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Gaza militant rocket hits Israel, Israel responds with air strikes

A water tower is seen after local residents said it was damaged by an Israeli shell at Beit Hanoun in Gaza, following a rocket that landed in the Israeli town of Sderot

JERUSALEM (Reuters) – Palestinian militants in the Gaza Strip launched a rocket that landed in the Israeli border town of Sderot on Sunday and Israeli aircraft and tanks responded by shelling the Gaza town of Beit Hanoun, the army and police said.

The rocket caused no injuries or damage in Sderot, where it landed in a residential area, police said.

An Israeli shell during an initial retaliation damaged a Beit Hanoun water tower and there were no casualties, local residents said.

Multiple air strikes later in the evening hit at least 30 different sites in the Gaza Strip belonging to Hamas, the smaller Islamic Jihad and other militant groups and two people were lightly hurt, Gaza health officials said.

A music festival in Sderot attended by hundreds of Israelis was temporarily disrupted as people sought shelter, television footage showed.

The Israeli military said aircraft had attacked targets in the northern Gaza Strip and added that since the beginning of the year, 14 Gaza rockets had hit Israel.

Israeli army spokesman Lieutenant-Colonel Peter Lerner said in a statement that the military “remains committed to the stability of the region and operated in order to bring quiet to the people of southern Israel.”

“When terrorists in Hamas’ Gaza Strip, driven by a radical agenda based on hatred, attack people in the middle of the summer vacation, their intentions are clear – to inflict pain, cause fear and to terrorize,” Lerner said.

Hamas spokesman Sami Abu Zuhri said: “We hold (Israel) responsible for the escalation in the Gaza Strip and we stress that its aggression will not succeed in breaking the will of our people and dictate terms to the resistance.”

Hamas controls the Gaza Strip and has observed a de-facto ceasefire with Israel since a 2014 war but some small armed cells of Jihadist Salafis have defied the agreement and have continued to occasionally launch rockets at Israel.

Israel has held Hamas responsible for all attacks originating in the coastal enclave.

More than 2,100 Palestinians, mostly civilians, were killed during the 2014 Gaza conflict. Sixty-seven Israeli soldiers and six civilians in Israel were killed by rockets and attacks by Hamas and other militant groups.

Despite the ceasefire, Hamas has vowed to continue to dig tunnels intended to infiltrate Israel, and while Hamas leaders stress they do not seek an imminent war, they see tunnels as a strategic weapon in any future armed confrontation.

(Additional reporting by Nidal al-Mughrabi, Writing by Ori Lewis; Editing by Alexandra Hudson and Sandra Maler)

Israel accuses World Vision’s Gaza rep of funding Hamas

By Ori Lewis

ASHKELON, Israel (Reuters) – Israel accused U.S.-based Christian relief group World Vision’s Gaza representative on Thursday of funneling millions of dollars in aid money to Hamas, charges that the Islamist militant group denied and the charity voiced skepticism over.

Mohammad El Halabi, World Vision’s manager of operations in Gaza, was arrested by Israel on June 15 while crossing the border into the enclave, which is under the de facto rule of Hamas, a group on the Israeli and U.S. terrorism blacklists.

World Vision said it was “shocked” by Israel’s allegations and said in a statement that it had regular internal and independent audits and evaluations as well as a broad range of internal controls to ensure aid reached intended beneficiaries.

“Based on the information available to us at this time, we have no reason to believe that the allegations are true. We will carefully review any evidence presented to us and will take appropriate actions based on that evidence,” the statement said.

It was not immediately clear if Halabi had been assigned a lawyer or how he might plead in court once formally charged. Israel had previously maintained a gag order on the case.

Briefing reporters on Thursday, a senior Israeli security official said Halabi, who has run the group’s Gaza operations since 2010, had been under extended surveillance.

The official said Halabi, a Palestinian, had confessed to siphoning off some $7.2 million a year, about 60 percent of the World Vision’s Gaza funding, to pay Hamas fighters, buy arms, pay for its activities and build fortifications.

