PA PM Fayyad and Israeli Fin. Min. Yuval Steinitz sign an economic agreement, to go into effect on 1/1/2013, that will regulate taxes and bilateral trade with the aim of reducing illegal trade and tax evasion and building the PA’s tax revenue base. It is the first major IsraeliPalestinian economic agreement since the 1994 Paris Protocol, which sets out in detail the economic relationship between Israel and the PA. (JP, UPI 8/1; JPI 8/17)
Overnight (similar to 7/30), IDF troops on the s. Gaza border fire into agricultural areas along the Gaza border e. of Khan Yunis sporadically for hours, causing no reported injuries. In the West Bank, the IDF patrols in Tulkarm and 1 village nr. Jenin in the morning; patrols in 1 village nr. Jenin late at night. Jewish settlers fr. Halmish settlement nr. Ramallah uproot and burn 30 Palestinian olive trees on Palestinian land nr. al-Nabi Salih. OCHA reports that Israeli authorities demolished an extension to a Palestinian home in East Jerusalem. (PCHR 8/2; OCHA 8/3)
With the Tal Law exempting the ultraOrthodox from military service set to expire at midnight, Israeli DM Barak orders the IDF to start drafting ultraOrthodox Jewish men and gives IDF officials 1 mo. to draft official guidelines to implement the order. (NYT, WP, WT 8/1)
Israeli pres. Peres’s office releases the text of a letter that it says is from Egyptian pres. Mohamed Morsi, formally responding to a Ramadan greeting Peres sent on 7/15/12. The text, welcomed by Israel, pledges to work to promote Middle East peace and get bilateral Israeli-Egyptian relations back on track, particularly regarding border security. Morsi aides deny that any letter was sent, but Peres’s office releases copies that show Morsi’s name typed (not signed) and an accompanying letter from the Egyptian amb. on embassy letterhead, indicating that the letter had been cleared with Morsi’s office. Official bilateral relations do not suffer, and public optimism on future relations increased. Most analysts believe (e.g., NYT, WP 8/1) that the incident simply reflects Morsi’s attempt to speak to 2 audiences, Israel and the international community, and his constituency in Egypt, hostile or at best ambivalent concerning the peace treaty with Israel. (NYT, WP 8/1)