank charged Nasser with 12 counts, including attempted murder and membership in a militant group. Although hundreds of Israelis have been killed in suicide attacks, none of the Israeli deaths were attributed to Nasser in the indictment.

An Israeli army spokesman alleged that Nasser was involved in "recruiting, preparing and dispatching young suicide bombers in order to carry out terrorist attacks." His job involved ferrying potential bombers to initial meetings with militants and helping them get ready for attacks.

One of his alleged recruits was Hussam Abdo, the 16-year-old whose picture was flashed around the world as he struggled to remove a suicide bomb at an Israeli checkpoint in March.

Another of the suicide bombers Nasser allegedly recruited was 16-year-old Sabi Abu Saud, who blew himself up at an army checkpoint near Tulkarm last November, injuring several soldiers.

Nasser's mother, Ihlas, said her son could not be guilty because he spent all his time at home. "They want to blame someone, so they have chosen my son," she said.

But Israeli intelligence, who raided the teenager's home and arrested him on March 25, said he arranged suicide attacks for the al-Aqsa Martyrs Brigade and also for the squads of the Popular Front for the Liberation of Palestine.

According to court documents, Nasser was recruited into al-Aqsa toward the end of last year by two local leaders of the underground group. At first, he began by putting up posters of Palestinian "martyrs" who died while attacking Israeli targets, but then learned how to build homemade guns, the indictment said. In February, he and his alleged comrades in al-Aqsa were photographed with an M16 assault rifle.

Last October, he was allegedly approached by two al-Aqsa leaders and asked to carry out a suicide bombing. He refused, but agreed to help them find other youths, the indictment said.

On March 22, Nasser approached some of Hussam Abdo's classmates and asked them if they could recommend a boy for a suicide attack. They suggested Hussam. On March 24, Hussam was allegedly picked up in central Nablus, blindfolded, and driven to a deserted house where an al-Aqsa bombmaker gave him an explosive harness ready for use. The boy was photographed and wrote out a farewell message to his parents. He was given a box of eggs to carry and driven to the Harawa checkpoint south of Nablus. There, he was spotted by Israeli soldiers, who instructed him how to remove the bomb harness as he stood shaking with terror, saying he didn't want to die. Hussam was recently charged with attempted murder.

Sharon vows to press on with Gaza pullout

MATTHEW KALMAN

JERUSALEM — Special to the Globe and Mail

Published Tuesday, May 04, 2004

Israeli Prime Minister Ariel Sharon yesterday brushed aside suggestions he might resign after the humiliating rejection of his Gaza withdrawal plan by his own Likud Party, and vowed to push ahead with the controversial scheme, perhaps in modified form.

"I want to say in the clearest fashion there will be another plan," he told a meeting of Likud lawmakers.

As the Prime Minister embarked on a series of consultations on whether and how to amend the plan, he made it clear he has no intention of stepping down. "I intend to continue leading the state of Israel to the best of my understanding, conscience and public duty. This is not an easy task. However, I intend to carry it through."

At the same time, Israeli opponents of the pullout celebrated yesterday by laying the cornerstone of a new residence in a Gaza settlement and moving four Jewish families into a predominantly Palestinian neighbourhood in East Jerusalem.

Mr. Sharon's plan envisioned an Israeli withdrawal from Gaza, home to 7,500 Jewish settlers in 21 settlements, and the evacuation of four small settlements in the West Bank by the end of 2005. But members of Likud, a traditionally pro-settler party, disagreed. They voted against the plan 60 per cent to 40 per cent in a nonbinding referendum on Sunday. But only about half of Likud's 190,000 members voted.

Opposition leader Shimon Peres said it was "unacceptable" for Likud members, who make up less than 2 per cent of the Israeli population, to determine the future of the country. He called for early elections, amid rumours that Mr. Sharon has already offered him a return to the coveted foreign-affairs portfolio in a broad-based national unity government.

Israeli officials suggested the original withdrawal plan, which was popular with Israelis and had U.S. backing, would be slightly scaled down and the new version would not be put to a Likud vote.

"I intend to consult my ministers, the Likud faction and other Knesset factions in order to examine the implications and the steps we intend to take," Mr. Sharon told Likud members of the Knesset, or parliament.

And in what appeared to be a hint that he might go it alone without the right wing of his party, or perhaps call new elections, Mr. Sharon warned: "Israel elected us to find a way to tranquillity, security and peace and promoting Israel's economy. And we intend to do this. There is no other reason for us to be here in the Knesset."

There were hints yesterday from the Prime Minister's circle that he will present the disengagement plan directly to the Israeli people, who polls indicate are overwhelmingly in favour of Israeli withdrawal from the Gaza Strip.

Gerald Steinberg, a political analyst at Bar-Ilan University in Tel Aviv, said Mr. Sharon might "try and detour around the Likud, basically abandoning his own party, his own core constituency and try to build a centrist Israeli political party or some sort of consensus-based new bloc."

