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Pivotal moment in Middle East
The Americans may not have expected the severity of Israel's response
By Roger Hardy
BBC Middle East analyst
The suicide attacks and the harsh Israeli response have triggered the worst crisis in the Middle East since the outbreak of the intifada 14 months ago.
Israel has accused the Palestinian Authority of being an entity which supports terrorism.
This could prove to be a moment of truth for US foreign policy, as well as for Yasser Arafat and Israeli-Palestinian relations
Palestinian officials have retorted that the government of Israeli Prime Minister Ariel Sharon no longer wants peace.
The war of words is accompanied by a serious escalation of violence on the ground, as Israeli forces continue to retaliate for the Palestinian suicide bombings over the weekend.
Arafat's credibility
The timing and severity of the attacks exposed the weakness of Palestinian leader Yasser Arafat at a moment when he could ill afford it.
Ariel Sharon has drawn parallels with the US campaign against Osama Bin Laden
His credibility in the eyes of both Israel and the United States was seriously diminished.
As Mr Sharon prepared to cut short a trip to Washington and return home, he appeared to receive a green light from the Bush administration to respond as he thought fit.
Senior US officials did not disguise their frustration with the Palestinian leader's inability to curb the violence.
Whether the Americans expected Mr Sharon's response is another matter.
They may have been taken aback by the Israeli cabinet's decision on Monday to declare "that the Palestinian Authority is an entity that supports terrorism, and must be dealt with accordingly".
Ominous implications
The cabinet statement added that it considered the Tanzim and Force 17 to be terrorist organisations. These are militias directly answerable to Yasser Arafat.
Arafat's credibility has diminished
The statement said the cabinet could reverse these decisions if the Palestinian leadership acted "to prevent and foil terrorism, punish terrorists and dismantle the terrorist infrastructure".
Even so, the implications are ominous.
Using the analogy of the US-led war on terrorism, Mr Sharon is clearly implying that the Palestinian Authority is playing the same role as the Taleban in Afghanistan, that of sheltering terrorists.
His message is that if it goes on supporting terrorists, then, like the Taleban, it will be treated as a terrorist body.
Labour walk-out
This is already a step too far for the Labour Party members of Mr Sharon's government of national unity.
Foreign Minister Shimon Peres and the other Labour ministers walked out before the cabinet vote on Monday night.
Things are looking bleak for Anthony Zinni's peace mission
Mr Peres clearly feels the cabinet decision will seriously undermine his efforts to work with the Palestinians and the Americans to bring about a ceasefire and revive the peace process.
The Labour Party is considering whether to leave the government.
Much as it may dislike the cabinet decisions, it will not relish precipitating fresh elections in which, according to opinion polls, it would emerge even weaker than it is today.
The violence and the Sharon government's response also pull the rug from under the new US envoy to the Middle East, retired General Anthony Zinni.
The Zinni mission was launched two weeks ago in a passionate speech delivered by US Secretary of State Colin Powell.
The speech heralded the first serious peace initiative in the Middle East by an administration which had hitherto kept the region at arm's length.
Washington hawks
Now many are writing off the US initiative as stillborn.
This in turn could weaken Mr Powell's position within the administration.
Hawks in Washington had been sceptical about a new Middle East initiative all along.
They argue the US and Israel should stand shoulder to shoulder in the war against terrorism, without worrying unduly about the sensitivities of Washington's allies in the Muslim world or in Europe.
This could therefore prove to be a moment of truth for US foreign policy, as well as for Yasser Arafat and Israeli-Palestinian relations.
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