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For someone who has pledged to die a martyr, Yasser Arafat resists intimations of mortality. A year ago, his doctors told TIME that Arafat might have stomach cancer, but the Palestinian leader refused to leave his besieged compound in Ramallah to seek treatment; if he did, Arafat feared, the Israelis might block him from returning. In recent weeks, as his health deteriorated, Arafat's official spokesmen said it was nothing serious. By early last week, Arafat couldn't keep food down; even the cornflakes he ate on Thursday morning had to be pureed. He was unable to move his legs fully and couldn't see from one eye. On Thursday morning, a group of visiting doctors from Egypt, Tunisia and Jordan, along with a Palestinian colleague, went to Arafat's bedroom and told him that he was suffering from a "very serious" deficiency of blood platelets but that they couldn't diagnose the problem properly in Ramallah. One of the doctors told TIME that the blood problem may be the result of "an infection caused by a cancerous growth," most likely in the stomach.

And so, after three years of squalid isolation in Ramallah, Arafat finally won his freedom last Friday morning, aboard a Jordanian military helicopter that ferried him to Amman. From there he boarded a French Embraer jet bound for Paris. Arafat's aides insisted he wouldn't die in exile, but never has his fate seemed more precarious.

In Washington, where Middle East hands have long joked that Arafat would outlive them all, officials say privately that the Palestinians may be about to lose the only leader they have ever known. "It looks like it's very serious," says a senior State Department official, "and he may not make it."

No one was monitoring the health reports out of Ramallah more avidly than Arafat's old foe Israeli Prime Minister Ariel Sharon. For perhaps the final time, the two lions of the Middle East conflict find their destinies entwined. Sharon has promised that if Arafat is able to return, Israel won't block him. But just as a potentially seismic shake-up of the Palestinian leadership was developing, there were deep rumblings on the Israeli side as well. Sharon won approval last week in Israel's parliament, the Knesset, for a bill scheduling the withdrawal of Israeli settlers from Gaza to begin next June.

Sharon's aides say the plan, which would involve uprooting 21 settlements in Gaza and four in the West Bank, would make it easier to defend Israelis against terrorist attacks and deflect international pressure on Israel to engage in peace talks. But while 60% of Israelis support the proposed withdrawal, Sharon faces escalating opposition from right-wing Israelis who condemn the plan and from some of his own Cabinet ministers, who have threatened to resign unless Sharon holds a national referendum. It's a sign of the fervor Sharon faces that an increasing number of right-wingers talk about him in terms usually reserved for Arafat. "Ariel Sharon is a dictator," says Elyakim Levanon, an influential settler rabbi. "He is breaking democracy in Israel."

Arafat's failing health poses a dilemma for Sharon. Since he unveiled his disengagement plan late last year, Sharon has successfully sold it to the Israeli public and to the Bush Administration as an alternative to the peace process, allowing him to put off indefinitely negotiations over a final two-state settlement. As Sharon sees it, Arafat is a terrorist, and Israel won't negotiate with him. Israel, the argument continues, should pull out of Gaza and set up a more defensible position in the West Bank while waiting for Arafat to die and be replaced by someone Sharon can trust. Sharon's critics in the Knesset argue that any efforts to unilaterally withdraw from Gaza should be frozen until peace talks can be restarted with a new, more acceptable Palestinian leadership.

Sharon's deputy and chief disengagement proponent, Ehud Olmert, says it's too early to change tack just because Arafat is sick. Sharon will have to wait and see who emerges as Arafat's successor and how strong his position is. "It could take a long time," Olmert says.

