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CNN Wolf Blitzer Reports

Special Edition: Crisis in the Middle East

Aired April 14, 2002 - 17:00   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.
WOLF BLITZER, HOST: Now, on this special edition of WOLF BLITZER REPORTS, live from Jerusalem.

The crisis in the Middle East leads to a new era of shuttle diplomacy, this time with Secretary of State Colin Powell. His meeting with Palestinian Authority President Yasser Arafat lasted more than three hours.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: It was 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 how we can move forward.

(END VIDEO CLIP)

BLITZER: Then Secretary Powell moves on to hours of meetings with Israeli Prime Minister Ariel Sharon, aiming to set a timetable for ending the military operations in the Palestinian territories.

And with another hot spot flaring up, a new round of meetings are set for Powell and another key player in the Middle East.

Hello. I'm Wolf Blitzer, reporting live from Jerusalem. Welcome to our viewers in the United States and around the world.

A new round of shuttle diplomacy, that tops our Middle East alert.

Secretary of State Colin Powell describes his meeting with Yasser Arafat as, quote, "useful and constructive." The two men met for three hours today inside Arafat's Ramallah compound, which is surrounded by Israeli forces. Arafat said his top concern is humanitarian hardships caused by Israel's West Bank incursions.

A State Department spokesman said Powell raised some of those humanitarian concerns in talk tonight with the Israeli Prime Minister Ariel Sharon. It was their second meeting. Sharon's spokesman said the prime minister proposed an international conference on the Middle East crisis.

Tomorrow, Secretary Powell will travel to Syria and Lebanon, in an effort to stem tension along Lebanon's border with Israel. Suspected Hezbollah militants have been attacking Israeli army outposts since the start of the West Bank incursion. Israel has responded with heavy air attacks.

And some 200 Palestinians holed up in Bethlehem's Church of the Nativity have rejected an offer by Israel to end the standoff. A government spokesman says they were offered a choice of standing trial in Israel, or accepting exile for life.

There's still no indication when precisely Israeli troops will withdraw from the West Bank. The Israeli incursions began some two weeks ago. But for an hour tonight, the Israeli prime minister met for a second time with the visiting Secretary of State Colin Powell. They met in Tel Aviv. Earlier, Powell was in Ramallah on the West Bank for talks with the Palestinian leader.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): In the three-hour meeting in Arafat's Ramallah compound, Powell insisted Palestinian suicide bombings must stop. Arafat's reaction is: The Israeli incursions into the West Bank must end first. His top concern, so-called humanitarian hardships, specifically the two-week Israeli siege in Bethlehem and the Israeli military action in Jenin. Conditions inside the Palestinian compound were described by a U.S. official as "difficult," but Arafat's presentation was described as, quote, "organized and serious."

Powell characterized the meeting as "useful and constructive." The chief Palestinian negotiator, Saeb Erakat, agreed.

SAEB ERAKAT, CHIEF PALESTINIAN NEGOTIATOR: We're fully committed to all obligations emanating from our understandings and agreements reached, including our security obligations.

BLITZER: During the meeting, Palestinians reported an Israeli incursion into another West Bank town, Tamoun. And the Israeli government offered 200 Palestinian gunmen holed up in Bethlehem's Church of the Nativity the option of life in exile or standing trial in Israel, an offer quickly rejected by the Palestinians. That standoff continues.

(END VIDEOTAPE)

BLITZER: Andrea Koppel, our State Department correspondent, is traveling with the U.S. secretary of state. She joins us now live from Jerusalem with a wrap-up of today's dramatic developments -- Andrea.

ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: Secretary Powell was all over the place today, Wolf. He was, as you said, started his day in Ramallah with that three-hour meeting with Yasser Arafat, and then ended his evening in Tel Aviv with a second meeting with the Israeli Prime Minister Ariel Sharon. At that meeting, it was a photo opportunity, and you can really see it on the men's faces: There were forced smiles, it was a somewhat stiff encounter, but privately we're told by U.S. officials that it was a somewhat encouraging meeting, in that Secretary Powell again pressed the Israeli prime minister to commit to a firm deadline to withdraw all Israeli troops and forces from West Bank towns and cities.

And while he didn't get that commitment, the two men did talk about the prospects for an international Middle East peace conference, something that the Israelis have said they would be open to, as long as only moderate Arab leaders attended.

Now obviously, Ariel Sharon has made clear he does not view Yasser Arafat as a moderate leader, but the Israelis tell CNN -- the spokesman, in fact, said that, you know, if Yasser Arafat were to agree to a cease-fire, were to make the necessary steps to rein in militants, then in fact the U.S. and the Israelis could sit down at this conference. They don't think that's likely to happen, but they are open to that possibility.

In addition, Wolf, this morning during the meeting with Yasser Arafat, one that actually ran into the early afternoon, that meeting in fact I am told by U.S. officials was also somewhat encouraging. Secretary Powell for the first time really expressing a certain amount of optimism.

And the reason being is that the U.S. did hear from Yasser Arafat that if Israeli troops withdraw, he is willing to take necessary steps. That doesn't mean that there was a breakthrough, but in the worlds of one U.S. official, "there wasn't a breakdown either," and it was encouraging enough to the Bush administration that they agreed that they would have Secretary Powell's Middle East aides sit town tomorrow, on Monday, with Yasser Arafat's aides to try to really work out some details as to how they might sequence these various events.

So, having said that, you know, there is not anything firm that we can report this evening. But certainly more of a sense of optimism among Secretary Powell and his aides that they may be able to make some progress, Wolf, in a not too distance future.

