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Jerusalem: Could Mideast Conflict Widen?; Powell Meets With Sharon, Arafat; Are U.S. Interests Affected by the Crisis?

Aired April 14, 2002 - 22:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, HOST: There are new concerns tonight about the possibility of a widening conflict here in the Middle East. Today, Secretary Powell is in Ramallah. Tomorrow, it's Beirut and Damascus, but tonight we are live once again here in Jerusalem.

ANNOUNCER: LIVE FROM JERUSALEM, Powell's search for peace. The search for peace continues. Today, shuttle diplomacy.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: I just completed a useful and constructive exchange with Chairman Arafat and the members of his staff, and we exchanged a variety of ideas.

(END VIDEO CLIP)

ANNOUNCER: Powell sits down the Arafat, then Sharon, the result, an agreement for withdrawal, and signs of a peace conference. Plus, a humanitarian crisis in a holy city.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We had to go out because we want some bread at least, bread. We have nothing at our houses.

(END VIDEO CLIP)

ANNOUNCER: And, a region in crisis. The U.S. reacts. What's in store for the nation's capital? LIVE FROM JERUSALEM, Powell's search for peace. Here's Bill Hemmer.

HEMMER: Once again, hello and good evening from Jerusalem. You know, there was talk all day on Sunday, and frankly here in Jerusalem we had our second day of quiet. It was a nice reprieve for a change, but whether or not it stays that way will certainly be decided behind closed doors inside those meetings between the Israelis and Secretary Powell and the Palestinians and Secretary Powell. And clearly right now, no indication as to whether or not there is any progress being made right now here in the region.

We're going to examine that issue throughout the next hour. First though, our News Alert, here's what's happening, the latest on Sunday from the region. Secretary of State Colin Powell did go to Ramallah to widen his search for peace. On Monday, he heads to Beirut to try and diffuse cross-border tension between Israel and Lebanon.

Recent attacks on Israeli targets by Hezbollah guerrillas from Lebanon in the south there threaten to open up a new battle front in the region. A protest call by Hezbollah triggered a huge march in Lebanon. Thousands of women turned out to rally against Israel's offensive. Some turned their fury on an Israeli checkpoint, pelting it with stones. The demonstrators said they were marching in support of Palestinian women and children.

Israel's supporters had their stay on the streets of Berlin, Germany. Young women draped themselves in the Israeli flag and chanted pro-Israeli slogans. Demonstrators here defended Israel's military operation, saying they were a justifiable weapon against terror.

The Prime Minister Ariel Sharon has proposed an international conference on the problems facing the Middle East. He brokered that idea during talks with Colin Powell, but says that Yasser Arafat should not be involved, and that is a sticking point. Due to that restriction, U.S. officials say they are not putting much stock in the idea.

The Supreme Court of Israel has cleared the way for the burial of Palestinians killed in Jenin. The Israeli army will collect and identify the victims with the help of the Red Cross and the Red Crescent. Palestinians have charged that the Israeli army was trying to cover up a massacre, something the military in Israel strongly denies.

Now back to Colin Powell's search for peace and the mission today, for the Secretary of State. There was no breakthrough in these meetings, but certainly there was a lot of attention given to not only what was happening inside the compound in Ramallah, but also at a meeting later with the Prime Minister of Israel Ariel Sharon. On the rough road to peace tonight, Andrea Koppel is watching it every step of the way. Here's her report tonight.

(BEGIN VIDEOTAPE)

ANDREA KOPPEL, CNN CORRESPONDENT (voice over): This is what Secretary of State Powell saw as he drove into Ramallah, once a vibrant political hub of the Palestinian Authority, now a virtual ghost town. The only signs of life, heavily armed Israeli soldiers.

(on camera): This is the compound where Yasser Arafat has been under siege for weeks. Just over there, there's barbed wire. Israeli soldiers and, in fact, their tanks deployed over there in front of the compound. We'd show you but we're not allowed to film them.

(voice over): Security was especially tight this day for Powell's much anticipated meeting with Palestinian Leader Yasser Arafat, a meeting which ran three hours and ended with Powell striking an optimistic note.

POWELL: Ladies and gentlemen, I just completed a useful and constructive exchange with Chairman Arafat and the members of his staff, and we exchanged a variety of ideas and discussed steps on how we can move forward.

KOPPEL: Among those ideas, U.S. and Palestinian officials tell CNN, working to secure a quick and peaceful end to this standoff between Israeli soldiers and Palestinian gunmen at Bethlehem's Church of the Nativity, providing international aid to help rebuild ruined West Bank infrastructure, and coordinating actions to further flush out Arafat's recent statement condemning terrorism to ensure an end to suicide bombings.

Palestinian officials say Arafat told Powell he wanted to cooperate, but said the ongoing Israeli military offensive in the West Bank is a major stumbling block.

NABIL SHA'ATH, PALESTINIAN CABINET MINISTER: He will do everything possible to stop all violence, once a cease-fire is agreed, once the Israelis for once comply with what President Bush has been telling them, get out now.

