Israel's Gross Domestic Product (GDP) grew by an annualized 5.4% in the first quarter, as the dollar continues to fall against the shekel, which is now an internationally recognized currency.

The 5.4% GDP jump is a slightly lower rate than in the two previous quarters, but higher than government forecasts. The Central Bureau of Statistics further reported this week that business product rose by 6.1% in the first quarter of this year, compared with 7.6% and 7.3% in last year's 4th and 3rd quarters, respectively.

The results negate the pessimistic forecasts of 4.3% GDP growth by the Ministry of Finance and 3.2% by the Bank of Israel.

Israeli Shekel Recognized by World
Meanwhile, as of this week, the Israeli shekel has become legal tender internationally, now that Israel has been made an official member of the international CLS (continuous linked settlement) clearing system. Israeli shekels can now be used in trading on markets overseas, banks the world over can convert shekels into other currencies, and Israeli companies and firms can settle payments in shekels either by check or bank transfer to their customers' overseas accounts.

The CLS announcement said, "Following regulatory approval, the Mexican peso and Israeli shekel have been designated as CLS Bank Settlement Eligible Currencies by the CLS Bank Board of Directors. The extension of the CLS Bank service to these currencies enhances systemic stability in the settlement of foreign exchange transactions, and over half of all CLS Bank Members will be able to settle in these two currencies immediately."

Bank of Israel Governor Stanley Fischer said the decision "is a significant further step in Israel’s increasing integration into the global economy. By reducing settlement risk in FX [foreign exchange] transactions, vital to Israel’s open economy, it reinforces the stability and efficiency of Israel’s banks and financial system, and benefits the entire economy."

Several countries and companies already honor the shekel, Globes reports, but the CLS announcement gives an international symbolic stamp of approval to the Israeli currency, recognizing it as one of the strongest currencies in the world.

Shekel Shoots Up, Dollar Dwindles
In fact, the shekel continues to strengthen against the euro and particularly the dollar.  The dollar traded briefly at less than 3.3 shekels this morning, lower than it has been in almost 11 and a half years.  The euro exchange rate now stands at 5.24 shekels, compared with 5.53 two months ago.

Awaiting Interest Rate Announcement
The shekel is expected to continue to increase following Fischer's announcement this evening (Monday) regarding the interest rate.  Most analysts expect him to raise it, after having lowered it or kept it unchanged the past three months.

Just days after Prime Minister Ehud Olmert announced dramatically that he had initiated unofficial talks with Syria, it is becoming clear that his own party colleagues in the government are withholding support for the bid to give Syria the strategic Golan Heights.

Three Cabinet ministers from Olmert's Kadima party - Ze'ev Boim, ex-Defense Minister Sha'ul Mofaz and Meir Sheetrit - say they are against giving away the Golan for at least the next 25-30 years.  It will take this long to see if Syria has truly changed its terrorism-supporting spots, they told the NRG-Maariv Hebrew news site.

Minister Gideon Ezra said he would not object to an agreement under which Israel leases the Golan from Syria for at least 25 years.

Syria has demanded - and apparently received - an Israeli commitment to withdraw from the entire Golan Heights, in exchange for simply announcing that it has begun unofficial talks with Israel. Olmert told the Knesset Foreign Affairs and Defense Committee of the Knesset on Monday that four other prime ministers before him have made similar commitments, "and it is all documented."  One former Prime Minister, Binyamin Netanyahu, challenged Olmert to also produce counter-documentation showing that Netanyahu had repudiated any Israeli offer to give away the entire Golan.

Minister Ruchama Avraham-Belila told NRG flat-out she would vote against any withdrawal from the Golan, while Minister Yaakov Edry and Roni Bar-On are leaning the same way. 

Minister Avi Dichter, asked to comment on the future of the Golan, refused to respond. Nearly two years ago, however, he implied that he would be willing to give away most of the Golan in exchange for genuine peace.  However, "the question of water and [the borders near] the Kinneret Sea are things I would not easily give up on," he said.

Minister Chaim Ramon, who favors a full Israeli withdrawal from Judea and Samaria but now opposes a ceasefire agreement with Hamas, is taking a relatively strong stance vis-a-vis Syria.  "We are willing to make painful concessions in order to attain peace with Syria," he said, "but we cannot agree to have Syria simultaneously support Hizbullah and Hamas, continue to be a central ally of Iran, and continue to be a central component in the extremist-Islamic axis."

Foreign Minister Tzipi Livni, who is trying not to come out too strongly in favor of or against the criminal investigation-plagued Prime Minister whom she may be asked to succeed in the near future, said, "Israel wants peace, but the Syrians must understand that it involves a total end to their support for terrorism, Hamas and Iran."