As you know all too well, having covered the White House beat and the Pentagon, this is shuttle diplomacy at its most basic level. Secretary Powell really bouncing between the parties. And tomorrow will in fact move on to two other countries. He will be going to both Beirut and to Damascus, Syria to meet on yet another issue that is of grave concern to the United States, and that is the potential for a wider regional conflicts. The Hezbollah guerrillas have been stepping up their cross-border incursions, at least with the Katyusha rockets, firing into northern Israel, and that was of enough concern to Secretary Powell, Wolf, that, as you know, on Friday he made a helicopter trip up to the border there to take a look for himself -- Wolf.

BLITZER: Taking on a new element in shuttle diplomacy, from Jerusalem up to Damascus, back to Jerusalem all in one day. Andrea, I understand you have some new information on what is going on in the West Bank town of Nablus. Share that with us.

KOPPEL: Well, Wolf, our understanding during his meeting this evening with Ariel Sharon, Secretary Powell used much stronger language, we're told by senior State Department officials, than he had used in the past. He said that there were serious U.S. concerns about the humanitarian situation, particularly in Jenin. The U.S. is obviously concerned about the ongoing siege of Nablus and other Palestinian cities, but in particular about Jenin. And in this official's words, Secretary Powell told Ariel Sharon that suspicions are growing about what's going on within Jenin, because, as you know, humanitarian worker have not been able to get inside. There have been all kinds of reports floating out there, which Secretary Powell raised with Ariel Sharon, and said that it is really in Israeli interest to get those humanitarian workers in there as soon as possible, to clear up these reports, Wolf.

But really, tough language tonight behind closed doors from Secretary Powell -- Wolf.

BLITZER: And we do understand, Andrea, as you well know, that Israeli financials are saying those international observers from the Red Cross, from other humanitarian groups, as well as international journalists, will be allowed to go into Jenin to get a firsthand account as early as tomorrow. Indeed, the IDF, the Israel Defense Forces, allowing some journalists in earlier today.

Andrea Koppel, thanks for all your good, hard work on a very difficult day. You better get some sleep because you're going to have another difficult day tomorrow. Andrea Koppel, traveling with the secretary of state.

Back in Washington, President Bush is now back at the White House, following a weekend at the Camp David mountaintop retreat. Our White House correspondent Major Garrett is there as well, and he joins us now with some reaction to Secretary Powell's dramatic developments -- Major.

MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: Well, good evening to you, Wolf, here from the White House. There has been, of course, considerable and justifiable attention placed on whether or not Secretary of State Powell could achieve a cease-fire between the Israelis and Palestinians, but senior Bush administration officials here at the White House also say there is another top agenda item for Secretary of State Powell, and that's the matter of containment.

(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 which is 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 provocations.

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.

SEN. 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 INST. 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.

(END VIDEOTAPE)

GARRETT: The White House says the progress in the Middle East is nothing if not incremental. And senior aides say success is not measured by startling breakthroughs, at least for now, but really by making sure things don't get any worse -- Wolf.

BLITZER: Major, how much of the administration's push motivation to try to ease the crisis here in the Middle East is driven by the actual concern over what's happening between the Israelis and the Palestinians and potentially between the Israelis and the Lebanese and the Syrians, as opposed to a U.S. desire to get to dealing with Iraq, knowing that as long as this crisis in the Middle East continues it's unlikely the U.S. can generate international support for some action against Saddam Hussein?

GARRETT: Well, Wolf, there are actually two answers to that question. There's the public question the White House provides, which is that they are totally unrelated, that no decisions have been made about Iraq and the administration is reviewing all options, but making it clear to the world that it considers the Iraqi regime led by Saddam Hussein to be a menace. That is the public appraisal from the White House. The private one, however, is that White House knows that these issues are completely linked, and there has to be substantial progress on the ground to build support within the Arab world for future interactions with Iraq, whatever they maybe and whenever they might occur -- Wolf.

BLITZER: Major Garrett reporting from the White House, thank you very much for that report. And in the next hour, I'll be speaking with the chief Palestinian representative to the United States, Hasan Abdel Rahman, but right now I want to bring in Dore Gold. He is a former Israeli ambassador to the United Nations and now a foreign policy adviser to the Israeli Prime Minister Ariel Sharon.

Ambassador Gold, thank you for joining us. What is your reaction to the relatively upbeat assessment we're getting from officials traveling with the secretary of state following his three-hour meeting today with Yasser Arafat?

DORE GOLD, SHARON FOREIGN POLICY ADVISER: Well, clearly the government of Israel has expressed its very serious disappoint and concern with Yasser Arafat's leadership. For many Israelis, he has become relatively, I would say, a spent force, someone who has not been able to deliver cease-fires in past and someone who we are skeptical with respect to his ability to deliver cease-fires in the future.

But our dialogue with the United States goes far beyond the issue of the Palestinians and Yasser Arafat. Secretary Powell, rightfully, is putting new focus on Syria and Lebanon, where there is a real potential powder keg. If there is a danger of regional escalation, it is out of the campaign of Hezbollah to push Israel beyond the blue line to which Israel retreated back in the year 2000, when Prime Minister Barak withdrew from Lebanon -- and the constant attacks on northern Israel, so it is appropriate to put focus on that.

Second of all, in our decision with the United States, we have shared with the U.S. new intelligence material, linking Fuad Shubaky (ph), who is in Arafat's headquarters, his chief financial officer, with Iraq. Of course, Shubaky's connection with Iran are well-known to the (UNINTELLIGIBLE) weapons ship.

BLITZER: Ambassador Gold, you heard Andrea Koppel, our State Department correspondent, say that in the meeting tonight in Tel Aviv between Prime Minister Barak (sic) and Secretary of State Powell the secretary of state raised increased U.S. concerns about what the Israeli military was up to in Jenin. There is a potentially a propaganda nightmare facing the Israelis if, in fact, some of the allegations turn out to be true. How concerned are you that Israel's refusal to allow journalists and other international observers into Jenin this past week could complicate Israel's public relations image out there?