KOPPEL: It's a message Powell again delivered to Israel's Prime Minister during their second meeting this week. Senior U.S. officials telling CNN Powell warned Ariel Sharon, the U.S. is very concerned about the humanitarian situation in the Palestinian territories. In particular, Powell told Sharon: "Suspicion is growing about what's going on in the Jenin Refugee Camp."

(on camera): On Monday, Secretary Powell will take a break from the Israel-Palestinian crisis and will travel to Syria and to Lebanon to focus on yet another U.S. concern, increased fighting on the Israeli-Lebanon border, and what U.S. officials fear could be the start of a wider regional war. Andrea Koppel, CNN, Jerusalem.

(END VIDEOTAPE)

HEMMER: All right, late tonight now. Let's get the perspectives from both sides. Earlier this evening, I talked with the Chief Palestinian Negotiator Saeb Erakat. He says peace can only be achieved and a cease-fire can only come about when both sides are willing, and right now he claims that Israel has abandoned its position after destroying, he says, the Palestinian Authority. Saeb Erakat earlier tonight.

(BEGIN VIDEOTAPE)

SAEB ERAKAT, CHIEF PALESTINIAN NEGOTIATOR: Sharon has made sure in the last 16 days to destroy the Palestinian Authority and he's doing a damn good job at it. He's destroying our infrastructure. He's destroying our villages, so we don't want to find ourselves giving some commitments in war in order for (UNINTELLIGIBLE) to stand two weeks from now and say Palestinians did not deliver on what they promised.

We want to have a credible situation and the credible situation of our peace begins only if we can resume our action as the Palestinian Authority, if we can resume to carry our obligation from Palestinian areas, which no longer exist because they are reoccupied by the Israelis.

HEMMER: OK. You brought up Jenin, and you used the word massacre there. Earlier this week, you said 500 Palestinians were killed there. Do you still stand behind those numbers in the refugee camp?

ERAKAT: I said 523 were killed actually since the incursions began throughout the West Bank, and I asked you a question, Bill.

HEMMER: But you said specifically and others said 500 in Jenin. Where are you getting the evidence that shows 500 people were killed there?

ERAKAT: I don't have evidence. I really can not (UNINTELLIGIBLE) but I ask one question. What do the Israelis have to hide? I heard you interviewing Richard Cook, the Director (UNINTELLIGIBLE) agency who told you the situation is catastrophic. There are no shootings. One side is shooting.

Why don't they allow CNN people to enter Jenin Refugee Camp? Why did they stop Richard Cook and his people from the U.N. to enter the refugee camp? This refugee camp is under the full legal jurisdiction of the United Nations. Why did they stop the International Red Cross to go there or (UNINTELLIGIBLE) to go there? They're trying to cover up and so far we have to --

HEMMER: Can I answer the questions you bring up there? I think those questions are very valid, and we've been pushing the Israeli government to get in there. Hopefully on Monday when the sun comes up, we'll have that opportunity. Back to my question though, Israelis say the number of dead is less than 100, closer to 70. The defense minister said that on Sunday morning. If their numbers are right and your initial numbers are wrong, will you come back here on our network and retract what you said?

ERAKAT: Absolutely. Absolutely, Bill, and I hope that the numbers will be nothing. I hope the numbers will be zero, because every human life (UNINTELLIGIBLE) and count for me. I have 1,600 names, missing people from the refugee camp. I have mothers calling me speaking about missing their daughters, their sons. I have husbands missing their wives. I have parents missing their grandparents.

And now, the number that we have been told to us throughout the West Bank incursions, 500. I hope the numbers in Jenin will not exceed - you know any number is too much. Any people killed is too much, and yet if they can't allow us to go there. They can't allow us to go to the graveyard and allow the (UNINTELLIGIBLE) and the Red Cross, I'll be more than happy to come and say yes, we were mistaken. The numbers were wrong.

But I'm afraid to tell you that they have been doing a lot of cover up. Their army spokesman two days ago said the numbers killed are in hundreds. Actually three days ago, Shimon Peres said that there is a massacre that he retracted, and I hope the numbers will be, you know, not as much as we said. (END VIDEOTAPE)

HEMMER: Saeb Erakat from earlier tonight. The Israeli perspective now from Washington a spokesperson for the embassy back in D.C. Mark Regev is our guest now. Good evening sir to you. We appreciate your time. Is Israel hiding something in the town of Jenin, in the refugee camp?

MARK REGEV, ISRAELI EMBASSY SPOKESMAN: Not at all, and you'll see in the next few days. We'll be opening the city again and people can come in and see. I think unfortunately we have seen a consistent Palestinian behavior pattern whereby they talk about massacre. They talk about murder. They try to play up atrocities, and it's just not true.

We had as you know, Bill, very, very difficult house-to-house fighting. There were casualties on both sides. There were booby- traps. There were suicide bombers. We took 23 hits on our boys. There were deaths. There were casualties on both sides, but massacre, no truth to that at all.

HEMMER: There are reports though that bulldozers are still working their way through the refugee camp. It doesn't sound good. The PR's been flat out bad for Israel the whole time. Why allow it to continue and not allow reporters to the scene to verify it?

