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The U.S. stock market the Dow Jones Industrial Average closed at 10,640.83 up 1.8% from the previous week's close of 10,449.14. The NASDAQ closed at 2,156.78, up 2.1% from the close of 2112.18 the Friday before. The yield on the ten-year U.S. Treasury bond was 4.17% on close of Friday, up seven basis points from 4.10 the week before. The U.S. dollar closed at 0.8308 euros on Friday, down 0.6% compared to 0.8357 the previous Friday. That puts the euro at 1.2036 dollars, compared to 1.1966 the week before. Oil closed at $58.09 a barrel, down 1.6% from the previous week's $59.04. In terms of euros a barrel of oil would cost 48.26 euros, down 2.2% from last Friday's close of 49.34. Gold closed at 421.70 dollars an ounce down 0.8% from $424.90 on the previous Friday. The gold/oil ratio (how many barrels of oil an ounce of gold would buy) closed at 7.26, up 0.8% from last week's 7.20.

The U.S. stock market was up again on positive sentiment in the United States (Note to our non-United States readers: What can I say? We're completely deluded optimists.):

U.S. Univ. of Michigan Sentiment Index Rose to 96.5 in July

July 15 (Bloomberg) -- U.S. consumer sentiment unexpectedly rose in July to the highest this year as sustained job growth and rising home values encouraged Americans, a private report showed.

The University of Michigan's preliminary consumer sentiment index for the month rose to 96.5 from 96 in June, to produce the year's first consecutive gain. A reading of 95 was forecast for the month, according to the median estimate in a Bloomberg News survey of economists.

Consumers have become accustomed to rising gasoline prices, which reached a record last week, economists said. They've also become adept at tapping into home equity gains, which may support spending and economic growth in the coming months.

"The recent uptick in gas prices hadn't been steep enough or sustained long enough to spook consumers, who've grown accustomed to prices going up and coming down," David Huether, director of economic policy at the National Association of Manufacturers in Washington, said before the report.

The 55 forecasts in the Bloomberg News survey ranged from a high of 100.2 to a low of 91. The preliminary sentiment index is based on a phone survey of about 300 households. The final report for the month, due July 29, will reflect about 500 responses.

The current conditions index, which reflects Americans' perception of their financial situation and whether it's a good time to buy big-ticket items, fell to 112 in July from 113.2 in June. The expectations index, based on optimism about the next one to five years, increased to 86.6 from 85.

"A lot of what we've seen in consumer attitude surveys this year has been dictated by energy prices, specifically gas prices at the pump which people see on a daily basis," Glenn Haberbush, an economist at Mizuho Securities USA Inc. in Hoboken, New Jersey, said before the report. Still, "it's a 'watch what I do, not what I say' kind of scenario because people are spending even as they're complaining."

Energy Prices

The average price for a gallon of gasoline at the pump rose to a record $2.33 for the week ended July 11, compared with an average of $2.16 for June and $1.92 for the same week a year ago, according to the Energy Department. Oil prices reached a record $61.20 a barrel on the New York Mercantile Exchange July 7 on concerns that Hurricane Dennis might interrupt production in the Gulf of Mexico.

According to government reports issued the past two days, manufacturing in is improving and retail sales are on the increase. The data suggest inflation fears are receding and economic growth is strengthening.

An index of manufacturing in New York state, which provides an early clue to U.S. factory activity, rose to 23.9 in July from 10.5 last month, the Federal Reserve Bank of New York said today. In June, U.S. industrial production increased 0.9 percent, the most since February 2004, and U.S. wholesale prices were unchanged, other government reports showed today.

Inflation Tame

Prices U.S. consumers paid for goods and services were unchanged in June after declining 0.1 percent in May, the government said yesterday. U.S. retail sales surged 1.7 percent in June after decreasing 0.3 percent the prior month.

Hurricane Dennis, which struck the Florida Panhandle July 10, helped spur sales of food and emergency supplies in the southeastern United States, according to Wal-Mart Stores Inc. On July 9, the world's largest retailer said sales at its U.S. stores which had been open at least a year were rising within this month's forecast range of 3 percent to 5 percent.

Job growth and higher wages are encouraging spending, said David Abella, an analyst with Rochdale Investment Management in New York.

Job creation has averaged 181,000 a month this year, compared with 182,830 in 2004, which was the most since 1999. The unemployment rate fell to 5.1 percent last month, the lowest since September 2001, according to the Labor Department.

Consumer Spending

Consumer spending, which accounts for about 70 percent of the economy, will probably rise at a 3.2 percent annual pace this quarter after increasing 3.6 percent in the first three months of the year, according to the Bloomberg monthly economist survey published July 12.

"In spite of the spike in gas prices, consumer spending is holding up very well," Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, said before the report. "We know the job picture is better and we know stock price performance has been better and we know they both go into the confidence stew."

Lower mortgage rates have also buoyed consumer attitudes, allowing many homeowners to refinance at lower borrowing costs and tap equity from increased home values, Mayland said.

Thirty-year fixed mortgage rates remain near the 14-month low of 5.53 percent reached in the the week ending July 1, according to Freddie Mac, the second-biggest purchaser of U.S. mortgages. The Standard and Poor's 500 Index reached 1223.29 July 13, its highest level since March 7.

