With Yasser Arafat released from his month-long confinement in Ramallah and Israeli Prime Minister Ariel Sharon set to visit Washington for talks this week with President Bush, the Middle East crisis is on the verge of a new round of diplomatic struggle. Israeli officials tell TIME that Sharon, hoping to pre-empt U.S. and Saudi initiatives, will make a new concession on Palestinian statehood, conditioned on "serious, concrete and continued steps against terrorism" by Arafat. Israeli officials say the concession will involve a new map for a potential Palestinian state. U.S. officials say they won't know the details until they meet Sharon face to face, but they expect much. Says a senior U.S. official close to the talks: "He's got to be willing to say that the [Palestinian] state will come in a reasonable time frame; it has to be viable [that is, territorially contiguous], and even if it's established on an interim basis, it's got to be linked to a final settlement." Whatever his proposal turns out to be, Sharon is not expected to back down on his feelings about Arafat. Israeli officials say Sharon will come armed with new, hard evidence of the Palestinian leader's continuing complicity in terrorism.
For his part, Arafat is enjoying the freedom he gained when the Israelis ended their siege of his Ramallah compound. His supporters are enjoying it too. In Bethlehem, where Palestinian gunmen, civilian officials and priests at the Church of the Nativity have been under siege almost as long as Arafat, gunmen in the church thought Arafat's freedom would lead to their own release and started firing their rifles into the air in glee, sources inside the church tell TIME. Israeli soldiers outside thought the shooting was directed at them and launched flares, which set fire to the roof of the church compound and damaged rooms in its Franciscan and Dominican areas but left the Byzantine basilica itself intact.
His confinement over, Arafat wasted little time reasserting his authority. On Thursday, he contacted his chiefs inside the church and told them he would handle all further negotiations over the siege, canceling a planned meeting between Israeli officials and leaders inside. Palestinian sources say Arafat wants to make political capital out of his control over the situation and make it appear that he is the only one who can come to the rescue of the site where Jesus is believed to have been born. --By Matt Rees/Jerusalem and Massimo Calabresi/Washington