Wednesday August 29 7:04 PM ET

Outlook for Israeli Pullout Bleak as Battles Rage

By Megan Goldin

JERUSALEM (Reuters) - Bursts of gunfire echoed across West Bank hills near Bethlehem on Thursday, jeopardizing hopes that two days of fighting had waned enough to satisfy Israel's demands for withdrawing from a Palestinian-ruled town.

Israel's incursion into the mainly Christian town of Beit Jala following heavy Palestinian gunfire at an Israeli settlement on Jerusalem's outskirts heightened international concern that 11 months of conflict could spiral out of control.

Despite rare telephone calls between Israeli Foreign Minister Shimon Peres and Palestinian President Yasser Arafat (news - web sites), a European Union (news - web sites) effort to pave the way for an Israeli withdrawal was in doubt after Palestinian gunmen renewed heavy fire.

``If the firing will really stop, including the firing of mortar bombs which is a terrible thing, the army will be happy to leave the places,'' Peres told reporters on Wednesday.

``If not, the army will stay there to protect Jerusalem,'' he said, referring to the Jewish settlement of Gilo which has frequently been targeted by gunmen in Beit Jala. Israel regards Gilo as a neighborhood of Jerusalem.

WORLD OUTCRY

Israel's incursion into Beit Jala drew harsh international criticism and demands for withdrawal from the United States, Israel's staunchest ally.

Peres said he spoke to Arafat on Wednesday afternoon and told him he hoped a cease-fire would hold so that Israeli forces could withdraw from Beit Jala overnight. Palestinian officials said Arafat had ordered his security forces to stop shooting.

But on the ground, Palestinian gunmen darting through alleys in Beit Jala and a refugee camp near Bethlehem fired at Israeli positions in Beit Jala and at apartment buildings in Gilo.

Israeli helicopters hovered overhead and troops returned fire, in one case with anti-tank rockets that Palestinian ambulance officials said lightly wounded six people.

Gun battles were also reported in the West Bank city of Hebron and in the southern Gaza town of Rafah which was sealed by Israeli tanks on Wednesday in a military operation which Palestinians said encroached on territory under their rule.

``International efforts are being carried out to persuade the Israeli government to withdraw from Palestinian areas it has occupied,'' Arafat's aide, Nabil Abu Rdainah, told Reuters.

Prime Minister Ariel Sharon (news - web sites) held consultations with Peres and Defense Minister Binyamin Ben-Eliezer on the fighting which lasted into the early hours of Thursday morning.

``The moment the shooting stops we have no reason to be there,'' Ben-Eliezer told reporters. Israel handed Beit Jala to Palestinian rule in 1995 under interim peace accords.

Christian Jouret, political adviser to European Union envoy Miguel Angel Moratinos, said the ``understanding'' was that Israel would withdraw no later than sunrise ``if everything is quiet.''

``It will be a disaster for them if they stay,'' he said. ''The Israelis want to leave with dignity, not in daylight and not under fire. We're waiting for that. We're crossing our fingers.''

Secretary of State Colin Powell (news - web sites) called Arafat on Wednesday and urged him to resume security cooperation with the Israelis and to do more to end the violence, a State Department spokesman said.

ANNAN URGES ISRAEL TO WITHDRAW

U.N. Secretary-General Kofi Annan (news - web sites) urged Israel to withdraw its troops from all Palestinian-ruled territory and stop its targeted killings of Palestinian figures.

Annan viewed an Israeli withdrawal from Beit Jala ``as an essential step to prevent further escalation,'' spokesman Manoel Almeida e Silva said. He asked all sides to exercise restraint.

The U.N. statement followed the assassination on Monday of Abu Ali Mustafa, leader of the radical Popular Front for the Liberation of Palestine, and the Israeli thrust into Beit Jala.

At least four Palestinians and one Israeli were killed on Wednesday. That brought to at least 544 Palestinians and 156 Israelis the number of people killed since a Palestinian revolt erupted last year after peace negotiations became deadlocked.

Palestinian witnesses in Rafah said armored Israeli bulldozers destroyed three houses near the border with Egypt late on Wednesday as a gun battle raged. Three Palestinians were hurt by shrapnel, none of them seriously.

Earlier in the day, Israeli tanks thrust into Palestinian-ruled territory in the Gaza Strip (news - web sites), sealing off Rafah, destroying three police posts and raising the Israeli flag over one of them, witnesses and Palestinian officials said.

-- Anonymous, August 29, 2001