"The shock has kind of worn off and people are finding that they can afford these oil and gas prices," Nariman Behravesh, chief economist at Global Insight Inc., in Lexington, Massachusetts, said before the report. "Consumers are feeling pretty good and the numbers suggest they're spending at a decent clip."

During this politically tricky time in the United States, the ruling class is doing everything it can to keep the economy expanding, even if it means a worse crash later. For example, nothing has been done to pull back the reckless lending into the housing bubble:

A Hands-Off Policy on Mortgage Loans

By Edmund L. Andrews

WASHINGTON, July 14 - For two months now, federal banking regulators have signaled their discomfort about the explosive rise in risky mortgage loans.

First they issued new "guidance" to banks about home-equity loans, warning against letting homeowners borrow too much against their houses. Then they expressed worry about the surge in no-money-down mortgages, interest-only loans and "liar's loans" that require no proof of a borrower's income.

The impact so far? Almost nil.

"It's as easy to get these loans now as it was two months ago," said Michael Menatian, president of Sanborn Mortgage, a mortgage broker in West Hartford, Conn. "If anything, people are offering them even more than before."

The reason is that federal banking regulators, from the Federal Reserve to the Office of the Comptroller of the Currency, have been reluctant to back up their words with specific actions. For even as they urge caution, officials here are loath to stand in the way of new methods of extending credit.

"We don't want to stifle financial innovation," said Steve Fritts, associate director for risk management policy at the Federal Deposit Insurance Corporation. "We have the most vibrant housing and housing-finance market in the world, and there is a lot of innovation. Normally, we think that if consumers have a lot of choice, that's a good thing."

Economically, the United States is now enjoying the benefits of massive war spending and the attendant deficit spending. This will always provide a short term stimulus. We should keep in mind the human cost as well as the long term risks, particularly if the war is a losing one. Here is Norman Solomon on the blood-soaked nature of U.S. economic growth:

Help the Economy: Invest Your Son
War and Venture Capitalism

By Norman Solomon

During the Vietnam War, one of the peace movement's more sardonic slogans was: "War is good business. Invest your son."

In recent years, some eminent pundits and top government officials have become brazen about praising war as a good investment.

Thomas Friedman's 1999 book "The Lexus and the Olive Tree" summed up a key function of the USA's high-tech arsenal. "The hidden hand of the market will never work without a hidden fist," he wrote. "McDonald's cannot flourish without McDonnell Douglas, the designer of the U.S. Air Force F-15. And the hidden fist that keeps the world safe for Silicon Valley's technologies to flourish is called the U.S. Army, Air Force, Navy and Marine Corps."

On Sept. 12, 2003, Secretary of State Colin Powell spoke this way as he defended the U.S. military occupation of Iraq: "Since the United States and its coalition partners have invested a great deal of political capital, as well as financial resources, as well as the lives of our young men and women -- and we have a large force there now -- we can't be expected to suddenly just step aside." He was voicing the terminology and logic of a major capitalist investor.

And so, it was fitting when the New York Times reported days ago that Powell will soon be (in the words of the headline) "Taking a Role in Venture Capitalism." The article explained that Powell is becoming a partner in Kleiner Perkins Caufield & Byers, a renowned Silicon Valley venture firm: "Mr. Powell acknowledged in an interview Tuesday that he has had any number of tempting job offers since leaving the State Department in January, but that the chance to work as a venture capitalist at Kleiner Perkins seemed too enticing to turn down."

Writ large, the balance-sheet outlook of venture capitalism is being widely applied to the current war in Iraq -- even while defenders of the war are apt to indignantly reject any claim that it's driven by zeal for massive profits. But let's take the corporate firms at their own words.

Last year, I went through the latest annual reports from some American firms with Pentagon contracts. Those reports acknowledged, as a matter of fact, the basic corporate reliance on the warfare state.

Orbit International Corp., a small business making high-tech products for use by the U.S. Navy, Air Force, Army, and Marines, had increased its net sales by nearly $2.4 million during the previous two years, to about $17.1 million -- and the war future was bright. "Looking ahead," CEO Dennis Sunshine reported, "Orbit's Electronics and Power Unit Segments expect to continue to benefit from the expanding military/defense and homeland security marketplace." In its yearly report to federal regulators, Orbit International acknowledged: "We are heavily dependent upon military spending as a source of revenues and income. Accordingly, any substantial future reductions in overall military spending by the U.S. government could have a material adverse effect on our sales and earnings."

A much larger corporation, Engineered Support Systems, Inc., had quadrupled its net revenues between 1999 and 2003, when they reached $572.7 million. For the report covering 2003, the firm's top officers signed a statement that declared: "As we have always said, rapid deployment of our armed forces drives our business." The company's president, Jerry Potthoff, assured investors: "Our nation's military is deployed in over 130 countries, so our products and personnel are deployed, as well. As long as America remains the world's policeman, our products and services will help them complete their missions."

The gigantic Northrop Grumman firm, while noting that its revenues totaled $26.2 billion in 2003, boasted: "In terms of the portfolio, Northrop Grumman is situated in the sweet spot' of U.S. defense and national security spending."

War. How sweet it can be.