GOLD: Well, obviously the Palestinians are trying to exploit of mystery of Jenin and assert all kinds of stories of massacres that are completely baseless. Israel sent in ground forces into Jenin. It risked the lives of its own infantry units in very dangerous house-to- house combat. Of course, those units could have called in airstrikes for support against the large Palestinian terrorist presence in the Jenin refugee camp. We didn't do that.

But the real problem with Jenin is that Palestinian -- various Palestinian units booby-trapped the whole refugee camp. They placed their large amounts of explosives in houses behind doors so that when Israeli soldier would open a door, it would explode. The area under the streets in the refugee camp were actually mined with a very primitive form of mining capability.

And as a result, there is a huge of amount of destruction as a result of this battle. What is very important now is to make sure is that when various international humanitarian groups, media and others return to the Jenin refugee camp, that there will be no danger of explosives, of booby trapped areas which could lead to unnecessary loss of life. We have a lot of work to do to clean out Jenin so that others can see that there was no massacre there.

BLITZER: When I interviewed Shimon Peres, the Israeli foreign minister, earlier today, he suggested that the Israeli withdrawal completely from these territories recently reoccupied by the Israeli army could be completed within 10 days to two weeks. Is that your assessment as well?

GOLD: Well, of course, Foreign Minister Peres is interested in Israel achieving a real cease-fire so that the threat of these suicide bombings comes to an immediate halt, and that there is a clear Palestinian responsibility which is undertaken to implement the substance of the Tenet proposals.

If the Palestinians seriously take upon themselves to implement the Tenet proposals, make sure there are no suicide bombings against Israel, we have no interest in sitting in Palestinian cities. We have no interest in replacing Palestinian mayors with Israeli colonels. So we have no interest in ruling the Palestinians. So certainly we could pull out of these areas rather quickly.

BLITZER: So if you pulled out of Ramallah, let's say, within 10 or two weeks, Yasser Arafat would no longer be isolated, he could go back to being the leader of the Palestinian Authority and travel as he used to travel?

GOLD: We have a very serious problem with Yasser Arafat, which is part of the U.S.-Israeli dialogue, because Yasser Arafat is not just someone who failed to combat the terrorism of Hamas and Islamic Jihad, but now we have his signature on documents in which he actually paid various operatives of the Tanzim, that's the Fatah militia, in operations against Israeli civilians, including that horrible attack on a 12-year-old girl's bat mitzvah in Hadera. He actually authorized the payment of $600 for that operative.

So, we have a very serious problem with Arafat. We cannot negotiate with those who are supporting terrorism.

BLITZER: So, in other words, are you going to arrest him? GOLD: No, I didn't say the government of Israel will do. The government of Israel has taken a decision. It has defined Arafat as an enemy on the basis of the intelligence we have in our position, and the government of Israel has also taken a decision to isolate Arafat. Where we go beyond that, what measures we take, will have to be decided by the cabinet, together.

BLITZER: All right. Ambassador Dore Gold, a foreign policy adviser to Prime Minister Sharon, a former Israeli ambassador to the United Nations. Thanks so much for joining us.

And during the next hour, we'll be speaking to the Palestinian representative in Washington, Hasan Abdel Rahman.

We're going to take a quick break, but when we come back, we'll be getting into the moment so many people in this part of the world have been waiting for. We'll have some perspectives on this day of meetings when we return.

And later, Michael Holmes live from Ramallah on the very delicate situation there after two weeks under Israeli siege. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back to our continuing coverage of the crisis in the Middle East. We're joined now by two experts on the Middle East, Professor Ken Stein of Emery University in Atlanta. He's a professor of Middle Eastern history. And Ed Abington, he is a former State Department official, a foreign service officer with extensive experience in the Middle East. He's also now a political consultant to the Palestinian Authority.

Gentlemen, thanks so much for joining us. And Ed Abington, first to you. You just heard Dore Gold say that inside Yasser Arafat's compound in Ramallah are individuals he describes as "terrorists" who have specific links to Iraq and Iran. What is your reaction to that?

ED ABINGTON, CONSULTANT TO PALESTINIAN AUTHORITY: Well, I mean, Fuad Shubaky (ph) has been arrested by Arafat, so of course we know that. That's not surprising. He was arrested last -- at the end of last January. So, I mean, I do not seeing anything new in that. I think the Israelis are doing everything they can to make the worst possible case for Arafat and the Palestinians. But I think that you have to look at what they are saying with that in mind.

BLITZER: Is that individual under arrest right now, or is he being protected by Yasser Arafat?

ABINGTON: He was under arrest and he was in a Palestinian jail in Arafat's compound. I was there at the end of January, and I know that for sure. So how can you -- he is currently holed up with 120 other Palestinians in the compound, surround by IDF troops. I would not say he is under arrest, I'd say he is surrounded by the Israeli army.

BLITZER: Ken Stein, you studied this region for many, many years. How is it possible that Secretary of State Powell could leave from this area in the next few days with anyone close to a cease-fire agreement?

KEN STEIN, EMORY UNIVERSITY: Yes, I think it is possible. This is a break in the status quo, not dissimilar from the 1973 Middle East war, when the Egyptians and the Israelis (UNINTELLIGIBLE) each other out, and then ultimately Henry Kissinger jumped into the negotiations. It's a break in the status quo, so you can start the status quo again with perhaps new rules of the game and new rules of engagement.

