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Finance Minister Benjamin Netanyahu and Histadrut Labor Federation Chairman Amir Peretz signed on Thursday morning an agreement on the implementation of reforms in Israel's sea ports.

The agreement will lead to the full privatization of the ports. The ports have been divided into three private companies as well as a fourth asset and insurance company, in a bid to encourage competition between the different ports.

The agreement follows several months of intense negotiations and ends a series of strikes and bitter work disputes by the workers' committees at the Haifa, Ashdod and Eilat ports.

Speaking after the signing ceremony, Netanyahu said this was an historic day for Israel. "This is an historic reform, and maybe the most important reform we have carried out so far," Netanyahu said.

Transportation Minister Meir Sheetrit who attended the sigining ceremony, said the improvement in services offered by the ports would turn Israel into "a hub from where goods could be distributed all over the Middle East."

Under the agreement, reached on Wenesday night after talks between representatives of the treasury, the port workers committees and the Histadrut labor federation, port workers will receive a NIS 100,000 wage bonus over the next five years.

In exchange, the port employees have agreed to downsize the work force by some 400. Employees who retire of their own accord will enjoy a 16 percent increase to their pension for a period of 15 months.

Fifteen percent of the port shares will be floated on the stock exchange within five years, and an additional 49 percent over the following 10 years.

The full privatization of the ports will be complete in 15 years.

The port workers union has agreed not to launch strikes in the next five years, but Dudu Peretz, chairman of the port workers union, warned that any breach of the agreement could trigger a strike.

"If no finance minister comes with a new folly that does not respect the agreement," Peretz told Israel Radio, "we will respect the agreement."