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Finance Ministry representatives met last night with representatives of the business sector and labor representatives to discuss compensation for war damage. Treasury budgets director Kobi Haber was present at the meeting.

According to Manufacturers Association chairman Shraga Brosh, preliminary understandings expand the definition of the conflict line to more than nine kilometers from the border.

In the event that the Katyusha range is considered the conflict area, then businesses as far south as Haifa and Afula would also be entitled to war compensation from the state. Brosh expects this definition to be enacted.

The question of reimbursement for war damage in the north presents Finance Ministry officials with a serious dilemma: the desire to compensate workers and employers for lost work days versus the fear of finding the kitty empty at the end of the war.

Attorney Avi Alter, a former legal advisor to the tax authority, says there are about 1 million residents of the north. Paying half of them a month's salary at the average wage of NIS 7,000, adds up to NIS 3.5 billion, he estimates.

Unlike property damage compensation, stipulated by law, salaries for workers absent because of the war is not laid out in legislation and except for areas defined as frontline, employers don't have to pay absent employees. Also, without an emergency being declared by the state, payments to businesses harmed by the situation including loss of potential profit is not systemized.

Residents of the north are dealing with mixed messages from the government and Home Front Command. On the one hand, they are tied to the shelters; on the other hand, no official entity has declared that routine is disrupted and given the term 'emergency situation' its financial significance.

Farmers are suffering damage to orchards where no one can harvest fruit, the bed and breakfasts are empty and small business owners can-t show up to their shops.

According to Brosh, 31 percent of companies in northern Israel have shut down, 24 percent are operating at partial capacity and 45 percent are working normally. He says the direct damage to industry in the north since the start of the war has reached NIS 2 billion.