February 1Customs duties between the Occupied Territories and Israel are abolished.
MarchIn response to the increase in the military and ideological power of Palestinian organizations, the PLO, in particular, in the Occupied Territories and Jordan, Israel attacks PLO bases in Kafr Karameh, a village in Jordan. The operation ends with heavy losses on both sides. The Palestinians claim victory.
March 1The status of the territories is officially changed from “enemy territories” to “administered territories.”
March 18Order No. 234 states that every male Palestinian over sixteen years old must have an identity card and carry it with him at all times.
April 12A group of Jews led by Rabbi Moshe Levinger goes to the Park Hotel in Hebron to celebrate the Passover Seder and then refuses to vacate the premises. In May, the settlers move into the military government’s building in the city, and in September, they begin to build their houses nearby.
July 7The Ministerial Committee for Economic Matters allows the employment of Palestinian workers in Israel, stating that “they will receive wages equal to that of an Israeli worker . . . and all the [tax and social] deductions will be made that are deducted from Israeli workers.” Before the year is out, 6 percent of the Palestinian workforce is working in Israel. Tax money is the main source for the military government's budget. As for Social Security, although Palestinians pay it, they do not benefit from it.
July 19The general curfew that has been in force in the West Bank since the war is lifted.
August 1The first attack is perpetrated against Israeli civilians inside the Green Line, the armistice line established between Israel and its neighbors, Egypt, Jordan, Lebanon, and Syria, after the 1948 War. An explosive device is hurled at the Orient Café in Jerusalem.
September 4Defense Minister Moshe Dayan proposes a plan for the establishment of four Jewish cities in the West Bank near major Palestinian cities. In the first phase, each city is to house a few thousand families. Dayan’s plan is seen as a response to the “Alon Plan” and an attempt to jeopardize it.
NovemberThe Employment Service of Israel’s Ministry of Labor sets up the first local office in the Occupied Territories. By 1976, there will be thirty-four such offices. However, most of the Palestinian workers in Israel will be employed not through the offices, but through direct contact with employers and through “workers’ markets” on the outskirts of the cities.
In the course of 1968, three settlements are established as NAHAL (Noar Halutzi Lohem, Fighting Pioneer Youth) outposts, all in the Jordan Valley. NAHAL units consist of military combat units that also perform civil service functions in new settlements.