The head of the General Security Services (Shabak), Yuval Diskin, told the cabinet on Sunday that Palestinian Authority terrorists in Gaza are already equipped with missiles capable of hitting the port of Ashdod and Kiryat Gat. According to Diskin, the enemy in Gaza must be defeated immediately if a greater escalation is to be avoided.

"Ever since the Philadelphi Route [between Gaza and Egypt] was breached, Hamas has
"The threat to the State of Israel is growing exponentially." -- Shabak head Yuval Diskin
been bringing high-quality weaponry into the Strip, which has made it possible to fire beyond Ashkelon, as far as Kiryat Gat and Ashdod," he warned.

Ashdod, the fifth largest city in Israel, is home to over 200,000 residents and Israel's largest port, accounting for sixty percent of the country's imported goods. It is located just under 25 kilometers (15.5 miles) north of Gaza. The inland city of Kiryat Gat, in the Southern District, is located 56 kilometers (35 miles) southeast of Tel Aviv.

"They already know how to operate sophisticated weapons there," Diskin said of the terrorists in Gaza. "They have not yet shut the door on the Egyptians' efforts [at brokering a temporary ceasefire], but they are preparing for the next round." According to Shabak estimates, if Hamas does not obtain all its goals in a temporary ceasefire agreement, "then there will be an even greater escalation." 

Diskin told the ministers that Hamas in Gaza currently has firepower that must be "dealt with immediately. If you don't take care of this problem now, then it will become more severe. The more time passes, the operation that will eventually be carried out will cost more casualties and more dead soldiers."

Hamas is obtaining weapons directly from Iran, Diskin explained, "and we don't identify any obstacle blocking the supply of ammunition to Gaza.... The Hamas leadership and the Iranian regime are growing closer on all levels. Aid, know-how and equipment are simply flowing in. Time is working in favor of Hamas and the threat to the State of Israel is growing exponentially."

Ashdod, Kiryat Gat Not Waiting for the Rockets to Fall
In March 2008, following warnings emanating from the IDF and the Shabak in 2007, the Ashdod Municipality and the IDF's Homefront Command began making preparations to protect Ashdod residents from the approaching enemy rocket fire. Local officials have been spending much of their time in Ashkelon, learning from up close how a major city deals with alerting and protecting its citizenry from missile and rocket attacks.

Kiryat Gat Mayor Aviram Dahar said Monday morning that he is preparing the city's 52,000 residents for Katyusha rocket attacks, as well. Mayor Dahar said that the city's social workers are being prepared to deal with an emergency situation, and that shock trauma treatment centers are being protected against rocket attacks.

Prior assessments by military intelligence indicated that Hamas was most likely waiting for a large-scale ground operation by Israel or for the killing of one of its top terrorists to deploy the longer-range missiles.

In recent months, Hamas has been making vocal threats of the type heard from Hizbullah chief Hassan Nasrallah prior to that terrorist group's firing of rockets at Haifa and Hadera from the north, during the Second Lebanon War.

"We will strike beyond Ashkelon," several Hamas leaders have declared at rallies and in Arabic-language press conferences, sometimes citing Ashdod by name.

American Jewish businessman Moshe (Morris) Talansky may be facing an F.B.I. investigation in the U.S. regarding his relationship with Prime Minister Ehud Olmert, even as he is being interrogated in Israel.

In a pending lawsuit filed in 2007 in Nassau County, the minibar company Kool-Tech accused Mr. Talansky of improperly arranging to have the company reimburse him for a $4,717.49 hotel bill he incurred at the Ritz-Carlton in Washington in October 2005, when he paid for a night's stay by “a senior Israeli cabinet member that had no relation to the business."

Though the Israeli official was not named in the lawsuit, the New York Times reported that a lawyer for Kool-Tech disclosed two weeks ago that the man was Olmert, and that the hotel reservation had been made by Shula Zaken, Olmert’s longtime aide.

The lawyer, William J. Davis, said the company broke off ties with Mr. Talansky upon learning of the expenditure, "largely out of a desire to steer clear of doing anything illegal or running afoul of laws" like the Foreign Corrupt Practices Act, which prohibits bribes to foreign officials.

Davis said that he was told that the F.B.I. had opened an investigation that included Talansky’s activities, but claimed that Kool-Tech had yet to be contacted by the authorities.

Scheduled to testify in court
Talansky testified again Sunday at the police's National Fraud Investigations Unit offices in Bat Yam, regarding the "cash envelopes" affair.