The job for Secretary Powell is multi-purposed. First, he has to gain a cease-fire, he has to worry about humanitarian needs. He wants very much to dove-tail the cease-fire into something that is a political discourse, telescoping or linking or connecting a cease-fire into some sort a political discussion. And from there, he has to look into a possibility of maybe an international conference or some sort of underpinning that would allow both Sharon and Arafat some support from their outside oxygen.

In the Israeli case, it would mean support from the United States; from the Palestinians, it would mean support from Europe and support from the Arab world. You have the letters of invitation that can be issued for a conference, you have the terms of reference that are available, and any number of about six or seven documents that have been put forth in the last two and a half months.

So there is a real prospect for moving forward, and I think Secretary Powell has a chance and opportunity, if Sharon and Arafat are willing to make some serious kinds of compromises with one another.

(COMMERCIAL BREAK)

BLITZER: Welcome back to our continuing coverage of the crisis in the Middle East. I want to apologize for that technical glitch. I interrupted Ed Abington, a former State Department official, now a political consultant to the Palestinian Authority, and Ken Stein, professor of Middle Eastern history at Emory University.

Back to you, Ed Abington. Given the animosity, the hatred that currently exists between Arafat and Sharon, is it still possible that some sort of peaceful agreement can be worked out by the U.S. and perhaps with others?

ABINGTON: You know, that's a good question. I don't really know the answer.

I think the most important thing, though, is to get a political process going. You recall the 1991 Madrid peace conference. No one thought that former Israeli Prime Minister Shamir would ever go along with the conference. But when you start a dynamic of negotiations, you start giving people hope. And I think on the Israeli side and the Palestinian side that the anger that both feel and the hurt that both feel needs to be replaced by hope.

For the Israelis, for security. For the Palestinians, an end to 35 years of occupation, which they see as the root cause of all the problems that they're facing.

BLITZER: Ken Stein, that animosity for both of these individuals, Sharon and Arafat, has been translated among their respective constituencies with high degrees of popularity. Can they ride that popularity to make the kind of bold decisions, to make the kind of bold concessions to the other side that might be required to achieve a peaceful breakthrough?

STEIN: I think what is necessary, Wolf, both the Palestinians and the Israelis are in a dilemma. And the dilemma is, they don't know what to relinquish to the other. And if you don't know what to relinquish to the other, you don't know what your red lines are and you don't know what you can negotiate.

I think both Palestinians and Israelis realize that they're embraced in this geographic and demographic containment called the area between the West Bank or the area between the Jordan River and the Mediterranean. They have to break themselves of that. And historically, the only way they can do that by all the suggestions that have been made going back to 1937, and that is either partition, disengagement, separation, independent states. That's the only solution.

And the objective now for the secretary of state is to find a pathway to go from cease-fire to political discourse to a Palestinian state to Israeli security to guarantees to making a difference on the ground for Palestinians so that they do have the hope that Ed Abington is speaking about.

BLITZER: Ed Abington, what can Yasser Arafat specifically do in concrete terms to end the suicide bombing attacks against Israeli civilians?

ABINGTON: Well, I think at this point his ability to use police and security in the West Bank is extraordinarily limited because they -- those forces have basically been destroyed by the Israeli military operation.

In addition, he's -- obviously he's under siege. His ability to do things is quite limited. But he can speak out. He can use his political standing, which has been increased as a result of the last couple of weeks to tell people there is another way, we trust in the United States, we trust in the vision that President Bush outlined on April 4. We have competence in the efforts of Secretary Powell, and we want to embark on the negotiating process with the United States to find our way out of this.

I think that calling for this vision of peace, as he did in the "New York Times" on February 3, in which he outlined a comprehensive vision of peace, is what he should be and can be doing now.

BLITZER: Ed Abington joining us from Washington, Ken Stein joining us form Atlanta, thanks for both of you for participating in our conversation tonight. Appreciate it very much.

Let's get a recheck of the top headlines now at the bottom of the hour. A spokesman for Israeli Prime Minister Ariel Sharon says his talks with the Secretary of State Colin Powell, the talks during the course of those talks, Sharon posed an international conference to be held on the Middle East conference. Sharon gave Powell no timetable for withdrawing Israeli troops from the West Bank. Powell travels to Beirut and Damascus tomorrow before returning to Jerusalem.

Powell also called his earlier meeting with Palestinian leader Yasser Arafat, quote, "useful and constructive." A senior State Department official says Powell stated very clearly that suicide bomb attacks must end. The secretary visited Arafat in his besieged Ramallah compound.

And the Israeli government says it offered a deal to some 200 Palestinian gunmen holed up in the Church of the Nativity in Bethlehem over these past two weeks. They were given a choice of standing trial in Israel or accepting exile for life. The Palestinians immediately rejected the offer.

That meeting in Ramallah today between Secretary Powell and the Palestinian leader Yasser Arafat lasted for three hours. Throughout those three hours, our Michael Holmes was on the scene. He was covering those dramatic events, and Michael Holmes joins us now live. Michael, your impressions, what you saw, what you heard and the fallout from Powell/Arafat meeting.

MICHAEL HOLMES, CNN CORRESPONDENT: Wolf, yes, we've been talking to a lot of senior Palestinian sources and officials during the course of the evening. They are telling us that they saw the meeting as, quote, "reasonable." They said that the atmosphere was, in their words, "positive and serious" as these two got together with their respected delegations.

Now, they covered a whole lot of ground. The first 70 minutes of the meeting, we're told, had Yasser Arafat talking about the Jenin situation, and asking Colin Powell why he had not visited there personally. But when it moved on to cover issues like political rebuilding, things like security, economic issues, and a long-term political horizon.