In April, U.S. President George W. Bush threw his support behind the disengagement plan, provoking widespread Arab anger. Yesterday, the White House said it will examine options with Mr. Sharon, calling his disengagement plan "a courageous and important step towards peace."

While some U.S. commentators said the Likud rejection of the plan has undermined Mr. Bush's credibility in the Middle East, Professor Steinberg disagreed.

"It's an embarrassment for Sharon in his future dealings with the White House because he was not able to deliver on that deal, but for the U.S. government in the big picture this is not a major issue," he said.

In Gaza overnight, an Israeli attack helicopter fired a missile at a group of Palestinians in a Gaza refugee camp, wounding at least 12, three critically, residents said. Hours earlier, in a separate incident in the West Bank, Israeli troops took up positions around Palestinian president Yasser Arafat's office building in the city of Ramallah, witnesses told Associated Press. Military officials said soldiers were arresting suspects, but said the operation was not linked to Mr. Arafat.

DAILY MAIL

23 April 2004

Matthew Kalman

This is what happened to a Palestinian child who joined teenagers throwing stones at Israeli border police.

Muhammad Badwan was grabbed by officers and tied by an arm to the grille covering the windscreen of their security vehicle (circled).

Last night the 13-year-old’s father said the police had illegally used his son as a human shield to try to stop demonstrators throwing stones at them.

‘When I saw him on the hood of the jeep, my whole mind went crazy, ‘ said Saeed Baswan, a 34-year-old labourer. ‘It’s a picture you can’t even imagine. He was shivering from fear.’

Muhammad said: ‘I was scared when they got me at first. I thought they would put me in prison. I was scared a stone would hit me.’

The incident happened in Muhammad’s home village of Biddo, north-west of Jurusalem, which has become a flashpoint for violence between Israeli forces and demonstrators protesting against the building of an Israeli security fence.

The picture was published by an Israeli human rights group trying to expose the behavior of some Israeli security personnel. Rabbi Arik Ascherman, director of Rabbis For Human Rights, heard about the boy and tried to intervene with the police, demanding he be released.

The rabbi claimed he was head-butted by one of the officers and arrested. He said he intended to press charges against the police.

‘The boy was sitting on the hood of a vehicle, unsuccessfully trying to hold back his tears, shivering with fright, and with one arm tied to the screen protecting the windshield,’ he said.

‘We tried to calm him down and reassure him. I asked if he was hurt. He said he had been beaten and was in pain.

‘It is very depressing that we have come to this position where this is what we do.’The Israeli police said they were investigating the incident.

Leader in waiting?

Palestinian 'prince' eyes Arafat's throne
Dahlan pushes a more moderate approach on Israel, but also has contacts with Hamas

By MATTHEW KALMAN
Special to The Globe and Mail

GLOBE & MAIL, Saturday, Apr. 3, 2004

RAMALLAH, WEST BANK -- He travels through the West Bank in a bulletproof, black Chevrolet Suburban, bearing official licence plates from the Palestinian security service. Everywhere he goes, his bodyguards stay close at hand, even sealing off the floor of his Ramallah hotel.

As politicians line up to welcome him home after a visit to England, and calls come in from friends in both the U.S. Central Intelligence Agency and Hamas, there is little doubt about the status of Mohammed Dahlan: He is a Palestinian prince in waiting.

At 42 -- a veteran of war, exile, Israeli jails and a long-running feud with Yasser Arafat -- Mr. Dahlan is fast emerging as the most powerful Palestinian of his generation. He is seen as one of the few people who could unseat Mr. Arafat in an election. And with the assassination last month of Sheik Ahmed Yassin, the Hamas spiritual leader, Mr. Dahlan may be unrivalled among Palestinian militant leaders as well.

"The Palestinian people are looking for a way out," Mr. Dahlan said in an interview this week. "They are looking for a Palestinian leadership to take them to this exit."

The former head of the Palestinian security service pierces the air with his finger for emphasis before taking a sip of mint tea. He knows that in Washington, Cairo and Jerusalem, he is considered by many to be the person to provide just that leadership.

"Our experience together -- the international community, the Palestinian Authority, Israel, the States --- has really failed, finally," Mr. Dahlan said. "To be frank with ourselves, it's failed. We have to change our role. We have to change our way of thinking, of working, of implementing our commitment. The Israelis should do the same. Enough is enough. We have to elect a new leadership. I think the new generation will be part of the future."

Mr. Dahlan has been a key player in Palestinian politics for 25 years, rising through the "shebab" youth wing of Mr. Arafat's Fatah movement to head the Palestinian Preventive Security Force, the largest armed detachment in Gaza. He still enjoys the loyalty of thousands of men he commanded, and earned the respect even of his enemies.