“Money was used to fund Hamas and pay armed wing fighters, and food and health packs intended for Gaza residents were also given to Hamas operatives, rather than to their intended recipients, the poor and meek of Gaza,” the official said.

The Israeli security official said some of the money Halabi was accused of taking had been used to buy arms for insurgents in Egypt’s Sinai peninsula, that also borders Israel, and that a Hamas military base was built with $80,000 of the funds.

Hamas spokesman Sami Abu Zuhri, speaking in Gaza, said the group had “no connection to (Halabi) and therefore, all Israeli accusations are void and aim to suppress our people”. Hamas also denies any links to Sinai insurgents.

(Additional reporting by Nidal al-Mughrabi in Gaza; Writing by Dan Williams and Ori Lewis; Editing by Louise Ireland)

U.S., Israel narrow differences for new talks on defense aid

Israeli Prime Minister Benjamin Netanyahu

By Patricia Zengerle and Dan Williams

WASHINGTON/JERUSALEM (Reuters) – The United States and Israel have narrowed their differences over what could be decisive negotiations this week to seal a multibillion-dollar military aid package for Washington’s top Middle East ally, officials said on Monday.

Raising hopes for removal of a key sticking point, Israel has signaled it may accept the Obama administration’s demand that U.S. military funds, until now spent partly on Israeli arms, will eventually be spent entirely on U.S.-made weapons, according to congressional sources.

It would mark a major concession by Israeli Prime Minister Benjamin Netanyahu after months of tense negotiations over the 10-year aid pact.

But Netanyahu, who has had a fraught relationship with President Barack Obama, has apparently decided it would be best to forge a deal with him rather than hoping for better terms from the next U.S. president, according to officials on both sides. Obama leaves office in January.

Differences on the package have underscored continuing friction over last year’s U.S.-led nuclear deal with Iran, Israel’s regional archfoe. The United States and Israel have also been at odds over the Palestinians. The State Department last week criticized Israel for planned Jewish settlement expansion on occupied land.

Netanyahu sent Jacob Nagel, acting head of Israel’s national security council, to Washington on Monday to lead three days of talks. A person briefed by Netanyahu said the prime minister expressed hope that Nagel would be able to “finalize” negotiations on a new memorandum of understanding and that it would mean increased funding.

A senior U.S. official reiterated the Obama administration’s pledge to sign a new MOU that would “constitute the largest single pledge of military assistance to any country in U.S. history.”

The current pact, signed in 2007 and due to expire in 2018, gave Israel around $30 billion in so-called foreign military financing.

U.S. negotiators are believed to have stuck to a previous offer of $3.5 billion to $3.7 billion annually for Israel under the new MOU, substantially less than the $4 billion a year Netanyahu has sought but still a substantial increase.

EASING OF DISAGREEMENT

A key disagreement has been over Washington’s insistence on ending a special arrangement that has allowed Israel to spend 26.3 percent of its U.S. defense aid on its own military industries rather than on American products.

Israeli officials argue that the provision, which is given to no other country receiving U.S. military assistance, was needed to maintain Israel’s “qualitative military edge” against sometimes hostile neighbors such as Iran, and that its removal would mean the loss of thousands of Israeli defense jobs.

But a congressional source briefed by the Obama administration said Israel had signaled its willingness to phase out the provision. The Israeli newspaper Yedioth Ahronoth said the White House was prepared to let Israel keep the arrangement for the first five years of the new MOU but it would be gradually phased out in the second five years, except for joint U.S.-Israeli military projects.

Another sticking point has been Washington’s desire to end a provision allowing Israel to spend around $400 million annually from the package on military fuels.

The congressional source said Nagel was expected to try to work out final details but not actually sign an agreement.

U.S. officials said progress was likely, but were reluctant to predict a breakthrough.

The Obama administration wants a new deal before the president leaves office. Republican critics accuse him of not being attentive enough to Israel’s security, which the White House strongly denies.

Netanyahu angered the White House in February when he suggested the agreement could wait for the next president.

