First, those of you interested in hearing the original and judging for yourselves can access it here -- it's the fourth song. In my opinion the first verse is suspiciously similar, but the chorus is clearly different.
Second, I would emphasise that the truth about whether Shemer truly 'lifted' the tune or not is still known only to her. The letter is actually far from an admission that she 'lifted' it. Rather, she explains that in the mid 60's she used to meet with a friend of hers, Nehama Hendel:
"Apparently, at one of these meetings, Nehama sang the well-known Basque lullaby to me, and it went in one ear and out the other," Shemer wrote."In the winter of 1967, when I was working on the writing of 'Jerusalem of Gold,' the song must have creeped into me unwittingly," she wrote. "I also didn't know that an invisible hand dictated changes in the original to me. ... It turns out that someone protected me and provided me with my eight notes that grant me the rights to my version of the folk song. But all this was done, as I said, unwittingly."I do question how Shemer could have remembered a song she heard just once so well that it could have 'unwittingly' crept into her so clearly several years later (and inspired the nation's most treasured song...). There is definitely something weird there. On the other hand, why would she have left the damaging letter -- and urged its publication -- had she really been guilty? She could only lose by doing so.
No, it sounds to me like Shemer, being the straight, honorable woman everyone always believed she was, had simply been plagued by guilt over the mere possibility she could have done something wrong and chose to clear her conscience with this letter. It's a bit neurotic but not unknown.
What I find interesting, however, is the reaction of most commentators on YNet, NRG etc. who almost unanimously ask, 'Who cares?' if she did draw inspiration from another song, and continue to defend Shemer's status (and the song's status) as national icon. In an age of cynicism, disillusion and post-Zionism, it's nice to know that at least some sacred cows are still sacred (not that I'm calling Naomi Shemer a cow...).
Last but not least, many commentators have noted that a whole host of famous tunes have murky origins, not least the Israeli national anthem Hatikva, which is often linked to Bedrich Smetana's "Moldau" but which is alternately rumored to have originated in a Romanian folk song, "Carul cu Boi." Most artists, of course, do either gain inspiration or are influenced by others -- but there's no excuse for out and out plagiarism.