Having helped stir the first intifida, or uprising, in the late 1980s, he led the Palestinian Authority's crackdown on Hamas in 1996.

But since his job last year as interior minister in the short-lived government of Mahmoud Abbas, he has been plotting a new campaign, rushing back to Ramallah from a two-month sojourn in Cambridge, England, after Mr. Yassin's death.

"It's a mess," he said of the current heightened tensions, as he kept a watchful eye on Al-Jazeera, the Arabic satellite TV station.

"The Palestinian leadership must share the blame for this result. It's not just the occupation. The [Israeli] occupation destroyed the Palestinian Authority. . . . There is no central ruling authority. The visible militant groups are the ones that are in control locally."

Mr. Dahlan is calling for "fundamental change" in Palestinian ranks, beginning with the full democratization of Fatah and the PA.

Though he's been officially unemployed since September, he is enjoying his time off. Once a four-pack-a-day man, he has quit smoking, coffee and even surrendered his beloved nargila water pipe, all "in one shot," he boasts. He spent his recent visit to England "wasting time, reading and improving my English."

Mr. Dahlan was born in 1961 in the Gaza Strip, in the Khan Younis refugee camp. As a teenager he joined Mr. Arafat's political movement and founded the Fatah Youth Association in Gaza. His role in the Palestinian movement landed him in an Israeli jail for five years (where he became fluent in Hebrew) before he was expelled to Jordan.

Eventually moving to Tunis to join Mr. Arafat in exile, he became a special adviser. He returned to Gaza with Mr. Arafat, taking up a senior position in the new Palestinian security forces and joining U.S.-brokered peace talks. He and Mr. Arafat fell out, mainly because of Mr. Dahlan's push for reforms.

Now he may be one of the few people in the world who maintains an easy-going relationship with CIA Director George Tenet and with Omar Suleiman, head of Egyptian intelligence, as well as an open channel to Mohammed Deif, the Hamas terrorist chief with whom he once shared an Israeli prison cell -- and whom he personally arrested eight years ago.

If Mr. Dahlan had his way, he would get tough with the 14 Palestinian security forces, and fold them into one service. He would also take up Israeli Prime Minister Ariel Sharon's offer to pull out of Gaza, a move he says could be used to create "a new model" of Palestinian governance.

He is confident that a democratic, unified Palestinian Authority can deliver security for Israel also, because the Palestinian people are tired of the violence. "If the Palestinian leadership have decided to stop this kind of attacks they should stop, period," he said. "We can do it. Believe me, we can do it. We did it before."

Mr. Dahlan says a reformed, liberated Gaza could serve as a model for a future Palestinian administration, and dismisses suggestions the PA is threatened by a Hamas takeover. He says the PA, with resolution and through dialogue, would have no problem reasserting its control over a liberated Gaza Strip.

"We need a basic change in the Authority and in Fatah, all through elections. Last time Fatah had elections was 15 years ago, so the cadre now does not listen to the decisions of the leadership," he said, adding that if members of the PA "are elected legally, I will commit myself to them. . . . They should renew their legitimacy through elections."

Would he run in those elections?

"Of course, yes."

Against Mr. Arafat?

"I don't know against whom," he says, then roars with laughter.

"I will play a role but I don't see my future in Gaza," he said, hinting at broader ambitions in Ramallah, the West Bank city where the seat of Palestinian power is located.

"I'm speaking on behalf of my generation. This is our future -- to be together and to create a moderate state here through elections, to develop and improve the idea of democracy among our people."

Venture capital invests in Israeli techs

Recovering from recession, country ranks behind only Boston, Silicon Valley in attracting cash for startups

SAN FRANCISCO CHRONICLE April 2, 2004

By Matthew Kalman, Chronicle Foreign Service

Jerusalem -- Israel's technology industry is doing better than you might think.

Just days after the Bank of Israel declared that the country's recession had technically ended, a group of leading California venture capitalists predicted the renaissance of Silicon Wadi, Israel's impressive high-tech sector.

"It's starting to happen in Israel again," said Harry Kellogg, vice chairman of Silicon Valley Bank and president of its merchant banking operation, which has invested in eight Israeli funds so far.

"Last year, about $1.1 billion was invested in Israel, ranking it No. 3 in the world after Silicon Valley and Boston," said Kellogg, who visited Israel last month along with 40 other major California investors. "More money is coming into startups here than is going into Shanghai or India. It's one of the key markets in the world as far as Silicon Valley Bank is concerned," he said.

Despite the optimism of venture capitalists and government banks, there's no denying Israel remains mired in political strife that makes it difficult for the long-standing technology industry to stay strong and grow. Just the same, Israel's tech sector, nurtured from academic and military roots, is showing that it's up to the task, thanks in large part to money coming from U. S. venture capitalists.

