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Prime Minister Ehud Olmert and Defense Minister Amir Peretz disagree on whether to evacuate the residents of Sderot in light of the Qassam rocket attacks on the town in recent days. The business tycoon Arcadi Gaydamak has added complexity to the debate by evacuating hundreds of Sderot residents to the Golden Tulip hotel in Be'er Sheva.

The possibility of evacuating people from Sderot was raised yesterday by Peretz during a meeting with defense officials called by Olmert to discuss the developments in the Gaza Strip and the constant bombardment of Sderot.

"Gaydamak is evacuating people, and he will take over the whole thing," Peretz said. "He sent buses and we need to consider an evacuation."

Olmert opposed the idea. "I am not willing to evacuate Sderot. These are precisely the sort of scenes that Hamas is waiting for. During the war [in Lebanon], when 200 Katyushas fell every day, we did not evacuate entire towns. I don't need to compete with Gaydamak's buses," Olmert said.

"I'm not talking about an evacuation, but a break," Peretz said.

"A break is fine," Olmert said.

The two were referring to what Gaydamak offered residents of Sderot last summer, when he sent thousands at his expense to Eilat to recuperate from the stress of the bombing.

Last night Peretz authorized in principle a plan for the evacuation of hundreds from Sderot for a few days. The idea is to take the evacuees to facilities of the Soldiers Welfare Association all over Israel. Priority in the evacuation would be given to the elderly, the infirm and people with no family members.

Peretz is expected to confirm the authorization later today.

According to an analysis by the Home Front Command carried out under orders from Peretz, there are 2,600 Sderot residents who are eligible due to their status as "needy population."

Nonetheless, by last night only 400 spots were prepared to receive evacuees, and only for a few days.

For his part, Gaydamak is also evaluating the possibility of undertaking the reinforcement of homes in Sderot. In consultation with a construction firm, Gaydamak decided to make a visit to the town Friday to evaluate the extent of the project, first hand.

Meanwhile, after more than 30 Qassam rockets landed in and around Sderot yesterday, Olmert decided to escalate Israel's response to the Hamas assault from the Gaza Strip.

At the end of the security meeting yesterday, Olmert said that "Israel will not be able to continue and show restraint when its citizens are being targeted, and therefore it was decided to respond harshly."

During the consultations between Olmert, Peretz and senior members of the defense establishment yesterday, it was decided to resume the assassinations policy, targeting militants.

"It was decided to authorize the IDF and the defense establishment to carry out a series of actions in order to target those launching Qassam rockets and their leadership, to disrupt their ability to launch rockets and to strike the terrorist infrastructure," a statement said.

A political source in Jerusalem said that Olmert changed his mind and decided to end the "policy of restraint" following intelligence assessments that Hamas intends to escalate its attacks against Israel.

The intelligence reports, presented during the meeting, suggest that the recent hail of rockets on Sderot were directly linked to the internecine fighting between Hamas and Fatah in the Gaza Strip. They stressed that the bombing would continue and even escalate.