But officials on both sides believe he prefers to get the deal before Obama leaves office. They see Netanyahu seeking to avoid uncertainties surrounding the policies of the next president, whether Democrat Hillary Clinton or Republican Donald Trump, and wanting to give Israel’s defense establishment the ability to plan ahead.

(Additional reporting and writing by Matt Spetalnick; Editing by Dan Grebler)

EU eyes Israeli technologies for spotting militants online

By Dan Williams

TEL AVIV (Reuters) – European powers are trying to develop better means for pre-emptively spotting “lone-wolf” militants from their online activities and are looking to Israeli-developed technologies, a senior EU security official said on Tuesday.

Last week’s truck rampage in France and Monday’s axe attack aboard a train in Germany have raised European concern about self-radicalized assailants who have little or no communications with militant groups that could be intercepted by spy agencies.

“How do you capture some signs of someone who has no contact with any organization, is just inspired and started expressing some kind of allegiance? I don’t know. It’s a challenge,” EU Counter-Terrorism Coordinator Gilles de Kerchove told Reuters on the sidelines of a intelligence conference in Tel Aviv.

Internet companies asked to monitor their own platforms’ content for material that might flag militants had begged off, De Kerchove said.

He said they had argued that the information was too massive to sift through and contextualize, unlike pedophile pornography, for which there were automatic detectors.

“So maybe a human’s intervention is needed. So you cannot just let the machine do it,” De Kerchove said. But he said he hoped “we will soon find ways to be much more automated” in sifting through social networks.

“That is why I am here,” he said of his visit to Israel. “We know Israel has developed a lot of capability in cyber.”

ADVANCE WARNING

Beset by Palestinian street attacks, often by young individuals using rudimentary weapons and without links to armed factions, Israeli security agencies that once focused on “meta data”, or information regarding suspects’ communications patterns, have refocused on social media in hope of gaining advance warnings from private posts.

Israeli officials do not disclose how far the technology has come, but private experts say the methods are enough to provide often basic alerts regarding potential attackers, then require follow-up investigation.

“Nine out of 10 times, the terrorist has contacts with others who provide support or inspiration, so meta data still applies,” said Haim Tomer, a former Mossad intelligence division chief turned security consultant.

When it comes to true lone wolves, even a valedictory Facebook message can often be picked up by Israel, he said.

“But in such cases, it would be a low-level ‘green alert’, meaning the person should be looked at further, whereas a ‘red alert’ would warrant instant action. That leaves the security services to decide how to handle matters,” Tomer said.

As De Kerchove was at pains to make clear to the conference, European standards of civil rights, such as privacy, make the introduction of intrusive intelligence-gathering technologies in the public sphere and aggressive police follow-ups difficult.

While Israel’s emergency laws give security services more leeway, its intelligence minister, Yisrael Katz, called for cooperation with Internet providers rather than state crackdowns. He cited, for example, the encryption provided by messaging platform WhatsApp which, he said, could be a new way for militants to communicate and evade detection.

“We will not block these services,” Katz told the conference. “What is needed is an international organization, preferably headed by the United States, where shared (security) concerns need to be defined, characterized.”

(Editing by Jeffrey Heller/Mark Heinrich)

As exports struggle, Israel’s economy faces slower growth

By Steven Scheer

JERUSALEM (Reuters) – For decades, Israel’s high growth was driven by exports of oranges, diamonds, pharmaceuticals and software, but the picture is changing due to weak global demand and a strong shekel.

Consumer spending is now a critical growth driver. Businesses fear factories and jobs are at risk if exports, which have declined 10 percentage points over the past decade, fall further.

“We are exporting 80 percent less than our peak” a decade ago, said Joseph Ben-Dor, chief executive of Ben-Dor Fruits & Nurseries on the Jordan River in northern Israel.

Ben-Dor, whose family started the business in 1888, said his main market is Europe, particularly Britain where his largest customers for plums and other fruits are Tesco, Marks & Spencer, Morrisons and Waitrose. He largely blames a strong shekel, rising water, labor and other costs, and government obstacles for lower sales abroad.