The global economic downturn of the past three years was amplified in Israel by the three-year Palestinian intifada. The impact of continued violence and terror attacks hurt the tourism industry and depressed consumption across the board, sending the gross domestic product plummeting.

"The Israeli economy was essentially mimicking what happened in the United States but with a magnification effect due to the security situation," said Manuel Trajtenberg, an economics professor at Tel Aviv University.

Nevertheless, the American investors visiting Jerusalem said the intifada hurt the high-tech sector less than it did other parts of the Israeli economy. Trajtenberg said figures available so far confirm that impression.

"It is true that the high-tech sector was shielded to a large extent from the magnification effect of the intifada," he said. "If you look at indicators of activity like unemployment, number of workers and exports, the downtrend is similar to the high-tech sector in the United States."

"There was less of a magnification compared to other sectors of the economy like tourism and retail industries," Trajtenberg said.

Last month, the Bank of Israel said that the recession in Israel, which began in the summer of 2000, months before the outbreak of the intifada, ended in November. The central bank said the recession cost Israel 10 percent of its GDP during those three years and sent unemployment soaring to a record 10.9 percent in the last quarter of 2003.

Active tech sector

Already, Israel has more companies traded on the Nasdaq than any other country outside North America. Moreover, annual foreign investment in Israeli startups has consistently outstripped any European country, according to the Israel Venture Capital Association, even though Israel has a population of only 6 million.

Sequoia Capital, one of the first Silicon Valley venture capital firms, has only one office outside the United States -- in Israel. Benchmark Capital's two foreign bases are London and Tel Aviv. Siemens venture capital has said it will open an Israel office -- its only branch outside Europe and the United States.

Israeli companies excel in security technologies, semiconductors and communications. Israeli tech firms include Checkpoint, a leading firewall firm; Amdocs, which makes billing systems for telecoms; Comverse, a big voice-mail company; and Mercury Software, which measures software performance.

Last month, investors at VentureWire Network Outlook 2004, an annual trade conference of the U.S. venture capital industry, voted three non-U.S. companies among the 10 startups most likely to succeed. All three were Israeli: Actelis Networks, BitBand and P-Cube.

Among the recent deals was an investment of $20 million by Grove Street Advisors in Pitango Venture Capital on behalf of the California Public Employees' Retirement System.

Grove Street Advisors manages $2.8 billion invested by CalPERS in 80 venture capital funds. Of that total, $25 million already is invested in six Israeli funds: Pitango, Gemini Israel Funds, Israel Seed Partners, Jerusalem Venture Partners, Apax Partners and Carmel Ventures.

Last week, the Israeli retail comparison site Shopping.com announced plans to file for the first Nasdaq IPO by an Israeli company in two years.

Grove Street Advisors founder and managing partner Clinton Harris said he has been investing in Israel since 1991 and has returned because now is "a good time to invest."

"We have $500 million earmarked for startups and set aside 5 to 10 percent of that amount for Israel," said Harris. "Apart from Israel, we have almost nothing invested outside the U.S."

Overall economic conditions

Israel's economic indicators are turning positive. Growth projections for the year have been adjusted to 3 percent, while demand, private consumption, sales and output all rose in December and January, according to Israel's Central Bureau of Statistics.

Professor Avi Ben-Bassat of the Hebrew University in Jerusalem, a former director-general of the Israeli Finance Ministry, agreed that there is "a very positive change in the trend of the economy." But he's not totally sold on the turnaround. Israel is "still in deep recession," he said.

"It will take a long time before we reduce unemployment from its current very high level of 11 percent to the natural level of about 6 percent and restore GDP growth to the pre-recession levels of 4 or 5 percent per year," Ben-Bassat said. "But we expect GDP to grow at a rate of 2 to 3 percent this year, which is much better than the negative trend of the past two years."

According to the Israel Venture Capital Research Center, the $1 billion attracted by Israeli startups in 2003 meant investment was back to the 1999 level.

"Escalating interest in Israeli high-tech companies among foreign investors and the fact that 12 Israeli venture capital funds have embarked on raising new funds are clear signals that the environment has significantly improved." The center forecasts that Israeli VCs will raise between $1.5 billion and $2 billion in 2004-05.

U.S. investors argued that the fall in foreign investment since 2000 was due to global economic conditions, not the intifada. They said they were not deterred by fears of the security situation in Israel.

"I've come here a dozen times, so I'm certainly not concerned about it," said Arjun Gupta of TeleSoft Partners, which has investments in two Israeli companies, Lynx and Jungo.

"I think there's a higher chance that you'll have a wreck on a U.S. freeway than really get into a problem here. Having said that, if you have other people's capital, you have fiduciary responsibility," he said.

"Across the board, we've never had an Israeli entrepreneur not say: 'Hey, if there's any problem, I'll pull the whole company over to the States,' " Gupta said.

The venture environment

Jon Medved of Jerusalem's Israel Seed Partners, a venture capital group with $260 million under management, said he faces growing competition from U.S. funds investing directly in Israeli startups.