Now, the economic issues are interesting. A couple of details we heard from the Palestinian side: Colin Powell offering $31 million for rebuilding to UNROE (ph), that's the U.N. agency that deals with Palestinian refugees, and a further $60 million U.S. that would go to the U.S. aid organization. The money not going to the Palestinian Authority, but to those two organizations to help rebuild the infrastructure here in Ramallah and throughout the West Bank. The U.S., we're told, also offering to help set up an international fund for rebuilding.

Now, one official told us, however, that while withdrawal was still an unresolved issue, these talks are not likely to go very far. He described today's talks as a "beautiful car without a motor." And it's an interesting analogy. When Colin Powell left, he drove out of a city that we have seen changed very much in the last two weeks.

(BEGIN VIDEOTAPE) HOLMES (voice-over): Colin Powell arrived at a cleaned-up Palestinian Authority headquarters. Crashed 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 under way, international activists, there are many here, walked around a corner but got no further.

(on camera): 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.

(voice-over): The city Colin Powell drove through is a world away from Jerusalem, although it's barely 10 miles drive. 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 Hasan Khatid (ph), a university professor.

UNIDENTIFIED MALE: 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 headquarter, partially built with American money. Legitimate targets, says Israel, in its war on terror.

Look instead, say people like Hasan Khatib (ph), at the damage to the things that keep a city running.

UNIDENTIFIED MALE: When they steal, for example, all the computers from the educational 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 summer time earlier this month, the clocks did not change. There was no functioning government to issue the order. One senior Palestinian official said of the damaged infrastructure: "Yasser Arafat does not 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.

UNIDENTIFIED MALE: 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.

(END VIDEOTAPE)

HOLMES: Now, Wolf, Monday, Colin Powell's people, we're told, will be meeting with Yasser Arafat's people. The aim: To work out some sort of mechanism for a long-term political solution to this conflict. And then Tuesday, Colin Powell and Yasser Arafat, again meeting, maybe -- Wolf.

BLITZER: Michael Holmes, on the scene in Ramallah, thanks so much for your report. We'll take a quick break. We have a lot more to cover in our coverage of the crisis in the Middle East. U.S. involvement, for example, in this part of the world. Does the Bush administration and the U.S. Congress really have a choice? My conversation with the Senate Minority Leader Trent Lott just ahead.

(COMMERCIAL BREAK)

BLITZER: Welcome back to our continuing coverage of the crisis in the Middle East. Tomorrow morning, Monday morning, Secretary of State Colin Powell will wake up here in Jerusalem. He will then fly to Damascus and Beirut to underscore U.S. concern over the heightened tensions along the Israeli border with Lebanon.

Joining us now, the former United States ambassador to Lebanon during the Reagan administration, John Kelly. Ambassador Kelly, thank you for joining us. How serious is this potential crisis between Israel and Lebanon -- and Syria, for that matter, along the northern border?

JOHN KELLY, FORMER AMBASSADOR TO LEBANON: Wolf, I think this crisis can be defused, because there are politicians running Lebanon who don't want to have another war with Israel. I think President Lahoud, Prime Minister Hariri in Lebanon are well aware of the economic, political and military costs of an engagement with Lebanon. So I don't think there is going to be another war there.

BLITZER: But how -- are you confident that the Hezbollah guerrillas who have been lobbying mortars into this Israeli held territories, the so called Shebaa Farms area, the triangle where Lebanon, Syria and Israel meet, that the Lebanese government of Prime Minister Hariri can control that situation, can control those Iranian- and Syrian-backed Hezbollah guerrillas?

KELLY: I think that Secretary Powell will be able to talk to the Syrians, talk to the Lebanese, and bring enough of an assurance that the Israelis are not going to attack, because if the Israelis don't attack, Hezbollah is not going to go big-time against Israel. So I think this is a conflict that can be avoided and can be defused.

Now, everybody in Lebanon remembers that Sharon is the same leader who brought Israeli troops into Lebanon in force 20 years ago. He is using some of the same rhetoric, but they will want to avoid that conflict.

BLITZER: As you know, the Israelis withdrew completely from Lebanon under the former Prime Minister Ehud Barak, and they anticipated that their border with Lebanon would be quiet as a result. But as you know, these past couple of weeks, there have been these Hezbollah mortar shells going after Israeli positions on a nearly daily basis, and the pressure of course, as you well understand, could mount on Sharon and his government to unleash the Israeli military.

KELLY: Wolf, the border has been quiet along the length, except for about a 5.5 mile stretch, which is the Shebaa Farms. Now, you say that Israel withdrew totally from Lebanon. The Lebanese don't agree. They claim the land that is the Shebaa Farms, and Syria, which used to hold that land and has ceded it to Lebanon, says it's Lebanese territory.

So you have got a border of about 100 miles length, with only five miles that is being active. And that's the kind of small issue, small area that shouldn't be allowed to get out of control.

BLITZER: But my understanding was that the United Nations says that is Syrian territory, the Israelis say it's Syrian territories, and it was my understanding the Syrians say it was Syrian territory. Only the government of Lebanon claims those Shebaa Farms, that tiny little enclave, belongs to Lebanon.

KELLY: Well, you're mistaken, Wolf. The governments of Syria and Lebanon have both agreed -- have both agreed and informed the United Nations that that is Lebanese territory.

And so, it's an a issue that ought be defused, It's a small issue. It's an issue that could be taken care of in 20 minutes if people were willing to resolve it, but Sharon does not want to give up an inch of soil where he has already planted the flag. I think he remembers the -- how he was driven out of office after the '82 war, and I think we're seeing a little bit of get-even on that side of the street.

BLITZER: Ambassador Kelly, thank you so much for joining us. But just to underscore the point, so far at least the United Nations is siding with the government of Israel on this Shebaa Farms, not with the government of Lebanon, is that right?

KELLY: I think the United Nations is urging restraint on all parties and saying that the legal title ought to be worked out in peace. And I think that's a good objective for Secretary Powell to be working on.