Diamond exports, 25-30 percent of Israel’s industrial exports, have slid 30 percent in the past few years, mainly on slower global demand, said Yoram Dvash, president of the Israel Diamond Exchange. Exports to China, a key market, have plunged 70 percent in the last 18 months.

Citing weak global growth that has hurt exports, Israel’s Finance Ministry on Wednesday lowered its economic growth forecast for 2016 to 2.5 percent from 2.8 percent and trimmed estimates through 2019.

The Bank of Israel last month cut its growth estimate from 2.8 percent to 2.4 percent for 2016 and 2.9 percent in 2017.

When exports are hot, Israel’s economy tends to grow between 4 and 5 percent a year. With flat or declining exports in 2014, 2015 and probably again this year, growth is closer to 2.5 percent, well below the average of 4.5 percent from 2004-2011.

“If the trend continues we can witness sustained private consumption growth but we will shift to a lower growth rate,” Nathan Sussman, head of research at the Bank of Israel, said. “Growth will likely be in the 2.5 to 3 percent range if it stays this way.”

With the population growing 2 percent a year, that amounts to per capita growth of just 0.5-1 percent.

NO MAGIC PILL

Ten years ago, net exports accounted for 41 percent of output. Now the ratio is 31 percent. While that tops the 13 percent in the United States and 27 percent for Europe, the decline has strained the economy.

“We need to target growth of 4 to 5 percent so if you want to reach that, you need to turn on the engine of exports,” said Shraga Brosh, president of Israel’s Manufacturers’ Association.

Brosh said the government needed to invest more in research and development and encourage small- and medium-sized factories to become more efficient through tax incentives.

Ohad Cohen, head of the Foreign Trade Administration in the Economy Ministry, said there was only so much the government could do. “We don’t have any magic pill,” he said.

Still, the ministry supports exporters with insurance guarantees and in opening new markets. In recent years, it has doubled the number of offices in Asia to 16. Asia now accounts for 22 percent of Israel’s exports, compared with 31 percent for Europe and 25 percent for the United States.

Israel plans to invest in penetrating markets in Africa and Latin America, Cohen said.

Exports excluding diamonds and start-ups are forecast to fall 1.5 percent this year after a similar decline in 2015. Much of the weakness has come from Europe, in part because the euro has lost 15 percent against the shekel since late 2014.

Another issue is that three companies – Intel, Israel Chemicals (ICL) and Teva Pharmaceutical Industries – control nearly half of industrial exports. For various reasons they have trimmed output.

Intel is shifting production to a new chip plant in Israel, while falling demand and prices for potash have weighed on ICL. Teva said its exports are “characterized with monthly and seasonal fluctuations” but are not falling on an annual basis.

Concerned by sluggish exports, the central bank continues to buy dollars to try to prevent further shekel strength. It has bought about $70 billion of foreign currency since 2008, but the shekel has not weakened enough to spur an export recovery.

(Editing by Janet Lawrence)

U.N. chief slams Israel over settlement plans in wake of Quartet report

UNITED NATIONS (Reuters) – U.N. chief Ban Ki-moon sharply criticized a decision by Israel to advance plans to build hundreds of units in the West Bank and East Jerusalem just days after world powers called on Israel to stop its settlement policy, his spokesman said on Tuesday.

“This raises legitimate questions about Israel’s long-term intentions, which are compounded by continuing statements of some Israeli ministers calling for the annexation of the West Bank,” Ban’s spokesman Stephane Dujarric said in a statement.

Ban was “deeply disappointed” that Israel’s announcement followed the release of a report on Friday by the “Quartet” sponsoring the stalled Middle East peace process – the United States, Russia, the European Union and the United Nations.

The long-awaited report said Israel should stop building settlements, denying Palestinian development and designating land for exclusive Israeli use that Palestinians seek for a future state.

The Palestinians want an independent state in the West Bank, Gaza and East Jerusalem, areas Israel captured in a 1967 war. The last round of peace talks broke down in April 2014 and Israeli-Palestinian violence has surged in recent months.

