Will set up joint security, incitement prevention, trade and legal aid committees at their meeting next week. Today: Transfer of authority in Bethlehem. 2. RECORD DEFICIT IN GOVERNMENT ACTIVITY IN JUNE: NIS 6.3 BILLION. 3. ISRAEL WORKING FOR CANCELLATION OF USA VISA REQUIREMENT. HATZOFEH 1. Withdrawals continue: Today – Bethlehem is “out of bounds” for IDF soldiers. SHARON TO ABU MAZEN: ISRAEL WILL ALLOW ARAFAT TO LEAVE MUKATA – FOR GAZA. Israeli and Palestinian PM’s met in public at PM’s Jerusalem Office for first time yesterday. Sharon agreed to set up joint committee on release of prisoners. Additional committees to discuss security and prevention of incitement. During first night of ceasefire: Three shooting incidents in Gaza Strip. 2. “COORDINATION WITH GENERAL SECURITY COMMANDERS MEANS THAT ARAFAT IS CONTROLLING THE PROCESS.” Senior security source: Haj Ismail and Majaideh are outstanding Arafat loyalists and do his bidding, not Abu Mazen’s. 3. JEWS GOING UP TO TEMPLE MOUNT – NOT MEN WITH BEARDS. ISA Director reveals to Knesset Foreign Affairs and Defense Committee: Temple Mount visits have been going on for several months. 4. ROADBLOCK WOMAN COMMANDER DIRECTED BATTLE WITH TERRORIST UNTIL HE WAS KILLED. 5. EXCEPTIONAL NIS 6.3 BILLION DEFICIT IN JUNE. MA’ARIV 1. Palestinians arrest suicide terrorist on his way to Israel. “ENOUGH PAIN.” Sharon and Abu Mazen met yesterday and spoke mainly about reconciliation. “We have no interest in continuing the conflict,” Palestinian PM said. “We do not want to rule you,” responded Sharon. 2. SUMMER WARNING: DON’T TRAVEL TO SINAI. Recommendation by Counter-Terrorism Staff. Foreign Ministry: India is dangerous too. 3. RACHEL’S BAPTISM OF FIRE. Sgt. Rachel Marko directed force that eliminated terrorist near Tulkarm. 4. HISTORY: ISRAELI TENNIS PLAYERS IN WIMBLEDON DOUBLES SEMIFINALS. YEDIOT AHRONOT 1. FRIENDLY START. Sharon: “We have no war with you, we want to live in peace and be good neighbors.” At warm meeting in Jerusalem, promised Abu Mazen: We will release administrative detainees soon. Abu Mazen: “Enough suffering, death and pain. We will solve the conflict by diplomatic means only, we are not hostile towards you.” Warned: Iran applying major pressure to perpetrate attacks. 2. ISRAELIS IN WIMBLEDON SEMIFINALS. ______________________________ SUMMARY OF EDITORIALS FROM THE HEBREW PRESS Yediot Ahronot hopes that a positive change of direction in the peace process might herald other positive changes in Israeli society, especially in education, patterns of government investment and work habits. The editors remark that, “Yesterday, the optimists who watched the meeting between the leaders of Israel and Palestine could say to themselves that maybe, just maybe, we are beginning to return to ourselves.” Hatzofeh comments on Monday’s deadly gas explosion in a southern Tel Aviv apartment building in which seven people were killed. The editors call for stricter, more transparent regulations on how gas is delivered and stored.