BLITZER: Ambassador Kelly, thanks for joining us. A tense situation potentially. Ambassador Kelly hoping and predicting that that situation can be diffused. Secretary Powell will be engaged in that issue for most of tomorrow. Thanks so much for joining us.

When we come back, we'll hear from the top Republican in the U.S. Senate, Trent Lott, how far should the U.S. go in getting involved in diffusing the crisis in the Middle East?

(COMMERCIAL BREAK)

BLITZER: Welcome back to our special coverage of the crisis in the Middle East. In Florida today, several high-ranking Democrats speaking at the Florida Democratic Party took some potshots at the Bush administration for its policy in the Middle East. Senator John Kerry of Massachusetts, a potential Democratic presidential candidate, at one point said: "The U.S. should not be kicked dragging and resisting into the peace process." Not surprisingly, the top Republican in the U.S. Senate, Trent Lott, offered a very different assessment of the situation when I spoke with him earlier today.

(BEGIN VIDEOTAPE)

SEN. TRENT LOTT (R-MS), MINORITY LEADER: Well, it's never easy when you become involved in the Middle East. Every word matters, and every action has a reactive effect.

I think that the Congress, both the House and the Senate, generally has been very responsible in what it has said or what the members have been saying. I think most of them realize that it's important right now that we give Secretary of State Powell the maximum latitude to try to bring about peace.

I think the president and Secretary Colin Powell and America really, you know, has no choice. We've got to be involved.

We've had the very best involved. Former Senator Mitchell's been involved, CIA Director Tenet's been involved, the vice president's there. Everybody's trying their best.

We would like to find a way to help the two peoples to separate from the killing and try to begin to negotiate again in a way that would lead to a secure peace for Israel, but a state for the Palestinians to be in.

Obviously he's been a failure. Obviously, you know, the United States and the world's disappointed in the leadership that he is not providing.

And there's no question that in the Congress the support for Israel is wide and deep, and there's concern about, how do we bring about negotiations and stop the violence and move toward peace negotiations?

Having said all of that, you know, we have to negotiate and talk to the parties that are involved. Arafat is the head of the Palestinian people. He could do more. If he would -- the president has made it clear that he has been very disappointed in him.

And I do think this is his last chance. He has got to step up. This is volatile part of the world. When you look at what Iraq is doing, what Saddam Hussein is saying, what's happening in the Middle East and what's happening in Venezuela, and then you realize we don't have a national energy policy, that we're dependent on oil from those countries, all the more important for the Congress to act to make sure we have a national energy policy. Also, all the more importance to why we need to try and find a way to get the parties to at least talk and stop the killing.

(END VIDEOTAPE)

BLITZER: The Senate Republican leader Trent Lott, when I spoke with him earlier today commenting on the Bush administration's policy in the Middle East.

And despite protests in several European capitals, criticizing Israel's military incursion into the West Bank, here on the streets of Israel there's a general sense of so what? Israeli anger and defiance when we return.

(COMMERCIAL BREAK)

BLITZER: Welcome back. As we reported earlier, so far the Israeli Prime Minister Ariel Sharon is refusing to bow to U.S. and other pressure for a specific timetable announcing Israel's withdrawal from those territories recently reoccupied on the West Bank. Among Israelis in general, there's widespread support for the Israeli prime minister, as our CNN's Jason Bellini discovered on the streets of Jerusalem.

(BEGIN VIDEOTAPE)

JASON BELLINI, CNN CORRESPONDENT (voice over): It was a small act of defiance. Twenty minutes before a suicide bomber killed six Israelis, a crowd gathered on a street corner for a party. They were only blocks away from the blast, a street party emblematic of a defiant undercurrent in Israeli society, that despite what most of the world might think and what world leaders, including the President of the United States, now demand withdrawal of the military in the West Bank, Israelis say they'll be neither swayed nor forced.

UNIDENTIFIED FEMALE: I don't give a damn about what my mother thinks. I won't give a damn about what America thinks.

UNIDENTIFIED MALE: Well, things don't seem to be getting any better, you know. The rest of the world will say, oh yes, (inaudible) over here.

BELLINI: Even some Israeli leftists, who disagree with their country's action, say that the world should mind its own business.

UNIDENTIFIED MALE: Any changes that need to be made, we have to initiate them regardless of what other countries think.

UNIDENTIFIED MALE: We need our boots black all the time.

BELLINI: Eleanor Shiffrin and her son Gabby, an Israeli soldier, expressed that same message, but in much stronger terms.

ELEANOR SHIFFRIN: We do feel that the whole world is against us no.

BELLINI: And that doesn't bother you?

E. SHIFFRIN: Look, what bothers me is whether we have enough courage and enough unity as a nation here to defend what is just, to defend what we see as our God given right for this land.

G. SHIFFRIN: We do what we have to do.

BELLINI: Israeli public opinion polls consistently show support for Sharon's military actions, even though most Israelis know those actions have not been good diplomatically for their country. Does it matter what the rest of the world thinks? Do Israelis care what the rest of the world thinks?

G. SHIFFRIN: Yes, it matters. It matters. We need the support of the rest of the world, but they don't know what is the situation here.

BELLINI: (Inaudible) Israelis, that the world doesn't appreciate their hardships. Palestinian victims, they say, win more sympathy.

UNIDENTIFIED MALE: Look, it looks like that we are the bad guys and they are the good, and you know the weak guys.

E. SHIFFRIN: It is always interesting and something hard, something especially brutal, something bloody, and who can survive then with this information is the Arabs.

BELLINI: Others believe that Israel's problems with President Bush and the United States are political.