Behind the scenes, the jostling has begun. Late Thursday night, as bulldozers cleared the courtyard of Arafat's compound of the concrete-filled oil drums and wrecked cars dumped there to prevent Israeli special forces from landing a helicopter to kidnap or kill Arafat, members of the P.L.O. Executive Committee met to discuss who would assume leadership duties while Arafat was abroad. No leader wanted to appear to be jumping into Arafat's shoes before he was dead, but P.L.O. chiefs told TIME they decided that in the absence of Arafat, Secretary-General of the P.L.O. Executive Committee, Mahmoud Abbas, would become head of the P.L.O. and of the powerful Fatah faction. Abbas will probably keep a low profile until the results of Arafat's Paris tests are in, but it's clear he's preparing to take control. Meanwhile, P.L.O. leaders expect that in Arafat's absence, Prime Minister Ahmed Qurei will begin carrying out the reforms of the security forces demanded by Israel and the U.S.—reforms that Arafat has blocked.

If Arafat were to die, the Palestinian constitution dictates that parliamentary speaker Rauhi Fattuh take over as President for 40 days, until elections might be held. Most top Palestinian officials believe Abbas, who resigned as Prime Minister last year after accusing Arafat of undermining his authority, would almost certainly win. Some Palestinian observers, however, questioned how long the clerkish Abbas would last if a challenge emerged later from a more ruthless opponent. The P.L.O. chiefs fear that without Arafat, the armed gangs ruling Palestinian towns wouldn't have even the modest restraining influence "the old man," as they call him, has had over them. The resulting civil unrest could doom Palestinian aspirations for statehood. "We have to avoid anarchy, because we know the alternative is that the Israelis will come in and take over," a senior Fatah official told TIME.

Israel is facing a power struggle of its own. Sharon won Knesset approval for his Gaza withdrawal plan with the support of left-wing and Arab parties. But his right-wing bloc split. The crisis of legitimacy has shocking similarities to the internal divisions that shook Israel before the 1995 assassination of Prime Minister Yitzhak Rabin. Some soldiers threaten not to carry out Sharon's orders to evacuate settlements, and their influential rabbis back them. The plan poses a dilemma for the religious Zionist movement at the heart of the settlement project. Its early rabbis decreed that Zionism was God's work because it reclaimed the land of Israel, even if many of its leaders were secular Jews. But if the Zionist state hands over land to the Palestinians, then, as some rabbis and their followers fervently believe, the state is no longer doing God's work, but Satan's.

The settlers view Sharon as a sellout. For years, he urged them to "grab hilltops" so that the land could never be given to the Palestinians in a peace deal. Now, says Arieh Eldad, a right-wing lawmaker, "Sharon is betraying everything he preached for so many years. He is betraying the people he sent to these hilltops, and they feel stabbed in the back. It may lead to civil war." While that's remote, a poll last month showed 7% of Israelis believed resisting the government by force of arms would be justified. Israeli intelligence fears an attack on the Prime Minister or on a politically charged target like the Temple Mount. "God forbid that anyone should touch the Prime Minister," says settler leader Levanon, "but some kind of violence will erupt under this stress."

In his own Likud party, Sharon faces political threats. Finance Minister Benjamin Netanyahu reluctantly backed Sharon's disengagement bill in the Knesset but then said he'd resign in two weeks if Sharon didn't agree to put the entire plan to a national referendum. Briefly Netanyahu threatened to run against Sharon for the Prime Minister's job, though his aides backed off that remark.

Sharon's next move may be determined most by Arafat's prospects for survival. If Abbas eases into the Palestinian driving seat, Sharon will face pressure to go back to the negotiating table. When Abbas was briefly Prime Minister last year, President Bush backed him and Sharon had to go along—until Arafat's backstairs maneuvers frustrated Abbas into resignation. Israeli political analysts believe that despite his condemnations of Arafat, Sharon was perfectly happy to let his old nemesis linger on in Ramallah, providing a flesh-and-blood excuse to avoid peace talks. A new Palestinian partner would force Sharon to decide whether he's truly willing to make further concessions to achieve a comprehensive peace. For both sides, that test could prove to be just as fateful as the treatment undertaken by Arafat's French doctors.

• MATT REES JERUSALEM