"There has been much talk lately in the U.S. of the venture overhang where too much money is chasing too few good deals, but the situation in Israel is still the opposite," Medved said.

"Israeli venture funds like my own are seeing quality deals at reasonable prices which are roughly half the valuations that are prevalent in the U.S. We have actually been outbid on a few deals recently by U.S. funds who felt the prices were attractive enough to pay a significant premium to what we offered, " he said.

U.S. investors say Israel offers a unique mix of entrepreneurial and technological skill, backed by a discipline and frugality that they ascribe to the influence of the army.

"They don't need as much money to get things off the ground here in Israel as they do in the U.S.," said Kellogg of Silicon Valley Bank. "Fear of failure is not an issue here like it is in other parts of the world. If you fail, it's not a bad thing like it is certainly in Europe and in Asia."

Isaac Applebaum of Lightspeed Venture Partners said he has invested in six Israeli companies and is beginning to see the emergence of serial entrepreneurs.

"It's the only place like it," said Applebaum. "I think it's going to get a lot better because there's a lot of new money coming in. These guys work day and they work night, and they deliver."

Pact brings peace to the Seinfeld cast

Resolution of a bitter conflict over royalties clears the way for the release of a DVD collection

By MATTHEW KALMAN
Special to The Globe and Mail
Friday, February 27, 2004 - Page R2

JERUSALEM -- Amultimillion-dollar dispute over royalties between Jerry Seinfeld and the three co-stars of his long-running television comedy series has finally been settled, allowing the release of an official DVD collection of the show's 180 episodes, plus newly filmed interviews and other material.

In an exclusive interview with The Globe and Mail, Jason Alexander (who played George Costanza on Seinfeld) said a deal "has very recently been worked out" after months of tension.

Describing the comedy star's behaviour over money as "inappropriate," Alexander said that he, Julia Louis-Dreyfus (Elaine) and Michael Richards (Kramer) had refused to provide extra material for the DVD collection because Seinfeld and Castle Rock Television, which produced the series for NBC, refused to pay them or offer a share in the royalties.

He said the Seinfeld producers have now agreed that the three co-stars will also earn royalties from the DVD collection.

"We are currently in negotiations so that we are participants in the DVD and that's a happy arrangement because we didn't really want to create this sort of negative impression of our experience," said Alexander, who has just ended a nine-month run in a theatre production of The Producers in Los Angeles.

Michael Richards broke ranks in December and agreed to work on the DVD.

"I innocently asked a question, 'Is there some compensation?' I don't believe there is," Richards told The New York Times.

A similar dispute nearly scuttled the last series of the nine-year-long show. The three co-stars have no share in the royalties, which have netted Seinfeld more than a billion dollars.

Alexander said the three co-stars decided to get tough during negotiations for the final series in 1997. They told NBC Entertainment chief Warren Littlefield that Jerry Seinfeld's decision to cut them out of the show's massive royalties had created an unacceptable gap between the actors.

They did manage to raise their fee for the final series to the same level as Seinfeld himself -- about $1-million an episode -- but Alexander said it was done with a heavy heart.

"We made a deal that was acceptable to us. We got paid very handsomely for our final season," he said. "It was in the pool of profit for NBC to give us those salaries.

"We weren't asking for something that wasn't there, but it was still inappropriate. It drove the cost of production of a TV show sky-high.

"I remember saying to Warren Littlefield: 'We're not kidding and we deserve this, but you're an idiot if you make this deal. It'll destroy television.' "

Alexander said the three co-stars would have greatly preferred "back-end participation" -- a share in royalties from future profits, rather than taking such huge salaries up-front.

"Julia, Michael and I, during our big renegotiation for the final year, asked for something that I will go to my grave saying we should have had, and that is back-end participation in the profits for the show.

"It was categorically denied to us, which forced us to then ask for ungodly salaries," he said.

"We make very little, standard Screen Actors Guild residuals for the reruns," he said.

"I'm not ashamed to talk numbers. I would say in the years that we've been in syndication, Julia, Michael and I have probably individually seen about a quarter of a million dollars out of residuals, whereas our brethren have seen hundreds of millions of dollars. Seinfeld has a profit of over a billion dollars."

"When the DVDs came up, we were being asked to provide new services," he said. "We had no problem with the DVDs being released, but then they said, 'We want you to perform new services. We want to do interviews and create additional footage and additional material.' Why would we do that? They said, 'Because of the legacy of the show.'

"Well, the character of George is not a millstone around my neck but I had to turn to my former bosses and say, 'I'm not invested in the longevity of the show. The longevity of the show actually is a detriment to me right now. It keeps me from getting certain kind of work. You have not made me a participant in the life of this show, therefore I am not inclined to give you these services.'

