When Defense Minister Amir Peretz took office four months ago, Hezbollah and the missile threat were at the bottom of the priority list senior IDF officers presented him, Peretz says. In private conversations over the past few days, Peretz said officers did not tell him there was a strategic threat to Israel, and did not present him with all relevant information about the missile threat.

"Conclusions should not be drawn regarding individuals while the battle is still being fought," Peretz said in these conversations, leading listeners to believe he is waiting for Chief of Staff Dan Halutz to resign. Halutz has admitted to selling his stock portfolio hours after Hezbollah kidnapped two Israeli soldiers, triggering the month-long war.

Meanwhile, Halutz told senior officers in a recent meeting that upon his request, IDF information security had given him a list of all phone calls received and made by officers, alluding to the fact that he knew which generals had been leaking information to the press.

Prime Minister Ehud Olmert called Halutz Tuesday night to encourage him, according to a government source. The source said he believed Halutz would not resign.

Olmert told business reporters: "I think a great injustice was done to Halutz. I heard his explanation that he asked his secretary to call his bank clerk at 7:30 A.M., before the kidnapping, and the secretary got back to him at noon," at which point Halutz gave the instructions to sell. "For me, that's enough."

Yesterday, Peretz's bureau responded to the affair for the first time: "Halutz commands the Israel Defense Forces out of loyalty to Israel and devotion to the security of its citizens and soldiers. His energies are given constantly to the fighting and completing the IDF's tasks," the statement said. Peretz's bureau said the defense minister spoke to Halutz Tuesday about the stock affair.

Meanwhile, Peretz's announcement to the general staff that he had appointed a committee, headed by former chief of staff Amnon Lipkin-Shahak, to examine the events of the war was met with harsh criticism in the IDF and the security establishment.

Security sources said Lipkin-Shahak cannot be objective since he was on Peretz's team of external advisors during the war. Shahak will not be investigating the conduct of the defense minister.

Sources close to GOC Northern Command Major General Udi Adam - who was sidelined when Halutz appointed Kaplinsky as his "representative" there during the fighting - said Adam would probably resign after the war and would then "open his mouth" about wartime events.

Meeting with Halutz and the general staff yesterday, Peretz told the officers he had appointed the investigative committee. Halutz briefly mentioned the matter of the stocks, and said he had no intention of resigning