1. HALUTZ LIKELY TO RESIGN IF INVESTIGATIVE COMMITTEES DETERMINE HIM RESPONSIBLE FOR WAR FAILURES.

Peretz convened General Staff members to "stabilize things" in wake of demands for Halutz's resignation.

2. HIRSCH: IDF INTELLIGENCE BRANCH DID NOT FORWARD INFORMATION.

3. HAMAS: ECONOMIC EMBARGO WILL BE REMOVED EVEN IF WE DO NOT RECOGNIZE ISRAEL.

PA assessment: New Prime Minister to be announced by weekend.

4. ASSESSMENT IN LABOR: AMI AYALON STRENGTHENING.

According to sources in the party, Ami Ayalon has secretly signed-up thousands of new members.

HATZOFEH

1. Rocket fire over Negev continues.  Palestinians: We caught two ISA collaborators.

ISA DIRECTOR: PREPARE FOR WAR IN GAZA STRIP.

All organizations in Gaza dramatically building-up military forces and we will meet them in the future. ISA Director criticizes Egyptian handling of smuggling into the Gaza Strip.

2. OLMERT CALLED HALUTZ: "YOU HAVE MY FULL SUPPORT."

Halutz rejects calls to resign: There are those who talk and there are those who do.  Peretz: The disagreement between me and the C-O-S regarding appointments did not cause a rift.

3. APPARENTLY: INDICTMENT AGAINST PRESIDENT WILL NOT INCLUDE RAPE.

4. EMBARRASSMENT IN GOVERNMENT: KNESSET VOTES IN FAVOR OF STATE COMMISSION OF INQUIRY.

Decision is only declarative.  Families of abducted soldiers: Do more to secure their release.

MA’ARIV

1. NEW INITIATIVE?

Diplomatic sources: Olmert presents Bush with plan, 'Consensual Convergence.'  Based on: Negotiations with Abu Mazen on disengagement from territories, while preserving settlement blocks.  Prime Minister's Bureau emphatically denies it.

2.  Ma’ariv exclusive: Ambassador Danny Ayalon in interview prior to leaving post.

 "BUSH WILL NOT HESITATE TO ATTACK IRAN."

3. STARTING TO CRACK.

Despite calls of support by Prime Minister and Defense Minister, confidants of Chief-of-Staff Halutz admit: If investigations indicate failure in his performance – he will resign.

YEDIOT AHRONOT

1. Feeling heightens amongst IDF leadership:

"HALUTZ WILL RESIGN WITHIN TWO WEEKS."

Olmert calls Chief-of-Staff the day after he refused to give public backing and said: I trust you.  Halutz confidants rebuff the gesture: He does not believe the Prime Minister.

2. Poll by Yediot Ahronot and Mina Tzemach/Dahaf last night:

SEVENTY-ONE PERCENT: CHIEF-OF-STAFF SHOULD RESIGN HIS POST.

Fifty percent of public: After the Lebanese War, we have less faith in the IDF.

3. MAJ.-GEN. FARES PROMOTED DESPITE SEVERE REPORT ON HIS DIVISION'S FAILURES.

______________________________

SUMMARY OF EDITORIALS FROM THE HEBREW PRESS

Yediot Ahronot comments on the ongoing controversy over the conduct of the recent fighting in Lebanon.  The editors note the hierarchical nature of the military and the fact that the advancement of any given officer depends on positive recommendations from his superiors. They caution that, "The problem is that in a war situation – certainly like the last one, which was conducted by three people lacking in experience and understanding of ground warfare (the Prime Minister, the Defense Minister and the Chief-of-Staff) – these facts promise a recurrence of the failures that were revealed, perhaps even on a larger scale."  The paper calls for the establishment of a National Security Council, "worthy of the name."

Yediot Ahronot, in its second editorial, defends the outrage of, and the public calls for a thorough inquiry by, bereaved families that lost soldiers in the recent fighting in Lebanon.

Hatzofeh suggests that the new Palestinian Authority government will feature many new faces.

Hatzofeh, in its second editorial, says that, "There are few optimists in Lebanon who believe in a resolution of the internal crisis."

[Ariela Ringle Hoffman and Haggai Hoberman wrote today’s editorials in Yediot Ahronot and Hatzofeh, respectively.]