"It took a while for them to understand. Frankly, I think they were well prepared to proceed without our services until the audience said, 'Don't do that.'

"I said to Jerry when he made the decision years ago to not let us in, 'The day will come when you regret this decision, only because it's going to put us in a position eventually of seemingly tainting the wonderful impression of what this was for the four of us.

"You have created a rift between you and the three of us, and while we are in no way, shape or form looking for parity with you, you have created a chasm that is also inappropriate,' " Alexander recalled.

EU funds disappear

DAILY MAIL 20 January 2004

By Matthew Kalman,
Daily Mail correspondent in Jerusalem

A TEAM of inspectors from OLAF, the European Union fraud office, is this week arriving in Jerusalem to investigate whether EU funds have been misdirected by the Palestinians.

The European fraud-busters come at a time when allegations are mounting of corruption in the Palestinian Authority.

Palestinian officials and employees of pressure groups in the West Bank and Gaza are accused of having systematically diverted foreign aid over recent years.

But the outcome of the OLAF investigation is by no means certain.

That's because European Union officials, orchestrated by EU External Relations Commissioner Chris Patten, have repeatedly ignored the signs that millions of euros of taxpayers' money may be ending up in the wrong Palestinian pockets.

In the hope of strengthening ties with Yasser Arafat and the Arab world, EU leaders have proved remarkably reluctant to find out exactly how their aid money is spent.

Arab states have reduced their funding in protest at the stalled peace protest. Does the EU have the will to do the same?

At the very least, the EU should consider its continued support conditional on clear-cut action by Arafat to implement the first phase of the Road Map peace plan. This calls for the Palestinians to 'declare an unequivocal end to violence and terrorism'.

The EU has placed customs tariffs on Israeli goods produced in West Bank settlements. EU aid to Israel is not allowed to be used in the occupied territories. The time may have come for the EU to apply similar sanctions to the Palestinians.

Yasser Arafat is suspected of having been paying the salaries of terrorists from the e10m in monthly EU budget support for his civil service.

Patten's claims that the EU funds were minutely supervised by the IMF have been disputed by the IMF official responsible, Salaam Fayyad, now Palestinian finance minister.

An IMF report concluded that $900m was 'diverted' from the PA budget up to 2000.

Former Palestinian cabinet minister Abdel Fattah Hamayel admits paying $40,000 per month 'living expenses' to those Al-Aqsa Martyrs' Brigades gunmen not already employed by the Palestinian security forces.

Stephen Bloomberg, a London-born engineer, is suing the EU for e20m. In August 2001, two Palestinian gunmen sprayed his car with bullets, killing his pregnant wife and leaving Mr Bloomberg and his teenage daughter paralysed in wheelchairs.

The gunmen were caught by the Israelis. One was a police officer and the other the police chief from the West Bank town of Kalkilyeh. Their salaries at the time were paid by the EU.

It is also alleged that corruption may have tainted EU donations to Palestinian Non Governmental Organisations.

Much of the e105m donated since 2000 has been channelled through the Palestinian Finance Ministry.

Funds are budgeted at an exchange rate of 4.5 shekels to the dollar and paid out at a rate of 3.5 shekels to the dollar.

No one knows what happens to the millions represented by the exchange gap.

Concrete action

LAST week, lawyer Khader Shekirat was arrested by Palestinian police after the EU accused him of stealing $2m from LAW - the EU-funded Palestinian human rights group which he headed.

Recently, the Palestinian NGO Network flatly refused to sign a pledge, requested by the American aid body USAID, that they will not 'provide material support or resources to any individual or entity that advocates, plans, sponsors, engages in or has engaged in terrorist activity'.

They said they preferred to reject the $1.3m received from USAID in the past decade rather than sign the pledge.

The EU should consider a similar pledge - combined with concrete action - from the Palestinian NGOs and the Palestinian Authority government.