This excerpt is from Norman Solomon's new book War Made Easy: How Presidents and Pundits Keep Spinning Us to Death, published in July 2005. For more information, go to: www.WarMadeEasy.com

Again, the economic benefits of a Spartan-like military state can continue only if the wars are successful. Military spending on losing efforts can only hasten sharp economic decline. And the resistance to the American Empire, in Iraq, in Latin America, in the statements of the leaders of China and Russia, do not bode well for continued expansion. The wishful thinking of the powerful can make it easy to overlook the beginning of the end of a system of exploitation. That end will often grow out of the areas that the dominant actor cannot comprehend. What is the one thing the corporations that embody late capitalism cannot understand? Empathy. They are psychopathic by nature and the psychopath cannot understand empathy and conscience. Here is Subcomandante Marcos of the remarkable Zapatista Movement describing the beginnings of their uprising:

And then our small history was that we grew tired of exploitation by the powerful, and then we organized in order to defend ourselves and to fight for justice. In the beginning there were not many of us, just a few, going this way and that, talking with and listening to other people like us. We did that for many years, and we did it in secret, without making a stir. In other words, we joined forces in silence. We remained like that for about 10 years, and then we had grown, and then we were many thousands. We trained ourselves quite well in politics and weapons, and, suddenly, when the rich were throwing their New Year's Eve parties, we fell upon their cities and just took them over. And we left a message to everyone that here we are, that they have to take notice of us. And then the rich took off and sent their great armies to do away with us, just like they always do when the exploited rebel - they order them all to be done away with. But we were not done away with at all, because we had prepared ourselves quite well prior to the war, and we made ourselves strong in our mountains. And there were the armies, looking for us and throwing their bombs and bullets at us, and then they were making plans to kill off all the indigenous at one time, because they did not know who was a zapatista and who was not. And we were running and fighting, fighting and running, just like our ancestors had done. Without giving up, without surrendering, without being defeated.

What the Zapatistas in Mexico, along with the Bolivian indigenous rebels and the Chavistas in Venezuela, are attacking is the heart of the system of capitalist exploitation: the alliance of international capital with local neo-feudal exploiters. But as important as the "attack" is their building of alternate systems of social welfare, their conceiving of alternate systems of economy, and even alternate systems of relating to other people globally. Here is Subcomandante Marcos again, describing the disillusionment that followed after the Mexican government decided not to honor its agreements with the Zapatista movement:

And the first thing we saw was that our heart was not the same as before, when we began our struggle. It was larger, because now we had touched the hearts of many good people. And we also saw that our heart was more hurt, it was more wounded. And it was not wounded by the deceits of the bad governments, but because, when we touched the hearts of others, we also touched their sorrows. It was as if we were seeing ourselves in a mirror.

What this indigenous movement saw was the similar suffering in communities around the world: a variety of different groups sharing the status of capitalist victims, of sufferers. As Bob Marley sang in "Babylon System:"

Babylon system is the vampire.
Sucking the children day by day.
Babylon system is the vampire,
Sucking the blood of the sufferers.
Building church and university.
Deceiving the people continually.
Me say them graduating thieves and murderers.
Look out now.
Sucking the blood of the sufferers.

Tell the children the truth.
Tell the children the truth.
Tell the children the truth right now.
Come on and tell the children the truth.

'Cause we've been trodding on the winepress much too long.
Got to rebel, got to rebel now.
We've been taken for granted,
Much too long. Rebel.

Here is the Zapatista take on capitalism and neoliberalism:

Now we are going to explain to you how we, the zapatistas, see what is going on in the world. We see that capitalism is the strongest right now. Capitalism is a social system, a way in which a society goes about organizing things and people, and who has and who has not, and who gives orders and who obeys. In capitalism, there are some people who have money, or capital, and factories and stores and fields and many things, and there are others who have nothing but their strength and knowledge in order to work. In capitalism, those who have money and things give the orders, and those who only have their ability to work obey.

Then capitalism means that there a few who have great wealth, but they did not win a prize, or find a treasure, or inherited from a parent. They obtained that wealth, rather, by exploiting the work of the many. So capitalism is based on the exploitation of the workers, which means they exploit the workers and take out all the profits they can. This is done unjustly, because they do not pay the worker what his work is worth. Instead they give him a salary that barely allows him to eat a little and to rest for a bit, and the next day he goes back to work in exploitation, whether in the countryside or in the city.

And capitalism also makes its wealth from plunder, or theft, because they take what they want from others, land, for example, and natural resources. So capitalism is a system where the robbers are free and they are admired and used as examples.

And, in addition to exploiting and plundering, capitalism represses because it imprisons and kills those who rebel against injustice.

Capitalism is most interested in merchandise, because when it is bought or sold, profits are made. And then capitalism turns everything into merchandise, it makes merchandise of people, of nature, of culture, of history, of conscience. According to capitalism, everything must be able to be bought and sold. And it hides everything behind the merchandise, so we don't see the exploitation that exists. And then the merchandise is bought and sold in a market. And the market, in addition to being used for buying and selling, is also used to hide the exploitation of the workers. In the market, for example, we see coffee in its little package or its pretty little jar, but we do not see the campesino who suffered in order to harvest the coffee, and we do not see the coyote who paid him so cheaply for his work, and we do not see the workers in the large company working their hearts out to package the coffee. Or we see an appliance for listening to music like cumbias, rancheras or corridos, or whatever, and we see that it is very good because it has a good sound, but we do not see the worker in the maquiladora who struggled for many hours, putting the cables and the parts of the appliance together, and they barely paid her a pittance of money, and she lives far away from work and spends a lot on the trip, and, in addition, she runs the risk of being kidnapped, raped and killed as happens in Ciudad Juárez in Mexico.