REGEV: Well, the minute all the booby-traps are taken out, the minute we're sure that there are no bombs under the streets, there are no mines left, that there are no snipers, we will be letting other people in to have a look. That won't be a problem.

Israel is a democracy. We have a free press. We have a transparent society. Obviously, while operations are continuing that's difficult. I think today we opened up larger parts of the West Bank than before. There are a few areas that are still closed, and I expect that they will shortly be opened.

HEMMER: You know what the U.S. is asking. The U.S. is asking the military incursions to end in order to go back to the Palestinians and say, we got you this, now keep the suicide bombers out of Israel, and then let's start talking. Colin Powell's got a whole lot on the line here. Is Israel willing to allow him to fail on this mission?

REGEV: On the contrary, we're doing everything we can to facilitate a success by the Secretary of State. We want him to succeed. We want terror to finish. We want the cease-fire to kick in. We want the Tenet Working Paper to be implemented and we want to go to Mitchell, which is the agreed political plan. But nothing can happen until terrorism is dealt with seriously, and that's the fundamental problem. We're doing everything we can to help Powell, to make this a success.

HEMMER: This has been going on for 17 days now, Mark, as you well know. How much longer will this take and do you anticipate Colin Powell even to be around before this operation is over? REGEV: The war against terrorism, whether it's the United States in Afghanistan or it's us on the West Bank, it's not a magical solution. It's difficult. We're going into a very, very crowded urban center, refugee camp cities, and we're dealing with groups like Hamas and Islamic Jihad and the Al Aqsa Brigade. There's no magical solution. We're dealing with it. We're dealing with it, I hope efficiently, and speedily. We'll finish the job. We'll pull out. We've already started to pull out. You know that. We pulled out of two major cities, and just yesterday we pulled out of -

HEMMER: Here's what I want to know. Here's what I want to know though. We're getting reports that all except for three locations of the West Bank the press will have complete access at some time very soon. When that time is, I do not know. (UNINTELLIGIBLE) withdrawal perhaps immediately, that is news then. When do the tanks start rolling?

REGEV: We are moving to facilitate a state of withdrawal, but can I turn it upside down and say to you this, Bill. If we moved out in a way that wouldn't be responsible, you'd just have more suicide bombings in Israeli cities like we had last week, and what will that - that wouldn't be good for Secretary Powell's mission either. We want to have stability. We want to limit suicide bombings.

We want to have a climate that will be good for the peace process, that will be good to get the cease-fire to kick in, and by pulling out in a way that wouldn't be cautious, that wouldn't be prudent, we'd just be destabilizing the situation, and I think the Americans understand that.

HEMMER: Go back to your previous answer, Mark, if you could. You said soon. Define that word for us.

REGEV: Well, that's obviously operational, and as you know tomorrow we'll be looking at our northern border with the Secretary going to Lebanon and Syria. And here, I think, is the important message. You know, Israel pulled out of every last inch of Lebanese territory in May 2000.

Not just I say so, not just the United States says so, but the United Nations, Secretary General Kofi Annan said Israel has pulled out of every last inch of Lebanese land, yet the terrorism continues from Lebanon. Where is the international outrage? Why is the Lebanese government, the Syrian government and the Iranian government allowing Israel to be attacked?

You know if you believe the simple Arab position, they say just withdraw. Just withdraw to the international border and Israel will have peace. Well, we have a test case. We pulled back to the international border in Lebanon. Did we get peace? Unfortunately not. We got more terror and more terror.

HEMMER: All right. Secretary Powell is going to be up north tomorrow. We shall see what unfolds and transpires there. Tonight though, Mark, thanks for your time. Mark Regev, the spokesperson from the Israeli government, the embassy there in Washington, D.C., many thanks.

We're going to keep our focus now on Washington, specifically the White House right now. The White House is cautious. They are stepping very gingerly right now with Secretary Powell continues to move through the region. Major Garrett tonight on the stakes right now for the White House and this presidency.

(BEGIN VIDEOTAPE)

MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT (voice over): While the world focuses on Powell's efforts to negotiate an Israeli- Palestinian cease-fire, the first priority of the Bush White House is to prevent the conflict from spreading to neighboring Lebanon or Syria.

RICHARD ARMITAGE, DEPUTY SECRETARY OF STATE: We're very concerned with that. That's why the United States has exerted tremendous pressure on Iran and Syria to refrain Hezbollah from these actions.

GARRETT: For two weeks, Hezbollah guerrillas, backed by Iran and Syria, have traded fire with Israeli forces. Powell will travel to Beirut and Damascus to meet Monday with leaders of both countries to halt what the U.S. regards as dangerous and destabilizing provocation.

CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: This is an issue of accountability for the parties in the region. Secretary Powell is in the region to call to account all of the parties that have a role to play here, to play a responsible role.

GARRETT: Top aides say they hope Powell can contain the conflict, even if he fails to negotiate an immediate cease-fire, and those talks are mired in the question of Israeli withdrawals from the West Bank, and pushing Palestinians to act against terrorism.