Two Arabs -- one a bomber, the other a victim

Apprentice lawyer killed guard, self 18 others in Haifa

San Francisco Chronicle
Saturday, October 11, 2003

Matthew Kalman, Chronicle Foreign Service

Haifa, Israel -- Among the 20 people who died last Saturday in the suicide bomb attack on a restaurant in Haifa were two Arabs, a man and a woman.
They had little in common.
Mutanis Karkaby, 32, was a poorly paid security guard at the Maxim restaurant, a popular meeting place on the beach jointly owned and patronized by Jews and Arabs, not a remarkable thing in the Israeli city where peaceful coexistence is most deeply entrenched.
Hanadi Jaradat, a 29-year-old from a well-to-do family in Jenin, was only days away from finishing her training with a local law firm.
Hanadi killed Mutanis and 18 other people when she walked into Maxim at lunchtime and blew it to pieces by detonating a harness under her clothes packed with explosives, jagged metal and bolts. Several entire families were destroyed -- grandparents, parents and young children ripped to shreds where they sat.
Hanadi was not a refugee. She didn't suffer from hunger or deprivation, and her landowning family could afford to send her to Jordan to study law. The Jaradats live in a smart-looking, detached house in Jenin noted for the large lemon tree in the front garden. They are not religious.
But Hanadi's generation, nonetheless, turned into a cell of killers. Swept up in the feelings of oppression and powerlessness shared by so many Palestinians, they steeped themselves in the blood-chilling ideology of Islamic Jihad, which calls for the destruction of Israel and the death of its Jewish residents.
Hanadi was not the first in the family to lash out through the medium of a suicide bombing. A relative, Rageb Jaradat, killed eight people and injured 22 when he blew himself up on a bus between Jenin and Haifa in April 2002.
Hanadi's brother Fadi and her cousin Saleh were Islamic Jihad terrorists. Saleh was a local commander of the group who helped plan a suicide bomb attack by another young woman in Afula in May and made several unsuccessful attempts to detonate large car bombs inside Israel. Fadi was one of his assistants.
ISRAELI HIT SQUAD
Both were gunned down in June outside the family house by an undercover Israeli hit squad as Hanadi watched in horror and begged the soldiers to spare them.
Saleh had been on the run and had not seen his wife and 12-year-old son for some time. That evening, the fugitives came into Jenin for a quick meeting.
"Saleh came to see his wife and son, and to ask about my father's health," Hanadi told the Hamas Web site after the killings. "We were sitting at the entrance to the house drinking coffee. It was dark. A car with Arab plates pulled up, and we thought it was one of Saleh's friends.
"Suddenly, the white car stopped. Two guys jumped out and immediately opened fire on Saleh. Another car quickly appeared, also with Arab plates. Saleh's wife picked up her son and rushed inside. My brother Fadi fell to the ground . . . bleeding.
"I held his hand, and I started dragging him behind the couch we were sitting on to get away from the bullets. I started shouting, 'Fadi! Saleh!'
"I heard Fadi say in a very weak voice, 'Help me, save me.' Then the armed men attacked me, knocked me on the ground, dragged Fadi away and told me, 'Go into your house, or we'll kill you.'
"I shouted back, 'Leave me alone, I want to save my brother, he is bleeding. '
"Saleh was lying motionless . . . but Fadi was still moving. But three of the soldiers, who spoke Arabic fluently, attacked me and asked me, 'Where are his weapons?' I said, 'I don't know. There are no weapons. Allahu Akbar, he's going to die.'
"Then they forced me to lie face down, and one of them said, 'You bitch, you terrorist, we'll kill you with them.' They put their rifle to my head. I shouted back, 'You are terrorists, dogs.'
"Then I saw them dragging both of them away. They dragged them a few meters and shot them again in cold blood."
VOW OF REVENGE
Hanadi swore to take revenge.
"The murderer will pay the price, and we will not cry alone," she told her Hamas interviewers. "To hell with all the world if our people cannot live in freedom and dignity and achieve the dream and goals of the martyrs."
Her father, Taisir Jaradat, said this week that he has no regrets. "I'm proud of my daughter," he said. "She did the right thing."
Her younger sister, Hydaya, described Hanadi as a "a very sociable and lovable person. . . . She became religious after my brother was martyred. She was very bitter.
"We are proud of her because she took revenge for my brother. Now we know that his blood was not spilled in vain."
While the talk in Jenin was of death and revenge, in Haifa it was of peace and reconciliation.
At the modest apartment of Mutanis' parents, relatives and friends tried to console the shattered family and vowed that Hanadi's act of retribution would not put an end to Jewish-Arab brotherhood here.
Mutanis was a Christian, one of thousands of Arabs who live side by side with Jews in the working-class Wadi Nisnas neighborhood. This week his parents' residence was packed with Jewish, Christian and Muslim neighbors paying their respects. Men sat in one of the rooms around his father, Jurias, while the women sat in the other with his mother, Layla, and young wife, Samar.
They were married two years ago.
LIFELONG HAIFA RESIDENT
Jurias has lived in Haifa all his life. His great-great grandfather came here from a nearby village. He is a plumber and also lays tiles, but there has been little work since the Israeli economy took a nosedive with the start of the intifada three years ago.
He said he wasn't surprised to see the mixed crowd flocking to his house and the funeral.
"We go to their houses of mourning as well," said Jurias. "Jews and Muslims came to the church, we all sat together. And later, they carried Mutanis' coffin on their shoulders together."
Asked the secret of Haifa's religious and ethnic harmony, he replied, "Arabs and Jews coexist together here because nobody tells anybody else what to do."
"The Palestinians and Israelis need a smart man who can see and hear," he said, miming the actions. "Then it will be finished in a day. Moses took a stick and parted the Red Sea. It was a miracle. There are many good people. Go and find them."
A photo of Mutanis, a dark-haired, good-looking young man, stared out from the sideboard.
"We were five brothers and sisters, and Mutanis was the youngest," said his brother Afif. "When you eat grapes, the last grape is the sweetest. So it was with Mutanis."
He said Mutanis had a gift for making people laugh.
"He smiled with his eyes, and he made people happy. He had worked in a few jobs, for the national lottery company, as a picture framer and a waiter."
Then he moved on to one of Israel's more hazardous occupations -- restaurant security guard.
Afif looked again at the picture.
"Life in Israel is difficult, but he wanted to build something. And he believed in God."