So we see merchandise in the market, but we do not see the exploitation with which it was made. And then capitalism needs many markets...or a very large market, a world market.

And so the capitalism of today is not the same as before, when the rich were content with exploiting the workers in their own countries, but now they are on a path which is called Neoliberal Globalization. This globalization means that they no longer control the workers in one or several countries, but the capitalists are trying to dominate everything all over the world. And the world, or Planet Earth, is also called the "globe", and that is why they say "globalization," or the entire world.

And neoliberalism is the idea that capitalism is free to dominate the entire world, and so tough, you have to resign yourself and conform and not make a fuss, in other words, not rebel. So neoliberalism is like the theory, the plan, of capitalist globalization. And neoliberalism has its economic, political, military and cultural plans. All of those plans have to do with dominating everyone, and they repress or separate anyone who doesn't obey so that his rebellious ideas aren't passed on to others.

Then, in neoliberal globalization, the great capitalists who live in the countries which are powerful, like the United States, want the entire world to be made into a big business where merchandise is produced like a great market. A world market for buying and selling the entire world and for hiding all the exploitation from the world. Then the global capitalists insert themselves everywhere, in all the countries, in order to do their big business, their great exploitation. Then they respect nothing, and they meddle wherever they wish. As if they were conquering other countries. That is why we zapatistas say that neoliberal globalization is a war of conquest of the entire world, a world war, a war being waged by capitalism for global domination. Sometimes that conquest is by armies who invade a country and conquer it by force. But sometimes it is with the economy, in other words, the big capitalists put their money into another country or they lend it money, but on the condition that they obey what they tell them to do. And they also insert their ideas, with the capitalist culture which is the culture of merchandise, of profits, of the market.

Then the one which wages the conquest, capitalism, does as it wants, it destroys and changes what it does not like and eliminates what gets in its way. For example, those who do not produce nor buy nor sell modern merchandise get in their way, or those who rebel against that order. And they despise those who are of no use to them. That is why the indigenous get in the way of neoliberal capitalism, and that is why they despise them and want to eliminate them. And neoliberal capitalism also gets rid of the laws which do not allow them to exploit and to have a lot of profit. They demand that everything can be bought and sold, and, since capitalism has all the money, it buys everything. Capitalism destroys the countries it conquers with neoliberal globalization, but it also wants to adapt everything, to make it over again, but in its own way, a way which benefits capitalism and which doesn't allow anything to get in its way. Then neoliberal globalization, capitalism, destroys what exists in these countries, it destroys their culture, their language, their economic system, their political system, and it also destroys the ways in which those who live in that country relate to each other. So everything that makes a country a country is left destroyed.

Then neoliberal globalization wants to destroy the nations of the world so that only one Nation or country remains, the country of money, of capital. And capitalism wants everything to be as it wants, in its own way, and it doesn't like what is different, and it persecutes it and attacks it, or puts it off in a corner and acts as if it doesn't exist.

Then, in short, the capitalism of global neoliberalism is based on exploitation, plunder, contempt and repression of those who refuse. The same as before, but now globalized, worldwide.

But it is not so easy for neoliberal globalization, because the exploited of each country become discontented, and they will not say well, too bad, instead they rebel. And those who remain and who are in the way resist, and they don't allow themselves to be eliminated. And that is why we see, all over the world, those who are being screwed over making resistances, not putting up with it, in other words, they rebel, and not just in one country but wherever they abound. And so, as there is a neoliberal globalization, there is a globalization of rebellion.

And it is not just the workers of the countryside and of the city who appear in this globalization of rebellion, but others also appear who are much persecuted and despised for the same reason, for not letting themselves be dominated, like women, young people, the indigenous, homosexuals, lesbians, transsexual persons, migrants and many other groups who exist all over the world but who we do not see until they shout ya basta of being despised, and they raise up, and then we see them, we hear them, and we learn from them.

And then we see that all those groups of people are fighting against neoliberalism, against the capitalist globalization plan, and they are struggling for humanity.

And we are astonished when we see the stupidity of the neoliberals who want to destroy all humanity with their wars and exploitations, but it also makes us quite happy to see resistances and rebellions appearing everywhere, such as ours, which is a bit small, but here we are. And we see this all over the world, and now our heart learns that we are not alone.

Much of this critique of neoliberal capitalism has been said before. But notice what is new here: the explicit emotional appeal of empathy and community. That can be a powerful weapon against a system that makes everyone alone, isolated and powerless, a system incapable of empathy or human feeling.

What we want in the world is to tell all of those who are resisting and fighting in their own ways and in their own countries, that you are not alone, that we, the zapatistas, even though we are very small, are supporting you, and we are going to look at how to help you in your struggles and to speak to you in order to learn, because what we have, in fact, learned is to learn.

And we want to tell the Latin American peoples that we are proud to be a part of you, even if it is a small part. We remember quite well how the continent was also illuminated some years ago, and a light was called Che Guevara, as it had previously been called Bolivar, because sometimes the people take up a name in order to say they are taking up a flag.