Talansky is scheduled to testify in court in a pre-trial deposition Tuesday, after which he will return to his home in the United States. He has said that he must return to America to care for his ailing wife, but that he plans to return to Israel next in mid-June for a grandson's wedding.

'I expected nothing in return'
In an earlier interrogation session, Talansky told investigators from the police’s anti fraud unit that he gave Prime Minister Ehud Olmert money that was not used for elections.

“I gave Olmert money that was not used to cover elections debts or to fund the election campaign,” Talansky said, according to information leaked to the press. 

Talansky’s admission contradicted Olmert’s claim that all of the money he was given went to cover campaign costs or to pay back debts incurred during his political campaigns. Talansky continues to insist that he did not receive any benefits in exchange for the money given to Olmert, and that he had no intention of getting anything in return when he gave Olmert hundreds of thousands of dollars.

An Iranian-born Israeli citizen was arrested at Ben Gurion International Airport on May 8 on charges of spying for the Islamic Republic, according to an indictment filed in Tel Aviv Magistrate's Court.

The story was cleared for publication on Sunday.

According to court documents, the unnamed man agreed to supply Iranian inteliigence with information on Israel's security establishment. He has been charged with contacting a foreign agent, relaying information to an enemy state, theft and fraudulently obtaining goods.

The man's attorney, Michal Orkaby, was quoted by Yediot Acharonot as saying the man has not resided in Israel for several years and did not give anyone any information on Israeli security services, nor did he wish the State any harm.

The Israel Security Agency (Shin Bet) said Iranian intelligence operatives have been pressuring Israelis who have families in the Islamic Republic to become spies for Iran.

Vice Prime Minister Chaim Ramon and Interior Minster Meir Sheetrit, both of Kadima, say they will vote against a ceasefire agreement with Hamas. 

Ramon joined the newly-formed Kadima in late 2005 from Labor, and Sheetrit from the Likud.

Speaking at the weekly Cabinet meeting on Sunday, Sheetrit said Hamas must be fought: "Not breaking the resistance force of Hamas today means that hundreds of thousands of Israelis will be brought within range of Hamas rockets later." 

"A ceasefire agreement with Hamas means that we will soon receive a stronger, more protected, better-armed and better-trained Hamas," Sheetrit said. He warned that cities such as Ashdod, Be'er Sheva and Kiryat Gat could soon be in Hamas-rocket range. 

Sheetrit also said that an Israeli agreement with Hamas could be interpreted as a "green light" to European countries to enter into agreements with Hamas as well.

Ramon: Contacts With Hamas Give Legitimacy to Terrorist Group
Vice PM Chaim Ramon similarly said that the very holding of indirect talks, via Egypt, with Hamas, "is a major mistake, now that we have succeeded in having Hamas isolated diplomatically.  This will legitimize Hamas, and will give an excuse to any country that wants to talk with Hamas."

Ramon said such talks strengthen Hamas at the expense of Fatah.  "There are ways to crush Hamas even without re-conquering Gaza," Ramon said.

A delegation of American and Canadian doctors specializing in emergency and trauma visited Sderot last week to dedicate medical equipment to the rocket-battered town on the Gaza border.
 
The physicians were members of the American Physicians Fellowship (APF), an organization that brings trauma experts to Israel for advanced courses.

Sderot schoolchildren hold a spent Kassam rocket.
(Photo: Sasson Tiram)

Dr. Norton J. Greenberger and Dr. Mike Frogel with Students from Torani Hadash School
(Photo: Sasson Tiram)

Many members of the group made personal commitments to travel to Israel immediately in the event of war or natural disaster, freeing their Israeli counterparts to assume IDF reserve roles on the front or at the disaster site.
 
"Israel has earned global respect for its incomparable emergency medical care," said APF Vice President, Dr. Mike Frogel, leading last week's delegation. "Unfortunately, Sderot has taken the brunt of terrorist attacks on Israeli civilians in recent years, and we have come to show our solidarity with these brave men, women and children—and to provide at least a small measure of our support which will strengthen their situation under these circumstances."

(right to left) Dr. Mike Frogel, APF Vice President and Dr. Norton J. Greenberger, APF President with Moshe Vaknin and Avi Tiger of MDA
(Photo: Sasson Tiram)

The group of doctors in Sderot
(Photo: Sasson Tiram)

The twenty doctors and nurses that visited Sderot hail from Atlanta, Minneapolis, Madison, Detroit, Hagerstown, Ft. Myers, San Diego and El Paso, as well as Canada. They are in Israel taking part in the Emergency and Disaster Preparedness Course and took part in the dedication of a $20,000 reinforced bus shelter for the Torani Hadash School and a $10,000 defibrillator system at the Sderot Magen David Adom Station – both by the APF.