UNIDENTIFIED FEMALE: Like I said, it's not really because (inaudible) that were not OK, because he's worried about what he's going to do in Iraq and he needs the whole consensus of the Arab world and it's not really about us.

BELLINI: Israelis say theirs is a defiance born of a necessity. They live in a region where they may never be liked, where doing what you have to do, they say, isn't always pretty.

Jason Bellini, CNN, Jerusalem.

(END VIDEOTAPE)

BLITZER: Much more ahead at the top of the hour. We'll have another half-hour of news covering the crisis in the Middle East. A look at Secretary Powell's mission from the Palestinian perspective. I'll speak live with the Palestinian chief representative in Washington, Hasan Abdel Rahman. And action today around Bethlehem's Church of the Nativity. Our Sheila MacVicar is there. Stay with us.

(COMMERCIAL BREAK) BLITZER: Welcome to our continuing coverage of the crisis in the Middle East. I'm Wolf Blitzer reporting live from Jerusalem.

We begin with the latest Middle East News Alert. Here are the top stories we're following this hour. Israel says Prime Minister Sharon proposed an international conference on the Middle East conflict when he met with the Secretary of State Colin Powell earlier tonight. Powell could not coax a timetable from Sharon for Israeli troop withdrawal from the West Bank. The Secretary travels to Beirut and Damascus tomorrow.

Powell came out of his earlier meeting with Yasser Arafat calling it "useful and constructive." An aide to Powell said the Secretary very clearly stressed to Arafat that Palestinian suicide bombings must end. Powell met with the Palestinian Leader in his besieged Ramallah headquarters.

Powell's meeting in Lebanon tomorrow will deal with cross-border attacks between that country and Israel. Suspected Hezbollah militants in Lebanon have targeted army outposts in the northern part of Israel, in a disputed area along the Israeli border with Lebanon. Those attacks have continued now for some two weeks. Israel has responded with an occasional air attack. The U.S. fears a new battle front will open in the region.

Two hundred Palestinians inside the Church of the Nativity, armed Palestinian gunmen have turned down a deal offered by the Israeli government. Israel says it gave them a chance of trial in Israel or exile for life. Israeli troops in Bethlehem have had the Palestinians under siege in the church for some two weeks.

The meetings involving the Secretary of State in Israel today, as well as in Ramallah were dramatic. Our Andrea Koppel, our State Department Correspondent, is traveling with the Secretary of State and she filed this report.

(BEGIN VIDEOTAPE)

ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT (voice-over): The second meeting between Secretary Powell and Prime Minister Sharon ended without either man making any comments to reporters during the photo opportunities. They also refused to take any reporters' questions, and you can see by the body language that it was a somewhat chilly atmosphere in the room.

Having said that, Secretary Powell according to one senior U.S. official was feeling more optimistic today than he had been thus far, following his meeting earlier today in Ramallah at the besieged headquarters of Palestinian Leader Chairman Yasser Arafat. Secretary Powell came out and in what's known as diplomatic speak called the exchange that he had had for three hours with Chairman Arafat as a "useful and constructive exchange."

COLIN POWELL, SECRETARY OF STATE: We exchanged a variety of ideas and discussed steps on how we can move forward. KOPPEL: Secretary Powell also said that his aides and aides to Chairman Arafat would be meeting on Monday. We're not yet sure where that meeting will take place, but presumably according to U.S. officials, the U.S. will be pushing the Palestinian side to give some kind of firm agreement, firm - maybe some more details as to how they would abide by a cease-fire and what kind of action that would back up those statements that were made the other day by Arafat, committing to fight terrorism and condemning terrorism of all kinds.

Saeb Erakat, the Chief Palestinian negotiator, came out after the meeting and had this to say.

SAEB ERAKAT, CHIEF PALESTINIAN NEGOTIATOR: I think the discussions were very constructive and we dealt with all of the issues and we fully committed to the implementation of Resolution 1402 for the immediate withdrawal of Israeli forces.

KOPPEL: So from here, it's our understanding that Secretary Powell will be traveling elsewhere in the region. He'll make a quick day trip to at least two spots, to both Beirut, Lebanon and to Damascus, Syria. The agenda during those meetings will be much more focused on what's known as the second front, fighting on Israel's northern border with Lebanon. The United States, as is the Arab world, is very much concerned about prospects for a widening regional war. Andrea Koppel, CNN, in Tel Aviv.

(END VIDEOTAPE)

BLITZER: Now let's get the latest now from the White House. Our correspondent there, Major Garrett, is standing by where they've been monitoring all of these dramatic developments here in the Middle East.

Major, first of all, how concerned are top White House officials about this accusation being hurled against them by some, including some conservative Republicans there's a double standard in fighting terrorism, one the United States engages in in Afghanistan, another standard for the Israelis in dealing with terrorism in this part of the world?

MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: Well, I would describe it as mid-level concern, Wolf. The Bush Administration is always concerned about any sort of percolating discontent among the conservative part of the Republican party, whether it's domestic policy or international policy.

Clearly, the Bush Administration wants to maintain what it likes to think of as moral clarity on the issue of terrorism, but moral clarity is harder and harder to find as it relates to the Israeli- Palestinian conflict, in part because the Bush Administration has decided, for now at least, that the Palestinian leader Yasser Arafat is the number one person to go to as the leader of the Palestinian movement, even though Israel would like to brand him a non-entity and someone they say is part and parcel of a terrorist movement that is killing their civilians.

The administration says no, we are going to deal with Arafat whether you like it or not. That's the message of the Israeli government's Prime Minister Ariel Sharon. Some conservatives in Congress don't like that. They believe that is a double standard on the issue of terrorism. Nevertheless, that is the Bush Administration policy and that was visible for all the world to see, particularly the Arab world to see today as Secretary of State Colin Powell traveled to the besieged compound in Ramallah of Yasser Arafat.