Senior officials on Sunday noted some progress, but said Israelis and Palestinians still had much more to do.

RICE: This has been a decades old conflict, and there's a reason for that, and that is that it requires hard steps to move forward.

GARRETT: Senior aides say containment is a modest and achievable goal, a prelude to more progress. But some in Congress want more.

SENATOR CHUCK HAGEL (R) NEBRASKA: The time for nibbling around the edges is over. We are seeing an escalation of a magnitude that we've probably never seen with the kind of unprecedented violence.

GARRETT: But other analysts warn that bold moves could come back to haunt the Bush White House.

DAVID MAKOVSKY, WASHINGTON INSTITUTE FOR NEAR EAST POLICY: I think the administration wisely says unless we know that a political process is going to bear fruit, we are not going to set the bar so high that we're setting ourselves up to fail. GARRETT (on camera): The White House says progress in the Middle East is nothing, if not incremental and for now, senior advisers say, success is measured not by startling breakthroughs but by making sure things aren't getting any worse. Major Garrett, CNN, the White House.

(END VIDEOTAPE)

HEMMER: All right, let's pick more on that topic right now about the possibility for a widening conflict here. From Houston tonight, Edward Djerejian is our guest tonight, former Assistant Secretary of State for Near Eastern Affairs and a former Ambassador also to Syria and also here in Israel.

Mr. Ambassador, good evening to you. I'm curious to know if you think these cross-border clashes, are these just provocations or do you have any sense right now that there are elements within the Middle East right now that would really like to go at an all-out war with Israel at this point?

EDWARD DJEREJIAN, FORMER ASSISTANT SECRETARY OF STATE FOR NEAR EASTERN AFFAIRS: Bill, I do not see any of the Arab leadership in countries like Syria or Lebanon obviously. Some of the more moderate Arab states who are seeking a military confrontation with Israel, that would put them at tremendous military risk and secondly, I think that that would prove to be very destabilizing to their own regimes.

So I don't see a war effort underway, but what I do see, which is very disturbing and that, I believe, is why Secretary Powell is going to Beirut and I understand Damascus, is that the situation on the northern border with Israel, between Lebanon and Israel can become very destabilizing, can escalate out of control, and can lead to a wider conflict, even though it may not be planned by the leadership.

HEMMER: If that's the case, Mr. Ambassador, Colin Powell goes to Beirut and Damascus tomorrow and then says what?

DJEREJIAN: Well basically, he tells the leadership in Lebanon and in Syria that they must do everything in their power to restrain Hezbollah. Hezbollah has its own agenda. You know, Bill, it's very important the role of Hezbollah in terms of the intifada of the last 18 months.

When the IDF, the Israeli Defense Forces, withdrew from Lebanon, unilaterally withdrew until Prime Minister Ehud Barak, Hezbollah claimed absolute victory and sent a message to Yasser Arafat, Sheik Nastralla (ph) the leader Nastralla sent a public message and said, you see we have shown the path. It is resistance, not Oslo, not negotiations.

And this concept, this perception caught fire amongst the Palestinians and in the Arab world, and it is a very important fact. Hezbollah is showing its solidarity with the Palestinians by keeping that border heated up over the Shebaa Farms issue.

HEMMER: Back here in the Middle East, tell us this between the Israelis and Palestinians in the short time we have left here. Do you see a lynch pin in this conflict? In other words, do you see one side making a move that opens up the door of opportunity for the other side to follow through and walk through it?

DJEREJIAN: I do think there is a possibility. It's a fragile one, and I think basically what it is is that we have to get out of this chicken and egg sequential, you do this, I'll do that, which you're seeing on many of your commentators, both in the region and in Washington, commenting on.

I think we have to get into a scenario where you have parallelism, in other words a context that's put into place where both sides take parallel steps leading obviously Tenet, Mitchell, plus, and the plus is really a political context to which both side could gravitate, a roadway toward a peaceful negotiation.

HEMMER: It might be easier said than done. I guess with Colin Powell in the region, do you see his visit here like some others do in Washington? This is Powell's mission, his mission only, it's sink or swim and up to him?

DJEREJIAN: Well, Condy Rice and the administration made very clear that President Bush has given Secretary Powell a wide mandate to do what he needs to be done on the ground. But the President has put himself on the line. On April 4th, he made a very declarative statement of policy. He leaned heavily on both sides. The administration is committed. It's the administration that's committed. It's not the commitment of just one person.

HEMMER: Mr. Ambassador, thank you. Edward Djerejian, live there in Houston tonight, sharing his thoughts on the region and the peace process going forward. Again, thanks to you sir. We'll talk again.

In a moment here, the protests that we're now seeing on world capitol city streets throughout the entire globe. We'll have those for you when our coverage continues. Once again, it is early on a Monday morning here in the Middle East. LIVE FROM JERUSALEM will continue after a quick break here.

ANNOUNCER: Coming up, as the violence continues, so do the protests. Washington is next. A look ahead to the march on the capitol, when LIVE FROM JERUSALEM CONTINUES.

