Ariel Sharon's premiership will formally end Friday at midnight, 100 days after he was felled by a stroke, and Ehud Olmert will officially become interim prime minister.
The cabinet met in special session Tuesday and approved a resolution making this possible.
Although there will be no practical difference between the powers Olmert enjoys now as acting prime minister and the powers he will have as of Saturday morning, according to the Basic Law: the Government, after a sitting prime minister is incapacitated for 100 days he is considered "permanently unable to exercise his duties" and the cabinet must meet to select a minister from his faction to serve as interim prime minister.
Sharon is currently hospitalized at Jerusalem's Hadassah University Hospital Ein Kerem campus and has been in a coma since January 4, with no change in his condition.
Olmert told the cabinet he hoped the decision making him interim prime minister would "be in force only for a very short time," and that soon the coalition negotiations would be complete and he would be able to present the Knesset with a new government.
Cabinet Secretary Yisrael Maimon told the cabinet, "This is a difficult and sad day for all of us - the aides who worked alongside Prime Minister Sharon, in his bureau, in the Cabinet Secretariat and in the entire Prime Minister's Office, as it is, of course, for the members of Prime Minister Sharon's family and for his friends. We did not think that we would reach this moment. We pray that Prime Minister Sharon recovers and send our best wishes to his family and friends."
Minister without Portfolio Tzahi Hanegbi said after the meeting that it was the "saddest day" he has experienced in his eight years as a cabinet minister.
Asked whether doctors could now say with certainty that Sharon would never regain consciousness, spokeswoman Yael Bossem-Levy said: "We can't say; such things have happened, but about Sharon, we can't say."
Although Hadassah Medical Organization director-general Prof. Shlomo Mor-Yosef said at a Tel Aviv University symposium nearly a month ago that Sharon was expected to be moved to a nursing and rehabilitation facility by now, and the quarter of his skull that had been removed has been reattached, Bossem-Levy said: "We have no estimate about when he will be moved. Things change from day to day. It could be weeks or longer. We still don't know when or where. It's not even being discussed now."
She could not comment on whether Sharon's loss of the premiership would mean security around his bed at the ground-floor intensive-care unit would be reduced. That, she said, was up to the security forces who protected him.
The cabinet also heard briefings from Defense Minister Shaul Mofaz and Chief of General Staff Lt.-Gen. Dan Halutz on the situation in Gaza, and approved measures the security cabinet recommended Sunday governing Israel's relationship with the Hamas-led PA.
According to the cabinet communiqu issued after the meeting, following the Palestinian Authority elections and swearing-in of a Hamas government that doesn't recognize Israel or agreements signed with it, the government has agreed on the following:
â€¢ The Palestinian Authority is a terrorist authority that is hostile to Israel.
â€¢ The State of Israel, and all of its official representatives, will not hold ties with the Palestinian Authority and its elements.
â€¢ The Palestinian Authority is one authority; therefore, neither the Palestinian Authority chairman nor his office will be treated any differently. However, there will be no personal disavowal of the Palestinian Authority chairman.
â€¢ Foreign officials who are visiting the region and who meet with Hamas elements will not be received, during the same visit, for meetings with Israeli officials.
â€¢ Israel will coordinate with the international community regarding humanitarian assistance for the needs of the Palestinian population, not via the Palestinian Authority establishment.
â€¢ Subject to security considerations, the Gaza Strip crossings will be open to allow the entry of humanitarian assistance into the Gaza Strip.
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