The Quartet report said at least 570,000 Israelis are living in the settlements.

Ban “reiterates that settlements are illegal under international law and urges the Government of Israel to halt and reverse such decisions in the interest of peace and a just final status agreement,” Dujarric said.

Diplomats said the Quartet report was not as hard-hitting as expected after Israeli Prime Minister Benjamin Netanyahu set out to ensure the document was softened.

(Reporting by Michelle Nichols; Editing by David Gregorio)

Gaza receives first Turkish aid shipment after Israel-Turkey deal

Palestinians check Turkish aid shipments upon arrival in the Gaza Strip at Kerem Shalom crossing between Israel and southern Gaza Strip

GAZA (Reuters) – Turkish aid shipments arrived in the Gaza Strip via Israel on Monday, a week after Israel and Turkey announced they would end a six-year rupture and normalize ties.

About 11,000 tonnes of cargo, including clothing, toys and medicines destined for the Palestinian coastal territory, were ferried to the Israeli port of Ashdod by a Turkish ship that docked on Sunday.

Under the supervision of the Turkish Red Crescent Society, the first of about 500 trucks carrying the aid entered the Gaza Strip, territory controlled by Hamas Islamists, through Israel’s Kerem Shalom crossing, witnesses said.

Relations between Israel and Turkey crumbled after Israeli marines stormed a Turkish ship in May 2010 challenging Israel’s naval blockade of the Gaza Strip and killed 10 Turkish activists during fighting on board.

Last week’s rare rapprochement in the divided Middle East was driven by the prospect of lucrative Mediterranean gas deals as well as mutual concern over growing security risks, and included an Israeli pledge to enable Turkey to send aid to Gaza.

“This is the first (aid) ship after the Turkish and the Israeli governments’ agreement,” said Kerem Kinik, president of the Turkish Red Crescent, who traveled to Gaza to supervise the distribution of the goods.

He said Turkey would provide “continuous, regular humanitarian assistance” for the territory.

Last week, some 3,400 trucks carrying 107,500 tonnes of goods, including medical supplies, electronic devices, consumer goods and construction material, entered the Gaza Strip via Israel, according to Israeli authorities.

Gaza merchants can import commercial goods from Israel and elsewhere but Israel restricts the entry into the territory of so-called dual-use items, saying they can be used to make weapons and build fortifications.

Egypt, which is at odds with Hamas, keeps its border with Gaza largely closed.

(Reporting by Nidal Almughrabi; Writing by Jeffrey Heller; Editing by Janet Lawrence)

Israel should stop settlements, Palestinians must stop violence; Quartet report

Palestinian schoolgirls walk with a donkey as the West Bank Jewish settlement of Maale Adumim is seen in the background

By Michelle Nichols and Louis Charbonneau

UNITED NATIONS (Reuters) – Israel should stop building settlements, denying Palestinian development and designating land for exclusive Israeli use that Palestinians seek for a future state, the Middle East peace “Quartet” recommended on Friday in a an eagerly awaited report.

The report by the Quartet entities sponsoring the stalled peace process – the United States, Russia, the European Union and the United Nations – said the Israeli policy “is steadily eroding the viability of the two-state solution.”

“This raises legitimate questions about Israel’s long-term intentions, which are compounded by the statements of some Israeli ministers that there should never be a Palestinian state,” according to the report.

The day before Israeli elections in March 2015, Prime Minister Benjamin Netanyahu said there would never be a Palestinian state on his watch, only to reverse himself days later and recommit to the objective of a two-state solution.

Diplomatic sources said the report carries significant political weight as it has the backing of close Israeli ally the United States, which has struggled to revive the peace talks amid tensions between Netanyahu and U.S. President Barack Obama.

Relations between the rightist Israeli leader and the Democratic president have yet to recover from their feud over last year’s U.S.-led international nuclear deal with Israel’s foe Iran.

