Who Will Blink First?

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Israeli Prime Minister Ariel Sharon, right, and U.S. Secretary of State Colin Powell during a joint press conference at the prime minister's residence in Jerusalem Friday

As Colin Powell left Ariel Sharon's Jerusalem residence last Friday afternoon and announced that four hours of talks had failed to persuade the Israeli Prime Minister to halt his military offensive in the West Bank, a 20-year-old Palestinian woman named Andaleeb Taqatqa prepared to die. Her plan was to walk into the Mahane Yehuda market in downtown Jerusalem and blow herself up during rush hour as Israelis shopped for fruits and vegetables in preparation for the Sabbath. When she arrived at the crowded bazaar just after 4 p.m., Israeli police prevented her from entering. She walked down the street, waited for a bus to pull up and detonated the explosives strapped to her body. Within minutes Jerusalem's streets filled with the familiar, sickening sights and sounds that accompany every Palestinian suicide bombing: blood and screams and sirens. As ambulances came for the dead and the injured--the blast killed six and wounded 80--a woman's severed head rolled along the asphalt.

The Secretary of State received news of the attack on his way to a helicopter pad outside Jerusalem, where he and Israeli defense officials boarded a Blackhawk to fly to Israel's northern command headquarters. Powell's hosts flew him over the site of the bombing, circling it repeatedly; he could see people running through the streets and ambulances taking the wounded from the scene. Once the Blackhawk touched down, eight miles from the Lebanese border, Powell took a call from Sharon and expressed his deep regrets over the attack. That day, after consulting with National Security Adviser Condoleezza Rice, Powell delayed a planned meeting with Yasser Arafat and threatened to cancel it altogether unless the Palestinian leader denounced the bombings--which last week included a suicide attack on a bus in Haifa that killed eight. "It was a group decision," says a senior White House aide. "This was a turning point." Actually, it was much worse: Powell's mission to the Middle East, which began with lofty hopes and turned bleaker every day, was on the verge of being ripped apart by a single determined 20-year-old. On Saturday Arafat finally met Powell's condition for a meeting by issuing a statement in Arabic "condemning strongly all the attacks which are targeting civilians on both sides." In advance of the Sunday meeting, State Department security teams traveled to Arafat's bunker in the Palestinian Authority's bombed-out Ramallah compound, where Israeli and Palestinian forces have posts 20 feet from each other. U.S. officials expected Israeli commanders to pull back temporarily once Powell arrived.

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As the shock of the Friday bombing reverberated, the White House continued to issue statements of resolve--that Powell was still pursuing a truce, that his mission to the region had not been derailed, that American prestige could still forge a peace between the Israelis and Palestinians that neither side really seems to want. "The President will not be deterred," White House spokesman Ari Fleischer said Friday. But those assurances did nothing to douse the growing sense that the combatants are waging a war driven by unquenchable vengeance and hate and that the U.S., at this late hour, may not be able to slow it down.

With the Arab street boiling and U.S.'s own war on terrorism hanging in the balance, the White House realizes it needs to intervene more aggressively to halt the violence. The situation has become so desperate that this unilateralist Administration is preparing to ask the rest of the world for help. A senior State Department official confirmed to TIME several elements under consideration as part of a deal to achieve a cease-fire, Israeli troop withdrawal and the start of political negotiations. The official said that Powell has been pressing Israel, the Palestinians and the Arab states for their ideas about a deal. The ideas include the deployment of U.S. monitors and an international fund to rebuild Palestine. Even more significant, the U.S. is leaning toward endorsing plans that would require the handover of land currently occupied by Israeli settlements in the Gaza Strip and would extend international recognition to an independent Palestinian state before a permanent peace is reached. "The U.S. thinks this is interesting and potentially useful," says a senior State Department official. If these elements come together, officials say, they would probably lead to an international peace conference--involving Israeli, Palestinian and other Arab and European representatives--that would try to map out the borders and capital of the new state.

