The annual report put out by Israel's intelligence agencies will be presented to the prime minister on Thursday, prior to discussion of it by the security cabinet.

Olmert will hear the assessments of representatives of the Shin Bet security service, Military Intelligence and the Mossad concerning the Palestinian Authority, the Iranian threat and the situation along the northern border.

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Defense Minister Amir Peretz will also attend the meeting with the intelligence officials.

Yesterday, Olmert and Peretz visited the Israel Defense Force's Judea and Samaria division and lit Hanukkah candles with the troops.

Some officers spoke with the prime minister about the need to seek a political solution to the conflict with the Palestinians.

"You are the spearhead of the State of Israel," Olmert said to them. "There is nothing better than seeking a political settlement, and that is our aim. We must think of ways to improve the quality of life and the economy of the other side. There are those [Palestinians] who are not involved in terrorism and we must take action to bolster the moderates."