And we want to tell the people of Cuba, who have now been on their path of resistance for many years, that you are not alone, and we do not agree with the blockade they are imposing, and we are going to see how to send you something, even if it is maize, for your resistance. And we want to tell the North American people that we know that the bad governments which you have and which spread harm throughout the world is one thing - and those North Americans who struggle in their country, and who are in solidarity with the struggles of other countries, are a very different thing. And we want to tell the Mapuche brothers and sisters in Chile that we are watching and learning from your struggles. And to the Venezuelans, we see how well you are defending your sovereignty, your nation's right to decide where it is going. And to the indigenous brothers and sisters of Ecuador and Bolivia, we say you are giving a good lesson in history to all of Latin America, because now you are indeed putting a halt to neoliberal globalization. And to the piqueteros and to the young people of Argentina, we want to tell you that, that we love you. And to those in Uruguay who want a better country, we admire you. And to those who are sin tierra in Brazil, that we respect you. And to all the young people of Latin America, that what you are doing is good, and you give us great hope.

And we want to tell the brothers and sisters of Social Europe, that which is dignified and rebel, that you are not alone. That your great movements against the neoliberal wars bring us joy. That we are attentively watching your forms of organization and your methods of struggle so that we can perhaps learn something. That we are considering how we can help you in your struggles, and we are not going to send euro because then they will be devalued because of the European Union mess. But perhaps we will send you crafts and coffee so you can market them and help you some in the tasks of your struggle. And perhaps we might also send you some pozol, which gives much strength in the resistance, but who knows if we will send it to you, because pozol is more our way, and what if it were to hurt your bellies and weaken your struggles and the neoliberals defeat you.

And we want to tell the brothers and sisters of Africa, Asia and Oceania that we know that you are fighting also, and we want to learn more of your ideas and practices.

And we want to tell the world that we want to make you large, so large that all those worlds will fit, those worlds which are resisting because they want to destroy the neoliberals and because they simply cannot stop fighting for humanity.

ISRAEL IS SET to evacuate its settlements from the Gaza Strip in mid-August. Until recently, the right-wing opponents of disengagement were making inroads. According to a survey by Yediot Aharonot, the proportion of the plan’s supporters had declined from 64% in February to 53% in early June. Three weeks later the trend reversed. Support shot back to 62%.

What happened was this: A cabal of young Kahanists had descended on Gaza from illegal West Bank outposts, setting up in an abandoned hotel, which they dubbed “the Song of the Sea.” They sat undisturbed for a month, writing obscene graffiti about Muhammad to provoke the nearby Arabs. They were determined, they said, to stay in Gaza until the cancellation of disengagement or death. Pundits trembled at the prospect of civil war.

The turning point came on a day when other opponents of disengagement blocked the country’s highways. The Kahanists had a brawl with the Arabs they had managed to provoke. At zero range they stoned – on camera –a young Palestinian who had already been knocked unconscious. The public backed away in revulsion. Feeling new wind in his sails, PM Ariel Sharon took action the next morning: the army surrounded the “Song of the Sea.”

The rest was anticlimax. Finding no support from their settler colleagues, the Kahanists turned in their weapons. Then elite army units entered the hotel and carried them to buses. No Masada. The threat of civil war evaporated. De-gunned, the settlers turned to sheep.

On the following day (July 1), in Yediot Aharonot, Gideon Maron and Oded Shalom wrote: “The right-wing extremists who barricaded themselves in Gush Katif could have been reined in a month ago. The army knew this but turned a blind eye, acting only yesterday, after blood was spilled.”

The month-long wait served to build up the drama, which Sharon needs. In order to serve his long-range policy aim, disengagement must take on mythic proportions. The greater the resistance against it, the more impossible it will seem to follow it with any Act II. That’s why he doesn’t do what Charles De Gaulle did with the French settlers in Algeria, fixing a date to pull out the army and saying that any settler who wants to remain in Gaza may apply to the Palestinian Authority. Rather, he needs the brouhaha as a doorstop: ‘This far we shall go, no farther. We can’t. Look how traumatic it is! Even this much has torn us apart!’

The financial aspect reinforces our suspicion. Dan Ben David, a lecturer on Public Economics at Tel Aviv University, has written that the purely civilian costs of the disengagement plan amount to 5.5 billion shekels, or an average of $611,000 per family. The 7000 Gaza settlers are 3% of the total settler population (not including occupied Jerusalem). At sums like this, how could the State afford additional traumas? Never.

SHARON'S present deeds are designed to improve his chances in the next round of elections. With 1.5 million fewer Palestinians under Israel’s responsibility, and as the only Israeli leader capable of evacuating settlers, he can offer his candidacy for the Nobel Prize. At the same time he can posture as the champion of the right wing, the man who saved the important West Bank settlements from the threat of dismantlement.

But there is also a new round of fighting at the door. The political situation is clearer now – and worse for the Palestinians – than during the Oslo years. Then they signed an agreement that was open-ended, assuring them nothing. The accord was full of holes that each side could fill as it wished. Israel could claim that it had not yielded on the issues of settlements, Jerusalem or the right of return. The Palestinians could claim the opposite. It took each seven years to understand where the other side stood. Even now the Oslo agreement is obscure enough to inspire the most varied interpretations. The Disengagement Plan, on the contrary, leaves no room for doubt: Sharon repeatedly brandishes the promise he got from US President G. W. Bush: that the major settlement blocs are off the agenda. Thus he advances toward his real program: to separate Gaza from the West Bank.