(COMMERCIAL BREAK)

HEMMER: Once again, as we've been reporting throughout the evening here, we are told at some point very soon, in the words of some spokespeople within the Israeli government, reporters will get more and greater access throughout different parts of the West Bank, with the exception of three different areas we're told in Ramallah, around Yasser Arafat's compound, around Manger Square in Bethlehem, and the Church of the Nativity, and also in that refugee camp in Jenin. We're still working our way in those areas, especially Jenin and hopefully with sunup on Monday, we'll have a bit more success.

Meanwhile, as we continue to monitor and gauge reaction around the world, some videotape now from the city of San Francisco. Supporters and demonstrators out in the streets on Sunday afternoon, the scene of a pro-Israeli and pro-Palestinian demonstrations today. They rallied against each other. Protesters for both sides insisted the news media portraying them unfairly.

About 1,000 supporters of Israel rallied also in Manhattan. They were not pleased that Secretary of State Powell had that meeting with Yasser Arafat. A New York City assemblyman said talking with the Palestinian leader was the same as negotiating with Osama bin Laden. The rally's organizer prayed Arafat would get his stated wish to become a martyr.

Thousands of demonstrators getting ready to hit the streets in Washington, D.C. It is a very large, pro-Israeli demonstration. For a preview, here is Patty Davis in the nation's capitol.

(BEGIN VIDEOTAPE)

PATTY DAVIS, CNN CORRESPONDENT (voice over): A pep rally at George Washington University's Jewish Student Center, ribbons, signs being readied for the pro-Israeli demonstration in Washington. For student activist Mosheh Oinounou, it's a call for an end to deadly suicide bombings like the one on Passover that nearly claimed his aunt.

MOSHEH OINOUNOU: When you find out that she was across the street at the time the explosion happened and was on her way inside the hotel.

DAVIS: Organizers expect tens of thousands to rally at the U.S. Capitol, their message -

MALCOLM HOENLEIN: We're showing solidarity with the people of Israel. Americans standing together against terrorism, standing with our administration and standing with our Congress.

DAVIS: A full page ad in the Washington Post promoting the rally, equates Israel's military offensive in the West Bank with the U.S. War on Terrorism.

HOENLEIN: The point is to get people an understanding of why is Israel doing what it's doing. They have suffered the equivalent in numerical proportions of nine September 11th.

ELIE WEISEL: I fought this fight against terrorism and therefore we are coming to Washington to say to the President, please go on, and terrorism is terrorism, and we must stop it.

DAVIS: The demonstration follows last week's pro-Palestinian protest near President Bush's Crawford, Texas ranch. In Chicago, Palestinian and Israeli supporters face off across the street.

DAVIS (on camera): Organizers say demonstrators from Texas to Florida to Wisconsin are jamming busses and airplanes to get to the rally.

DAVIS (voice over): This group in Houston also making its way. DEBBIE SILBERMAN: We are going to Washington to lobby our ideas and our beliefs and our stand for Israel.

DAVIS: Back at the Jewish Student Center in Washington.

OINOUNOU: Messages of support, messages of hope. You know messages, you know letting the Palestinians know that we're willing to have peace. There is peace possible, only when terrorism stops.

DAVIS: A message Moshe Oinounou and these students hope will be heard in the Middle East. Patty Davis, CNN, Washington.

(END VIDEOTAPE)

ANNOUNCER: Coming up, LIVE FROM JERUSALEM, a look at a people under siege.

UNIDENTIFIED MALE: There's a huge number of weapons in there.

ANNOUNCER: The standoff in Bethlehem is still to come.

(COMMERCIAL BREAK)

ANNOUNCER: Yasser Arafat's compound in Ramallah was originally designed as a British prison in the 1930s. It later served as a regional headquarters for the Israeli army. It became Arafat's headquarters in the West Bank in 1994.

HEMMER: Welcome back to Jerusalem as we roll on here at the half hour. I want to check our top stories from Sunday that rang throughout the area here. Secretary of State Colin Powell went to Tel Aviv after a visit in Ramallah. In Tel Aviv, he met with Israel's Prime Minister Ariel Sharon.

Sharon suggesting that there should be an international conference on the troubles in the Middle East. The Secretary of State said the U.S. might he interested in hosting that event, but others say it is a non-starter at the outset.

Colin Powell heads to Lebanon, then Syria tomorrow. He flies to Beirut on Monday to talk about the cross-border fighting between Hezbollah guerrillas in Lebanon and the Israelis across the side.

For the past two weeks' time, Israeli forces have been trading fire with suspected Hezbollah militants entrenched in the Lebanese border. Hezbollah had been firing mortars at Israeli positions inside the Golan Heights. Israel has responded with heavy air attacks, all this bringing out the possibility of a widening conflict here in the region that is in part chiefly why Colin Powell will head up there tomorrow on Monday.

Meanwhile, earlier on Sunday in Ramallah, Secretary Powell went to visit Chairman Arafat in Ramallah. This has been a place under siege for 17 days, especially the area where Yasser Arafat's compound is located. Michael Holmes has been there at the outset. The Israeli government says it went in there to help uproot the infrastructure of terrorism, but as Holmes reports tonight, that campaign may have the opposite effect. Here's Michael Holmes.