Islamic Jihad denies Syria camp

But former terrorist says he received training there

San Francisco Chronicle
Tuesday, October 7, 2003

Matthew Kalman, Chronicle Foreign Serrvice

Jerusalem -- Syria claims that Ein Zaheb, the area near Damascus bombed by Israeli warplanes Sunday, is a Palestinian refugee camp in a peaceful rural area. But a former fighter in a Palestinian terrorist group told The Chronicle the bombed site was a key training facility and arsenal for Palestinian extremists based in Syria as recently as two years ago.
Israeli intelligence sources say they attacked the facility because it is "supported by Iran and is used for operational training for Palestinian terrorists."
Responding to the Israeli charges, Abu Emad el-Refaei, an Islamic Jihad spokesman in Beirut, denied that his organization had any bases in Syria.
"We do not have any training camps or bases in Syria or any other country," he told al Jazeera television Monday. "All our bases are inside the Palestinian occupied territories."
But Jamal Ali, who was an active member of a Syrian-based Palestinian extremist group until he renounced violence and left Syria nearly two years ago, said in an exclusive interview that he had received training at the camp three years ago. He said the site was uninhabited but was used for secretive one-day training sessions.
Now living under an assumed identity in Jordan, Ali said he had trained at Ein Zaheb and other facilities in Syria. He added that the Ein Zaheb base had still been in operation, and even expanding, in the summer of 2001, just before he left the country.
Ali said trainees were taken, one at a time, to nearby caves and given their weapons, accompanied by a training officer and four security guards.
"Inside the cave, we were handed the weapons and two or three grenades," he said. "We then went to a building outside known as the 'grease place,' where they kept the bullets and ammunition. Then we would spend hours stripping and rebuilding the guns until we could do it blindfolded.
"After that, we were driven up to the plateau for target practice with cardboard targets erected in the hills. Finally, we would practice throwing the grenades over the hillsides and diving for cover behind the rocks."
Footage first broadcast on Iranian television and replayed Sunday by Israel TV showed trainees at Ein Zaheb handling detonators and explosives, as well as large numbers of weapons, rockets and grenades stored in tunnels and caves.
Ali said the base was operated by the radical Damascus-based Popular Front for the Liberation of Palestine-General Command (PFLP-GC), the Palestinian splinter group led by Ahmed Jibril, but was used by most of the 10 extremist Palestinian organizations with headquarters in Damascus, including Hamas and Islamic Jihad.
A senior commander for the PFLP-GC told the Associated Press in Damascus on Monday that the camp was one of their deserted bases, not an Islamic Jihad camp, and had not been used in seven years. He said a civilian guard had been injured in the attack.
Ali described the camp as a sprawling underground network in "a very mountainous area riddled with caves."
"Inside the network of tunnels is one of the main weapons stores for Jibril's and the other groups," he said. "About three or four kilometers away, up on a plateau in the mountains, is a firing range used for training with guns, hand grenades and explosives."
Ein Zaheb was originally a training base used by Yasser Arafat's Fatah group, he said, until Syria turned against Arafat in 1983 and handed it over to Jibril.
"Ein Zaheb was the place where Abu Nidal, another Syrian-backed terrorist, executed 11 high-ranking officers from Fatah just after the Lebanon War in 1982," Ali said.
"It's a very rugged, very beautiful place in the mountains on the road from Damascus to Beirut," said Ali. "The terrain is so rough they train special squads in rock climbing and rappelling, but it's also full of natural springs and pools." The area is called Rabweh, he said, which means heaven.
On Monday, workers cleared rubble from what appeared to be a one-story house destroyed in the air raid. Pieces of metal and concrete shattered by the rocket attack lay on a nearby hill.
Israeli officials claim the camp is still feeding a pipeline that supplies terrorists to attack the country.
"There is a wide variety of training in the camp, including sabotage, artillery training, guerrilla warfare and even aeronautical training," said an Israeli security official. "Some of the terrorists training at the camp are operatives who come to receive advanced training and then return to Palestinian Authority territory in order to establish an operational terrorist infrastructure."
Amos Gilead, adviser on diplomatic and security affairs in the Israeli Defense Ministry, said the choice of Ein Zaheb as a target followed more than a month of tough messages warning Syrian leader Bashar Assad to stop assisting Palestinian extremists.