But after so much bloodshed and so many broken promises, it's not at all clear that the war would end with the recognition of such a state--and it has never been clear that the U.S. could get the parties to agree to the terms for creating one. Washington has never had the power to bend either adversary to its will, and now its influence is at low ebb. After months of mixed messages and policy shifts, Bush dispatched his Secretary of State to restrain Sharon and Arafat, only to watch both sides continue the slaughter. Despite three public calls by Bush for Israel to withdraw, Israeli forces trampled through the West Bank, bulldozing suspected terrorist safe houses and bombmaking facilities, stripping hundreds of Palestinian men, cutting off water and electricity in some towns and laying waste to the Palestinian Authority's infrastructure. "We can't control them," an Administration official says. "We can't force Sharon to withdraw." Aside from Arafat's 11th-hour statement condemning terror, Powell so far has extracted little else from either side. "Of course we're frustrated," a senior White House official said. "Who wouldn't be?"

Diplomacy seems impotent in the face of such raw, depraved warfare. Two weeks since the beginning of Israel's assault on the West Bank and a year and a half since the start of this intifadeh, emotions among both Israelis and Palestinians have hardened into an implacable rage. Israeli sources told TIME that Israeli army commanders last week proposed pumping nausea-inducing gas into Arafat's compound and the Church of the Nativity in Bethlehem to drive out the Palestinian fighters holed up there. The idea was eventually rejected by Itzik Eitan, head of the Israeli Central Command. During a week of heavy fighting between Israeli forces and Palestinian militants in the Jenin refugee camp, 13 Israeli soldiers were killed in an ambush--the most military deaths suffered by Israel in a single operation since 1985. As many as 500 Palestinians are said to have died in Jenin, and Palestinians claimed the Israeli forces massacred Palestinian men and buried them in mass graves. (The Israelis denied the charges.)

Israeli officials provided the following inventory of weaponry seized during their two-week sweep of Palestinian towns and villages: 1,340 Kalashnikovs, 37 hand grenades, 70 kg of explosives and five suicide-bombing belts, among other pieces of hardware. To the Israelis, the unearthing of such ordnance and the resurgence in Palestinian suicide attacks demonstrated the urgency of their military operation against the Palestinian Authority, which they see as synonymous with the terrorist infrastructure. (The Israelis point to documents seized in Arafat's headquarters that they say prove payments for bombs and bombers are authorized by the chairman himself.) Sharon's army chief of staff, Shaul Mofaz, has told Sharon the military may need another month to finish its operation. Since the start of the assault, the Israelis have rounded up almost 1,200 men suspected of involvement in terrorist groups; in Jenin alone, the army captured more than 80 wanted men, including a few "heavy terrorists." The army says its door-to-door searches are intended to locate weapons stashes and explosives factories. They are also trying to eradicate the offensive capabilities of the Palestinian radicals by taking them on--and killing them--in gun battles. Cabinet officials tell TIME that once the operation ends, the Israelis plan to erect buffer zones inside the West Bank that Palestinians will be barred from entering.

Sharon's belligerence has won him the support of an Israeli public fed up with Palestinian suicide bombings: his job approval has risen to 62%, from 45% before the operation. But those gains have come at a steep cost to Israel's image in the world. Palestinians in dozens of West Bank towns speak of the indiscriminate brutality of the Israeli raids. A 15-year-old boy in Jenin says the Israelis handcuffed and beat him, stripped him of his clothes and locked him in an open pen for two days and nights without cover. In Nablus hundreds of Palestinians surrendered in the city's Old Square after Israeli soldiers threatened to destroy their homes if they remained in them. Though Israel says it targeted Arafat's political and military command centers, its tanks also left some Palestinian homes, schools and hospitals in ruins. Nigel Roberts, who heads the World Bank's West Bank office, says the $1.7 billion in emergency aid that he had figured the Palestinian Authority would need this year will not come close to covering the damage done by Israel in the past three weeks.

Accounts of Israeli excesses on the West Bank have stoked hostility toward Israel in Europe, where Jews have been the targets of a rash of recent attacks. Last week the European Parliament passed a nonbinding resolution calling for the E.U. to suspend Israel's preferential trading status. Meanwhile, rolling anti-Israeli street protests in the Arab world are unnerving U.S. diplomats. "We are losing friends," says a U.S. official who has long handled Middle East affairs. "People are extremely frustrated and angry about what is happening in Palestine. The protests are about Israel and the U.S."