(BEGIN VIDEOTAPE)

MICHAEL HOLMES, CNN CORRESPONDENT (voice over): Colin Powell arrived at a cleaned up Palestinian Authority headquarters. Crushed cars and debris that were there yesterday gone today. Same for tanks, APCs and armored vehicles, the car park, a car park once more, the armor patrolling outside instead of inside the compound.

As the meeting got underway, international activists, there are many here, looked around the corner but got no further. About a dozen of these activists have made the trip here by foot, about 30 of their compatriots are inside the compound with Yasser Arafat. This is as far as they'll get however.

You can see Israeli troops and border police behind, have stopped their path. They're about 200 meters from the perimeter wall. You can see the compound in the background. They'll get no further and neither will we.

The city Colin Powell drove through is a world way from Jerusalem, although it's barely ten miles drive. A little more than two weeks ago, Ramallah was the thriving home to almost 50,000 people, a substantial middle-class bustling streets and stores, cultural centers and schools, a community.

Israel says what also thrived in Ramallah was a terrorist infrastructure directed by Yasser Arafat. The 50,000 people are still here behind closed doors under curfew. Their community, they say, is not. Much here has been destroyed or damaged from private homes to cultural centers, local government offices, to police stations, all necessary, says Israel, in its hunt for terrorists.

We drove a mile from Arafat's compound to the home of Ghassam Khatib, a university professor.

GHASSAM KHATIB: The streets, the institutions, the services, anything you can think of is completely different than before.

HOLMES: Forget for a moment the politics of Ramallah, the Palestinian Authority headquarters. Forget too the security headquarters, partially built with American money. Legitimate targets, says Israel, in its war on terror. Look instead, say people like Ghassam Khatib, at the damage to the things that keep a city running.

KHATIB: When they steal for example all the computers from the education ministry and damage all the structures, especially the computers of the statistical bureau of the Palestinian Authority. They are creating damage that is irreversible.

HOLMES: When the territories were meant to switch to summertime earlier this month, the clocks didn't change. There was no functioning government to issue the order. One senior Palestinian official said of the damaged infrastructure, Yasser Arafat doesn't have the power to flush the toilet, let alone run a government. There were armed Palestinians here in the first days, no doubt. We saw them, filmed their battles with Israeli soldiers, but in the past couple of weeks, say locals, door-to-door searches may have damaged the tangible, but hardened the psyche of the people.

KHATIB: Instead of the pretended objective of this operation, which is stopping the Israeli violence, they are creating the right atmosphere and the right psychology for an increase in the Palestinian resistance to the Israeli occupation.

HOLMES: Michael Holmes, CNN, Ramallah.

(END VIDEOTAPE)

HEMMER: Yasser Arafat has been in Ramallah dating back to December, but there are a number of questions around the Arab world tonight about who indeed might be helping the Palestinian leader and helping him find a way out of this.

Let's go to Washington once again and talk with Mamoun Fandy, a professor of Middle East studies, our guest tonight from Washington, D.C. Good to see you. Good evening or good morning I should say from Jerusalem here. Answer the question for me, if you could, who in the Arab world right now is talking with Yasser Arafat, influencing him and possibly helping him to find a way out?

MAMOUN FANDY, NATIONAL DEFENSE UNIVERSITY: I think the first to help him were the Egyptians. I mean the first chief diplomat we saw next to Arafat in Ramallah the other day was Ahmed Mahir (ph) the Foreign Minister of Egypt, and probably a day after we saw that Arafat also signed a statement practically telling his people that he condemns the suicide bombing and all of that. So, Egypt is playing a very important and pivotal role in that drama, and probably the Saudis are playing a major role as well.

HEMMER: You mentioned the Egyptians first. Do the Egyptians have most sway here or is it the Crown Prince Abdullah in Saudi Arabia that might hold equal sway?

FANDY: Well, I think Egypt has a lot of sway for a simple reason. Egypt was the first country in the region to blaze that trail of peace when President Sadat went to Jerusalem. Egypt has a special relationship with the United States, has a special relationship with the Palestinians. It also has formal peace agreement with Israel and has diplomatic relations with Israel, so Egypt can talk to everybody.

Of course the Saudis are absolutely helpful, and the Saudi initiative was extremely helpful. But, still Egypt is open to everybody. Cairo is still a place to go for Israelis, Americans, and Arabs, also to do any kind of back channel negotiations sometimes.

HEMMER: Let's move to the north now and Lebanon, and give us your perspective right now. We've been reporting throughout the day, you know Secretary Powell will be there tomorrow. We have asked a number of people throughout the day about this widening conflict and the possibilities thereof. From your perspective in Washington, how do you see it fitting in right now?

FANDY: I think it's very important. The issue of Lebanon is very central. Lebanon is a frail and fragile state with a giant organization in the south called Hezbollah, and you have to help the Lebanese to really control their territory. You make sure that the conflict is contained and a spill over to the north is very problematic and a recipe for disaster, because that would widen the whole scope and bring in other players.