The Quartet report said Israel had taken for its exclusive use some 70 percent of Area C, which makes up 60 percent of the occupied West Bank and includes the majority of agricultural lands, natural resources and land reserves.

“The transfer of greater powers and responsibilities to Palestinian civil authority in Area C, contemplated by commitments in prior agreements, has effectively been stopped and in some ways reversed and should be resumed to advance the two state solution and prevent a one state reality from taking hold,” the report said.

PALESTINIAN LEADERS SHOULD CONDEMN TERRORISM

The report said at least 570,000 Israelis are living in the settlements, which most countries deem illegal.

“Israel should cease the policy of settlement construction and expansion, designating land for exclusive Israeli use and denying Palestinian development,” the report recommends.

It said only one permit for Palestinian housing construction in Area C was reportedly approved in 2014, while there did not appear to have been any approved in 2015.

The Palestinians want an independent state in the West Bank, Gaza and East Jerusalem – areas Israel captured in a 1967 war. The last round of peace talks broke down in April 2014 and Israeli-Palestinian violence has surged in recent months.

On Friday, a Palestinian woman tried to knife an Israeli police trooper in the West Bank city of Hebron and was shot dead, police said. Since October, Palestinian street attacks that have killed 33 Israelis and two visiting Americans. Israel has killed at least 201 Palestinians, 136 of whom it said were assailants. Others were killed during clashes and protests.

“Regrettably … Palestinian leaders have not consistently and clearly condemned specific terrorist attacks,” the report said.

“The Palestinian Authority should act decisively and take all steps within its capacity to cease incitement to violence and strengthen ongoing efforts to combat terrorism, including by clearly condemning all acts of terrorism,” the Quartet report said.

The Palestinian Authority headed by President Mahmoud Abbas is based in the West Bank, while Islamist group Hamas has been in control of Gaza since 2007. The Quartet said Gaza and the West Bank “should be reunified under a single, legitimate and democratic Palestinian authority.”

U.N. Middle East envoy Nickolay Mladenov briefed the U.N. Security Council on Thursday on the Quartet report and said it would be up to the council and the international community to use the report to decide the way forward.

(Additional reporting by Dan Williams in Jerusalem; Editing by Cynthia Osterman and Bill Trott)

Israel to cut Palestinian tax transfers after West Bank killing

People mourn during the funeral of Israeli girl, Hallel Yaffa Ariel, 13, who was killed in a Palestinian stabbing attack in her home in the West Bank Jewish settlement of Kiryat Arba, at a cemetery in the West Bank city of Hebron

JERUSALEM (Reuters) – Israel will reduce monthly transfers of tax collected on behalf of the Palestinians in what aides to Prime Minister Benjamin Netanyahu described as a response to the killing of two Israelis in Palestinian attacks in the occupied West Bank this week.

The amount deducted from about $130 million sent to the Palestinian Authority each month will be equal to stipends it pays militants in Israeli prisons and the families of jailed or slain militants, Netanyahu’s office said on Friday.

“Incitement and payouts to terrorists and their relatives constitute an incentive to murder,” it said in a statement.

Palestinian gunmen killed an Israeli and wounded three others in an attack on a family car in the West Bank on Friday, the Israeli army and medics said. On Thursday, a Palestinian stabbed a 13-year-old girl to death in a West Bank settlement.

(Writing by Dan Williams; Editing by Louise Ireland)

Israeli teenager stabbed in West Bank a U.S. Citizen

sraeli soldiers gather near the scene where a Palestinian fatally stabbed a 13-year-old girl inside her home, at the entrance to

WASHINGTON (Reuters) – A 13-year-old Israeli girl fatally stabbed in her bedroom in the occupied West Bank on Thursday was a U.S. citizen, the State Department said.

The girl, Hallel Yaffa Ariel, was attacked after an assailant climbed a security fence and entered a home in the settlement of Kiryat Arba.

“We have now confirmed that she is a U.S. citizen,” State Department spokesman John Kirby said at a news briefing.

(Reporting by Lesley Wroughton; Writing by Doina Chiacu; Editing by Alan Crosby)

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