The danger that they could continue to spread--destabilizing U.S.-friendly regimes in the region and jeopardizing the Administration's plans for a showdown with Iraq--goes some way toward explaining Washington's sudden interest in the peace process. In Morocco early last week, Powell said Israel's offensive has created "strategic problems" for the U.S. While Bush sympathizes with Sharon's campaign against terror, sources say he is frustrated that Sharon has dismissed his calls for restraint. "There is a part of Bush that recognizes that if he were in a similar spot, he'd take military action," says a senior aide. "There is also a part that knows part of that action is counterproductive."

The incoherence of the President's thinking on how to manage the conflict has produced a muddled policy and weeks of costly American inaction. "Three weeks ago we said one thing, and today we're saying something different," says a senior Administration official. The deployment of Powell was supposed to clear things up. But while the retired general's prestige in the region exceeds that of any other Administration official, he has often found himself outflanked in the White House--arguing for a more evenhanded approach to the warring parties while powerful hard-liners, led by Defense Secretary Donald Rumsfeld, push to give Sharon a freer hand. Rumsfeld argued against sending Powell to the region at all, against making any new offers to the Palestinians and against a Powell meeting with Arafat. "It's fight, fight, fight--all the time, at every step," says a Powell associate. "He's getting increasingly frustrated. Every single step in the road gets fought over." Last week, with Powell shuttling through five countries and the violence in the West Bank becoming worse, the White House kept quiet, leaving the diplomatic moves to Powell. "You can't undercut him," said a senior official. "You've got to let him do the talking while he's over there." But some Powell allies sensed a White House attempt to protect the President and saddle Powell with the blame, should his mission fail to produce results.

White House sources denied any such intrigue. "It's not about whether you're on his side or Rummy's side," says a senior official. "Powell's doing a job, a hard job. It shouldn't be an opportunity to play a political game." Even so, Powell's aides were frustrated to hear that an Administration hawk had told TIME the hard-liners are "looking past Arafat" to new Palestinian leaders. "You could do that theoretically," says a close Powell aide. "But Arafat's the person everybody's going to have to do business with, like it or not." Powell's determination to meet with Arafat--despite Arafat's refusal last month to sign a U.S.-sponsored "bridging" proposal that outlines conditions for a cease-fire--outraged Sharon, who told a group of Jewish-American fund raisers the Secretary was making a "tragic mistake."And after the Friday bombing, White House aides opened an escape hatch for Powell, saying Bush wanted to consult with him soon. "Ultimately the President is going to expect him to come home and make a report," a senior aide says.

Even if Powell leaves the region empty-handed, the situation will demand that he return. Over the past decade, Israelis and Palestinians have witnessed the collapse of every interim agreement designed to pave the way for a Palestinian state and a final territorial settlement. The mistrust has pushed the two sides farther apart on every issue of dispute and made the idea of a Palestinian state seem like an empty promise. Sharon now talks of a "long-term interim agreement" that would put off a final peace for an additional 10 years--a position that is intolerable to the Palestinians, who want a state now and are willing to continue a kamikaze war until they get it. The Israeli offensive against Palestinian civilians in the West Bank--and the Palestinian leadership's continued sanctioning of suicide attacks against innocent Israelis--has led some to wonder whether even statehood can bring a lasting peace in a place where hatred runs so deep. A Palestinian gunman from Arafat's Fatah Tanzim militia who escaped the Jenin camp tells TIME that "we are very grateful to Sharon because he made every Palestinian child, every Palestinian woman and every Palestinian man hate the Jews and hate Israel."

Allowing those sentiments to take root in an independent Palestine will only prolong the war between Arabs and Israelis, further imperil the existence of the Jewish homeland and create more enemies of the U.S. That is one reason the Administration is trying so hard to find a pathway to peace. Its strategy is still coming into focus. Says a senior White House aide: "We're in an atmosphere where everyone is waiting for someone else to go first." The first big breakthrough Powell needs is to convince Sharon and Arafat that they can wait no longer.