Prime Minister Ariel Sharon, responding to the American disapproval of the large budget allocations for the Yesha settlement enterprise, has cut it down by more than half. The original allocation was to be well over a billion shekels, but Sharon has now decided to make it 600 million, to be spread out over a number of years. The Yesha Council is up in arms, claiming that the Sharon government has essentially \"frozen\" the development of Judea and Samaria towns.



Foreign Minister Shimon Peres, on the other hand, says no. In a letter to his U.S. counterpart, Secretary of State Colin Powell, Peres writes that Israel refuses to accept the Mitchell Report\'s recommendation to cease settlement activity, as it would \"look like a reward to the Palestinians for their violence.\" Peres reviewed for Powell the government\'s guidelines - according to which no new towns will be built, but existing ones will be developed. He said that the Oslo agreements stipulate that the issue of Israeli towns in Judea and Samaria be discussed only in final-status negotiations.



Minister Without Portfolio Danny Naveh is in Cairo today to explain Israel\'s position on the Mitchell Report to senior Egyptian government advisor Osama al-Baz. Minister Naveh will reiterate the government’s position that the Palestinian violence and attacks must cease in order for negotiations to resume. Naveh became the first Israeli government minister to be permitted to visit the Israeli Druze Azzam Azzam, who has been imprisoned in Egypt for five years on charges of \"spying for Israel.\" Naveh told Azzam that Prime Minister Sharon is committed to working for his release.