The left-wing parties in the Knesset drift, meanwhile, toward oblivion. This applies both to Meretz-Yahad, which gives Sharon a parliamentary umbrella from outside his government, and also to Labor, which is inside. Professor Shlomo Ben Ami, who was part of the Israeli team at Camp David in July 2000, criticizes the Disengagement Plan as a patchwork leading nowhere: “Its backers don’t see it as a component in a broader plan for a political arrangement that will bring Israel to permanent recognized borders. In the final analysis, two senior politicians in Israel today, Ariel Sharon and Shimon Peres, are partners in the concept that Israel does not need to advance toward a permanent arrangement and an end to the conflict.” (Haaretz June 30.)

Laborites like to boast that Sharon is implementing their platform, but that is at best an illusion, at worst sheer fraud. Labor is merely preparing its seats in the next government, which it hopes Sharon will assemble – and not Binyamin Netanyahu. It has backed away from the challenge of building an alternative to the Likud.

THE OBSESSIVE preoccupation with the misery of the settler-evacuees, and with the difficulties faced by Sharon, conceals what is happening in the background. After seven months as PA President, Abu Mazen has reached the end of his rope. He never quite understood that disengagement curtails his days. After Israel has left Gaza, it won’t need him anymore. Many, it is true, still wag their fingers at him, complaining that he ought to collect the weapons of Hamas, but this is a smoke screen. Since the start of the second Intifada, Israel has known that it must not place its security in the hands of a Palestinian authority. Where the border between Gaza and Egypt is concerned, for instance, it wants Egypt to police it, not the PA, and it is now engaged in the final stages of a deal.

The army waits eagerly for the first Kassam rocket that will fall after disengagement. It will then demonstrate that by getting rid of the settlements, it has improved its military position. It will be able to invade the Strip by land, sea and air without having first to take account of a vulnerable Jewish population there.

It is not just Israel, however, that will undermine Abu Mazen. Hamas has rejected his call to join his government. Thus it expressed its annoyance with him for delaying the parliamentary elections. Hamas understands why Abu Mazen wants it inside: so that he can avoid the moment of truth at the polling booth. Hamas also knows where its power resides. It is waiting for disengagement so that it can pluck the fruits by taking command of the Strip. There is a whiff of historical dialectic in this: Sharon, it would seem, is improving the position of Hamas!

The proponents of disengagement are wrong. The US is wrong in telling Abu Mazen to refrain from making conditions and simply allow Israel to leave. Abu Mazen is wrong to sit on his hands while Israel secures the tools it needs to continue ruling the West Bank. And finally, Sharon and his supporters are wrong. Their Disengagement Plan contains the seed of the third Intifada. The Palestinian people will not accept the new reality imposed by Israel: the imprisonment of millions, without means of livelihood, behind a fictive border of separation enhanced by actual fences and walls. The flames of the third Intifada will overcome all fences and walls.

We feel that it is urgent and necessary to raise the alarm regarding what may come during and after evacuation of Jewish settlers from the Gaza Strip occupied by Israel in 1967, in the event that the evacuation is implemented.

We held back on getting this statement published and circulated, seeking additional feedback from our peers. The publication in Ha'aretz (22 June 2005) quoting statements by General (Reserves) Eival Giladi, the head of the Coordination and Strategy team of the Prime Minister's Office, motivated us not to delay publication and circulation any further. Confirming our worst fears, General (Res.) Eival Giladi went on record in print and on television to the effect that "Israel will act in a very resolute manner in order to prevent terror attacks and [militant] fire while the disengagement is being implemented" and that "If pinpoint response proves insufficient, we may have to use weaponry that causes major collateral damage, including helicopters and planes, with mounting danger to surrounding people."

We believe that one primary, unstated motive for the determination of the government of the State of Israel to get the Jewish settlers of the Qatif (Katif) settlement block out of the Gaza Strip may be to keep them out of harm's way when the Israeli government and military possibly trigger an intensified mass attack on the approximately one and a half million Palestinians in the Gaza Strip, of whom about half are 1948 Palestine refugees.

The scenario could be similar to what has already happened in the past - a tactic that Ariel Sharon has used many times in his military career - i.e., utilizing provocation in order to launch massive attacks.

Following this pattern, we believe that Prime Minister Ariel Sharon and Defence Minister Shaul Mofaz are considering to utilize provocation for vicious attacks in the near future on the approximately one and a half million Palestinian inhabitants of the Gaza Strip: a possible combination of intensified state terror and mass killing. The Israeli army is not likely to risk the kind of casualties to its soldiers that would be involved in employing ground troops on a large scale in the Gaza Strip. With General Dan Halutz as Chief of Staff they don't need to. It was General Dan Halutz, in his capacity as Commander of the Israeli Air Force, who authorized the bombing of a civilian Gaza City quarter with a bomb weighing one ton, and then went on record as saying that he sleeps well and that the only thing he feels when dropping a bomb is a slight bump of the aircraft.