(right to left) Dr. Norton J. Greenberger, APF President and Dr. Mike Frogel, APF Vice President
(Photo: Sasson Tiram)

A reported decision by the IDF to move non-combat soldiers from the Erez crossing to a point out of the range of missiles from Gaza caused outrage Sunday among both Israelis living near Gaza and politicians.

The decision, first reported by Ynet website, was handed down by Maj.-Gen. Yosef Mishlav, Coordinator of Government Activities in the Territories. Mishlav decided that the soldiers serving in the Coordination and Liaison Administration near the Erez crossing would be moved to the military base at Joulis, which is located 17 km. from Gaza and is not currently under missile and mortar threat.

"Because of the security situation in the Erez compound, the Coordinator decided to temporarily move the soldiers to a command center in the rear because there is no point in endangering them. The decision is temporary and may change according to assessments of the situation."

The decision reportedly predated the truck bomb attack on Erez last week, which caused extensive damage to the facility.

However, an IDF source quoted in the Hebrew-lanuage Walla news site said that intelligence officials informed the IDF that terrorists have been building a tunnel underneath the Erez base with the intention of setting off explosives and possibly kidnapping soldiers and civilians.

Gaza Belt Residents Angry
Following the report, news outlets have featured quotes from disappointed residents of the Gaza Belt region.

"This is a disgrace," Yuval Peltz of Netiv HaAsara, located a few minutes' drive from Erez, told Maariv-NRG. "The army is evacuating soldiers, and we continue to live here and guard the area. We will not evacuate. To evacuate is to flee," he said. The community's council head, Rivka Saad, said the evacuation was "very worrisome" because it meant that the civilians had now become the front line. "We continue to expect the state to protect us, because we are staying here. We have no other country," she said.

MKs: cowardice, impotence, feebleness
MK Yuli Edelstein (Likud) said that the decision to evacuate soldiers from the Erez Crossing showed that "the IDF has internalized the government's impotence and would rather not pay in soldiers' lives [to remove the threat]."

National Religious Party Chairman MK Zevulun Orlev said: "he who runs from terror will be chased down by terror. The decision to move the IDF base is one of cowardice. Are they going to move Sderot, Kfar Aza, Moshav Yesha and Ashkelon too?"

MK Aryeh Eldad (NU/NRP) said that "it seems that the IDF forgot that its duty is to protect civilians and not vice versa. He who evacuates IDF soldiers because of proximity to the enemy will eventually abandon the residents as well and betray his duty to protect the State of Israel."

MK Shai Hermesh (Kadima), a resident of Kfar Aza, said that "the decision by the IDF leadership to evacuate female and male non-combatant soldiers from the front to the rear is a blow to morale and weakens the ability of the residents who have been under terror attack for the last seven years." Hermesh added: "I expect the government to understand that time is running out, and it is time to act."

MK Otniel Schneller said he intended to raise the subject before the Knesset's Defense and Foreign Affairs Committee. "This is not the IDF," he said. "It is the raising of a white flag of surrender. It is feebleness from people and commanders who do not understand what an army is. If the Chief of Staff approves this, I will ask to be called up for reserve duty and protect the residents myself instead of the soldiers who are evacuated."

Dr. Gerald Finkelstein, who is leading a new archaeological dig in Jerusalem, claims to have discovered the very quarry which supplied stones used thousands of years ago to build Jerusalem's Western Wall, also known as the Kotel.

Pottery from the Herodian period through the destruction of the Second Temple was found at the excavation site. These finds, paired with the type of stone, further suggested the quarry's connection to the construction of the supporting walls surrounding the Temple Mount, including the Kotel.

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In the above video, Dr. Finkelstein expresses his excitement at this dig, his first time working on an archaeological site in Israel.

Different new and interesting Israeli inventions for helping preserve the environment were showcased at an international conference in Jerusalem on Monday. The International Environmental Conference addressed a range of subjects on the future of Israel and the environment.

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In the above video, Dr. Yossi Leshem, a conference organizer and leader at Israel's society for the protection of nature, explains that the goal of the conference was to bring the issue of environment protection to both policy makers and the general public. 

The end of the video features a young woman from the Society for the Protection of Nature in Israel displaying a small but significant invention enabling hikers to gather multiple plastic bottles thrown on hiking paths and conveniently bring them to a disposal point.