It would not bring in the Lebanese only. It would bring in the Syrians and all of a sudden we have really a wider war that threatens the whole stability of the region. So it's very important to make sure that Hezbollah is quiet.

HEMMER: Do you think if Hezbollah could have its way, it would enter the fray and get involved in a conflict with Israel at this point?

FANDY: I think it is - after Israel withdrew, I think Hezbollah behaved responsibly, but right now the situation does not look good, and of course the spill over and the tension in the region is creating a lot of problems and probably it might get Hezbollah more important positions to stake a claim for the Lebanese state. It's very important that the Lebanese state itself becomes very functional and is very much top prop up the legitimate Lebanese government and help the Lebanese government to be at the forefront of all of this. Otherwise, we'll have a serious problem.

HEMMER: As you well know, Colin Powell will be there tomorrow, and hopefully the situation there will stay at least as quiet as it's been, despite the cross-border dispute and shelling that we have witnessed here. If you were in that compound in Ramallah, what would you be advising Yasser Arafat right now?

FANDY: I don't know if advice helps. I think if the chief diplomat of the only super power left met with President Arafat, then that's the way to go. There is no other way, except the American way, and he has to listen carefully, I think, to the Americans and to the Egyptians and to people who care about the Palestinians and the Palestinian future, and also care about both sides of that conflict, because in the final analysis, you need to make peace in a region that's stable.

For the two states to emerge, they have to be states that are willing to live in peace with each other, as well as with the rest of the region. So, the only country that can guarantee that peace is the Unites States of America and listening to the Americans very carefully, that will be the way.

HEMMER: Easier said than done. Yes. Thank you, sir. Mamoun Fandy, back there in Washington, D.C. Thanks for your thoughts tonight.

FANDY: Thank you, Bill.

HEMMER: In a moment here, we're off to Bethlehem. The standoff does continue there. Sheila MacVicar was in Bethlehem earlier on Sunday. Her report on a city still under siege.

(COMMERCIAL BREAK)

ANNOUNCER: The Jenin Refugee Camp was established in 1953, and has a population of around 15,000 people. While some residents work around Jenin, many depend on finding work inside Israel proper.

HEMMER: Welcome back to LIVE FROM JERUSALEM. The sun is about coming up here on Monday morning. The Israeli Supreme Court on Sunday issued a decision after filing an injunction for two days on the removal of bodies in the refugee camp of Jenin. It now says the Israeli army can move those bodies. In fact, in a court order, it said that the Israeli army can collect and identify the victims with the help of the Red Cross.

Palestinians say as many as 500 may have died there. Israel says the number is closer to 70 or 100. The bodies will be given to the Palestinians for burial, but if they're not done quickly, the army will then bury them itself.

Palestinian officials have accused Israel of carrying out a massacre in the camp and trying to cover it up by burying victims in unmarked graves. Meanwhile, also in the West Bank town of Bethlehem, that standoff continues at the Church of the Nativity, Manger Square still ringed with Israeli troops there.

On Sunday, the Israeli government made an offer to those holed up inside. They can surrender for arrest, or they can sign a paper and be evicted from the entire region, never to come back again. To Bethlehem now and the streets there where Sheila MacVicar now reports that trying there and the going is still very tough for those still inside the town.

(BEGIN VIDEOTAPE)

SHEILA MACVICAR, CNN CORRESPONDENT (voice over): The sound of Bethlehem, Manger Square, early Sunday morning. For 14 days after the Israeli military went back into Bethlehem, 13 days after Palestinian gunmen, the Israeli military says 200 of them took over the church of the nativity, the people of Bethlehem have been under siege.

The city is a mess. No garbage has been picked up. Conditions are ripe for breeding disease. Food is rotting. It smells. The water system is damaged, and this family told us they had enough water left for only one day. When people do come out on the streets of this neighborhood of the Old City, it is because they must.

UNIDENTIFIED FEMALE: We had to go out because we want bread, at least bread. We have nothing at our houses, nothing at all, without electricity or no water, nothing.

MACVICAR: All it takes to clear the ally is the brief sight of Israeli soldiers. In seconds, the ally is deserted, the shutters closed. Canon Andrew White, the Anglican Church's envoy, went to Bethlehem to see conditions there. REVEREND CANON ANDREW WHITE, MIDEAST ENVOY OF ARCHBISHOP OF CANTERBURY: The humanitarian crisis is really quite enormous. We're hearing stories literally by the hour of people who are without food and water, without medicine.

MACVICAR: Bethlehem civilians are trapped, caught between the Israeli military and the Palestinian gunmen.

MACVICAR (on camera): The Israelis say their troops will not pull back from Bethlehem in spite of what is clearly a growing humanitarian crisis until they can end the siege at the Church of the Nativity, and so far there has been no way found to break that deadlock.

Meeting his cabinet on Sunday, Prime Minister Ariel Sharon laid out his offer to break the siege. The Palestinian gunmen in the church could either accept permanent exile, he said, or stand trial in an Israeli court.

Palestinian officials says in spite of the price their people are paying, those choices are unacceptable. There is no sign the resolve of any of those holed up in the church is breaking. Canon White sees every day to the clerics trapped inside.