The initiators of this alarm have been active for many decades in the defence of human rights inside the State of Israel and beyond. We do not have the academic evidence to support our feeling, but given past behavior, ideological leanings and current media spin initiated by the Israeli government and military, we believe that the designs of the State of Israel are clear, and we submit that our educated intuition with matters pertaining to the defence of human rights has been more often correct than otherwise.

We urge all those who share the concern above to add their names to ours and urgently give this alarm as wide a circulation as possible.

Circulating and publishing this text may constitute a significant factor in deterring the Israeli government, thus protecting the Palestinian population in the Gaza Strip from this very possible catastrophe and contributing to prevent yet more war crimes from occurring.

Please sign, circulate, and publish this alarm without delay!

Please send notification of your signature to Tamar Yaron tiyaron@hazorea.org.il

WE WOULD ALSO APPRECIATE RECEIVING NOTIFICATION IF THE ALARM WAS PUBLISHED IN ANY MEDIA AND/OR IF IT WAS SENT TO A GROUP DISTRIBUTION LIST.

Two Israel Defense Forces soldiers from an infantry regiment of ultra-Orthodox troops were arrested on suspicion of placing a fake bomb at the Jerusalem central bus station last week, it emerged on Monday. A Jerusalem court extended the remand of the two soldiers by eight days.

According to police, the two Nahal Haredi unit soldiers, both 20 years of age, used their uniform to smuggle into the complex a bag containing the device. It was also said that the suspects were caught on security cameras at the station, and were detained following a joint investigation of Israel Police and Military Police.

During the course of the investigation, police discovered that the two suspects entered the station through the Jaffa Street entrance at approximately 6 P.M.

The primary suspect is said to have carried a military backpack containing the dummy bomb. A few minutes later, he was met by his accomplice who entered the station. Both men proceeded upstairs to the third floor men's room, where they left the bag.

The fake bomb placed by the suspects to protest against the disengagement, included a bag with a gas balloon, a clock and some wires. A note was also placed in the bag reading "the disengagement will blow up in our faces."

Passersby who noticed the 12-kilogram canister called the police, who sealed off the bus station for more than an hour before determining that the device was harmless. Traffic quickly jammed the area around the bus station and the entrance to the city, and bus service was interrupted.

After an intensive investigation during which authorities succeeded in conclusively ascertaining the identity of the two suspects, one of the suspects was arrested in his Jerusalem apartment while the other was taken into custody at his army base.

Security is high at the bus station, which routinely X-rays packages and requires people to pass through a metal detector.

Since the beginning of March, right-wing extremists have planted six dummy bombs: two in a Tel Aviv train station and four in Jerusalem. In those incidents the fake bombs also bore notes reading, "The disengagement will explode in our faces."

Israeli occupation forces are preventing Palestinians from passing through gates in the separation barrier to work their farms, according to a human rights activist.

Khalid Yassin of Ram Allah Human Rights Centre told Aljazeera.net on Tuesday that farmers in the West Bank village of Mas'ha had in effect been banned from their properties since 4 July due to the closure of Gate 46.

"Entry was always difficult - Israeli troops only allowed access at a couple of times during the day.

"But now occupation forces have shut the gate for good, even though cattle still need to graze and crops need to be tended to. The olive harvest in October and November will be impossible," Yassin said.

No access

Yassin added that other gates, such as Gate 45, had been shut for more than 18 months and that farmers had no practicable access to their own land or any say about who might have access to it on the other side of the wall.

"Soldiers told people in Mas'ha to use Gate 48 - which is an 11km walk. Is it reasonable to expect farmers to walk 44km every day just to visit their own farms on the other side of the wall?

"In any case, they will not have the right permits to enter 48 - and will have next to no chance of successfully obtaining one," Yassin concluded.

Delayed response

Aljazeera.net contacted Israel's District Coordination Office in Qalqilya, the Civil Administration and a spokesman for Israeli occupation forces to explain why Gate 46 was shut.

No one could give an immediate response.

The separation wall was built through the Palestinian village of Mas'ha in September 2003.

The built-up residential and business areas ended up on one side, with 92% (or 5700 dunams) of the agricultural land on the other.

JERUSALEM - Israeli troops remained poised for a possible ground assault in the Gaza Strip to end Palestinian rocket attacks as 20,000 security officers braced for a mass rally against the Gaza pullout.

For a second day running, thousands of extra soldiers and armoured vehicles remained deployed across the border with Gaza, awaiting the green light for a threatened large-scale assault, should rocket attacks continue.

Palestinian leader Mahmud Abbas has said he is determined to stop militant strikes "at all costs" while Prime Minister Ariel Sharon said there was no restriction on Israel's defence establishment to halt them.

On Monday, a close aide to Sharon reiterated that Palestinian attacks would not be allowed to hinder next month's historic Gaza pullout, but appeared to rule out a full-on offensive until diplomatic efforts had been exhausted.

"We don't want an escalation and we are taking into account the position of our friends," he said, alluding to the expected arrival of US Secretary Condoleezza Rice later this week and Egyptian mediators holding talks in Gaza.

Prime minister Ahmed Qorei said that the Palestinian administration was determined to impose order after talks with Egypt's deputy intelligence chief, Mustafa al-Buheiri, in Gaza to help restore a troubled seven-month-old truce.