WHITE: There's a very serious health hazard in there and we also know there's a huge number of weapons in there as well. So, all in all you have a humanitarian crisis, but you also have potentially almost an apocalyptic crisis waiting to take place within there.

MACVICAR: Walking in Bethlehem, you feel the clock ticking, a people under siege, a standoff with gunmen the Israelis say are terrorists, and not a solution in sight. Sheila MacVicar, CNN, Bethlehem.

(END VIDEOTAPE)

HEMMER: In a moment here, back to Jerusalem where Israelis riding the bus, some fearing it might be their last ride yet. John Vause went along for a ride on Sunday. His report, Israelis living and riding in fear, when our coverage continues.

(COMMERCIAL BREAK)

HEMMER: Back here in Jerusalem now, I want to take a bit of a closer look, more of a focus on Israeli daily life here, riding in fear. We saw the event last Wednesday morning in Haifa, when a suicide bomber blew himself up on a bus. We also saw it on Friday, just outside of a bus stop in central Jerusalem. Tonight, John Vause and a look at Israelis right now, riding in fear, that their last bus ride may indeed be their last even.

(BEGIN VIDEOTAPE)

JOHN VAUSE, CNN CORRESPONDENT (voice over): Take a ticket and take your chances. It's a way of life for the one million Israelis who catch a state subsidized bus every day. There's standing room only on Bus #6, the same bus route where two days earlier a suicide bomber was stopped in a doorway, exploded herself and killed six people, injuring dozens of others.

For the passengers on #6, this latest attack has simply added to their already substantial fear. Like Ehuva (ph), she doesn't own a car, can't afford taxis, the bus is her only choice. Twice a day now, she passes the stop outside the city's main market where the suicide bomber tried to board.

It's a quiet anxious ride. Few people talk or smile because they know last Friday, it could have been them. Are you nervous?

UNIDENTIFIED FEMALE: I am nervous.

VAUSE: Two times a day, Sheila McSlotkey (ph) takes the bus. She prays to God she'll survive the journey.

There have been ten suicide bombings on busses since the start of the intifada, but authorities believe many more have been stopped by bus drivers, who can refuse to pick up passengers who look suspicious. In 23 year, Cion Lacouney (ph) has never been attacked. He says he knows what to look for.

"There are people who are suspicious. If they get on on a hot day like today and they're wearing a jacket or a big coat, I check it out. I don't have a choice" he says.

(on camera): There really is nothing routine about catching a bus in Israel. Many of the passengers say it's a bit like a game of Russian roulette, because they say there's always a chance that the next person who tries to get on could be a suicide bomber.

(voice over): For Israelis, random choices and events can mean being in the wrong place at the wrong time. It can often mean life or death. John Vause, CNN, Jerusalem.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

HEMMER: Welcome back to Jerusalem. The seeds of conflict in this region, where essentially some more than 100 years ago when Jews from all over the world started migrating back to their biblical homeland. It has not been an easy road ever since. Gary Tuchman now tonight and a history lesson.

(BEGIN VIDEOTAPE)

GARY TUCHMAN, CNN CORRESPONDENT (voice over): May 14, 1948, Israel declares its independence. A new nation celebrates, but less than 24 hours, the Jewish state is attacked by Egypt, Syria, Lebanon, Iraq and Jordan. The message to Israel and the world was, we don't accept the United Nations partition dividing British-controlled Palestine into Arab and Jewish nations.

PROFESSOR KENNETH STEIN, EMORY UNIVERSITY: The Arab world was not pleased by a Jewish State in the middle of the Muslim heartland. It didn't believe that the Zionists had the right to be there. They believed that they were a minority.

TUCHMAN: Zionists, people committed to establishing a Jewish state, as well as Jewish refugees had been moving to Palestine in large numbers since the 19th Century.

STEIN: Most of the land, which was in their possession, when partition was suggested was the most (UNINTELLIGIBLE), the best Arab land, the land that could grow the best crops.

TUCHMAN: The U.N. said it divided the land based on the demographics, so effectively the minority Jews got much better fertile land. The Palestinian Arabs who are already angry over the British oversight thought the partition was unfair. The war lasted 15 months. Israel overwhelmed the numerically superior Arab forces, who were intent on Israel's destruction. The Jewish nation ended up with more land than what was planned under the partition, including half of Jerusalem, which under the partition was supposed to be an international city. Palestinian refugees fled, some of them forced out, others encouraged to leave by Arab leaders as warfare ravaged the Holy Land.

TUCHMAN (on camera): Armistice agreements were signed with the Arab nations, but the vanquished countries did not call for peace. Instead, more fighting and wars were just around the corner, as Egypt and Jordan took control of most of the land that was supposed to be the independent Palestine. Gary Tuchman, CNN.

(END VIDEOTAPE)

HEMMER: And with the birds chirping, the dawn of another day here in the Middle East. It is already Monday here. Who knows what may happen today. I'm Bill Hemmer, thanks for watching LIVE FROM JERUSALEM. I'll see you again later on Monday.

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