"We want to impose the rule of law, we want security for our people," Qorei told reporters, warning that any Israeli ground offensive would "create a very serious problem, not to us only, to us and to Israel and to the region".

Buheiri was locked in meetings with representatives of most armed groups and the governing Fatah party, after meeting Hamas on Sunday.

The Islamist movement -- the principal group behind rocket attacks -- said it remained committed to the informal cool down, but reiterated that it reserved the right to retaliate for Israeli fire.

The level of violence appeared to have scaled back, with only one mortar round and one anti-tank shell fired on Israeli targets in the Gaza Strip since day break, the army said.

Six suspected Hamas militants were arrested overnight in the
West Bank.

Around 20,000 police and soldiers were deployed in southern Israel to prevent thousands of opponents of the Gaza pullout from holding a mass protest rally later. [...]

Security forces are under strict orders from Sharon to prevent the protestors from reaching the border crossing between Israel and the Gaza Strip in a bid to force their way into the sealed-off Jewish settlements.

Ultra-nationalist opponents of the pullout -- due to begin on August 17 -- have vowed to impede the withdrawal by flooding the settlements with radicals bent on sabotaging the evacuation.

With chances of success practically zero, the authorities fear extremists will resort to increasingly radical tactics, leaving the threat of violence looming over the rally.

Although organisers from the Yesha settlers' council have called for a peaceful protest and are banking on a turnout of around 100,000, the liberal newspaper Haaretz warned that "violence will be virtually unavoidable".

Police have refused permission for the rally to near Kissufim with access to the settlements barred to all except residents, journalists and security personnel.

"We will try to get to Kissufim by every means possible without resorting to violence and to join our brethren in Gush Katif, who are under blockade," said Yesha spokesman Emilie Amroussi.

LONDON - British Prime Minister Tony Blair came under fresh pressure for supporting the Iraq war after a respected think-tank linked the invasion to Britain's worst terror attack in which at least 55 people died.

The comments -- rejected by the government -- came as interior minister Charles Clarke prepared to meet his opposition counterparts to discuss planned anti-terrorism laws, and as a global hunt for clues into who planned the July 7 bombings in London forged on.

The Royal Institute of International Affairs, known as Chatham House, concluded in a report that the war in Iraq gave a "boost" to Al-Qaeda and made Britain especially vulnerable to attacks -- a theory that clashed with Blair's belief that there is no link with the July 7 bombings.

"There is no doubt that the situation over Iraq has imposed particular difficulties for the UK, and for the wider coalition against terrorism," said the London-based research centre in its study, "Riding Pillion for Tackling Terrorism is a High-risk Policy".

"It gave a boost to the Al-Qaeda network's propaganda, recruitment and fundraising," Chatham House said, arguing that it also provided an ideal training area for Al-Qaeda-linked terrorists and deflected resources that could have gone to help bring terror mastermind
Osama bin Laden to justice. [...]

The government is in talks with opposition parties to win support for new terror laws in the wake of the London bombings.

Home Secretary Charles Clarke is meeting his Conservative and Liberal Democrat counterparts to thrash out details of the proposed legislation.

A series of consultative meetings are taking place throughout the week.

Mr Clarke, David Davis and Mark Oaten will discuss new offences of preparing, training for and inciting terror acts.

Opposition support

The opposition parties support the new proposals in principle, but want to discuss the details with Mr Clarke.

The talks come as a report says the UK's involvement in the Iraq invasion heightened the risk of attacks.

Supporting the US-led invasion of Iraq put the UK more at risk from terrorist attack, the Royal Institute of International Affairs and the Economic and Social Research Council said.

The report also said the invasion boosted al-Qaeda's recruitment and fund-raising.

Conservative shadow home secretary Mr Davis wants to look again at using phone tap evidence in court, BBC political correspondent James Landale said.

Consensus

Party leader Michael Howard said: "I do hope we can reach agreement with the government - that remains to be seen.

"We will obviously have to look at the details of what they propose, but we shall be approaching these meetings, these discussions, in a spirit of consensus."

Mr Oaten told the BBC he was concerned about how incitement to terrorism will be defined.

"Are we talking about speeches, articles? What are the kind of words that somebody would use which could then be implied to be incitement?" he said.

"This will be hard legislation to draft, and of course, we don't want to introduce legislation which could then have the knock on consequences that we hadn't really thought about."

Costly surveillance

On Sunday it emerged one of the London bombers was investigated by MI5 last year but was deemed not to be a threat.

Mohammad Sidique Khan, 30, was subject to a routine assessment by the security service because of an indirect connection to an alleged terror plot.

He was one of hundreds investigated but was not considered a risk by the security services.

More than 50 people died and 700 were injured in the blasts. Four bombers are also believed to have died."

Khan, from Dewsbury, West Yorkshire, killed himself and six other passengers in the Edgware Road bombing on the London underground.

Hasib Hussain, 18, from Holbeck, Leeds was responsible for the Number 30 bus bombing, in which 13 people died; Shehzad Tanweer, 22, from Beeston in Leeds for the Aldgate Tube blast, which killed six, and Germaine Lindsay, 19, from Aylesbury, Buckinghamshire, for the King's Cross Tube explosion in which 26 people were killed.