And, Wolf, the administration knows full well the symbolic importance of that meeting, and after that meeting Secretary of State Powell and his top aides briefed senior administration officials here in Washington who then fanned out on the Sunday talk shows to put a best administration foot forward on the developments in the Middle East. One of Secretary of State Powell's key deputies, the Deputy Secretary of State Richard Armitage, when asked about the pace of Israeli withdrawals offered no firm commitments.

(BEGIN VIDEO CLIP)

RICHARD ARMITAGE, DEPUTY SECRETARY OF STATE: I would assume nothing. The President has called for the Israelis to withdraw without delay. There have been substantial withdrawals. We expect more. I wouldn't put the timetable on it for fear that I might be found out to be misinformed.

(END VIDEO CLIP)

GARRETT: So, Wolf, no firm timetable from the Bush Administration, but definitely an expectation that those withdrawals will not only continue but in all likelihood be expedited in the not too distant future, at least that is the expectation here at the Bush White House.

There is also a broader message, Wolf, that the administration wants to send, not only to the Palestinians but neighboring Arab countries. Everyone has their part to do. The National Security Adviser Condoleezza Rice, explained that sentiment on "Meet the Press."

(BEGIN VIDEO CLIP)

CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: The key here is to have the parties concentrate on what they have to do, not on what the other side has to do. The President of the United States has laid out a road map that says that there are very tough things that need to be done by all of the parties, by the Palestinian Authority, which tonight has not really done the tough things that it needs to do to bring peace for its own people, things that the Israeli government needs to do, and then support for this process, and active support from the Arab neighbors.

(END VIDEO CLIP)

GARRETT: And, Wolf, the key phrase here at the Bush White House is that Secretary of State Powell has maximum flexibility to negotiate whatever he can achieve throughout his travels to the region. A cease-fire is clearly a desirable goal of the Bush Administration, but nobody here is setting the bar quite that high, containing the situation, making sure it doesn't spiral out of control is the number one priority. Wolf.

BLITZER: Major Garrett at the White House, thanks so much for that report. Earlier today, I had a chance to interview the Israeli Foreign Minister Shimon Peres. Among other things, I asked him about Israel's reaction to the meeting that the Secretary of State had with Yasser Arafat. Here's an excerpt from that interview.

(BEGIN VIDEOTAPE)

BLITZER: Do you still believe that when all is said and done that Yasser Arafat is a legitimate peace partner for Israel right now?

SHIMON PERES, ISRAELI FOREIGN MINISTER: He is legitimate in the sense that he was elected by the Palestinian people and we can not replace the Palestinian people. We can not elect their leaders or fire them. But I think Arafat has to do some -- make some proposals to become a leader. The most important I would say is to establish a single authority among the Palestinians of the arms, the carriers of arms, and the use of it. Otherwise, he will be creating a chaotic situation.

BLITZER: So do you believe that the Secretary of State of the United States Colin Powell did the right thing today when he went to Ramallah and sat down with Yasser Arafat for three hours?

PERES: I think that if you want to talk with the Palestinians, Arafat remains the address of talking with them. I don't see anybody else that the Secretary could have approached in order to have a meaningful dialog.

BLITZER: Are you encouraged, Mr. Minister, that following that three-hour meeting the Secretary announced there would be continued talks, lower level talks between Israeli and Palestinian officials, possibly a second round of talks with Yasser Arafat on Tuesday?

PERES: I think that on the one hand we have to settle some complicated issues, like for example when will our army re-deploy itself to their previous positions before the present operation started? Initially, we said it will take four weeks. Well two weeks already have passed, so it's another matter of maybe ten days or two weeks, unless there would be some unexpected event. So when the Palestinians are saying they want us to go out, we never intended to remain there and it can be relatively in a short while.

On the other hand, we have to give merit to some new ideas. The old ideas, the previous ideas were aged and over used. I think one of the important ideas that came over the table is to have original conference with all the parties concerned coming together and try to lay out an agenda like it was done ten years ago in Madrid.

(END VIDEOTAPE)

BLITZER: Israel's Foreign Minister Shimon Peres speaking with me earlier today. He was in Tel Aviv. I'm in Jerusalem. Joining me now from Washington is the Chief Palestinian representative in Washington Hasan Abdel Rahman. Ambassador Rahman, once again thanks so much for joining us.

You just heard the Israeli Foreign Minister say another ten days, perhaps two weeks Israel will withdraw from those areas in the West Bank. Can you live with that time table?

AMBASSADOR HASAN ABDEL RAHMAN, CHIEF PALESTINIAN REPRESENTATIVE TO U.S.: Is their a timetable? I think the problem that is facing the mission of the Secretary is that he was unable to get from the Israelis a commitment to withdraw, and there is no timetable.

With all due respect to Foreign Minister Shimon Peres, he did not present a timetable. He said, well maybe ten days. But is there a timetable? Is there an intention in Israel to abide by the Security Council resolution and by the demand of President Bush? I think that is what was lacking today in the meeting between President Arafat and the Secretary of State Colin Powell. He did not link a timetable.

On the other issues, I believe there was no disagreement. I mean the Palestinian side assured Colin Powell that we will do our share, but first you need to get the Israelis to hold their invasion, which is continuing, because the Israelis did not stop their invasion of the Palestinian villages and towns, and they have not presented anyone with any timetable for withdrawal, and that's the problem I believe.

BLITZER: Ambassador Rahman, one of your responsibilities as the Chief Palestinian Representative in Washington is to report to Yasser Arafat and the leadership of the Palestinian Authority about the Palestinian image in Washington, especially in government circles in the Executive Branch, the Bush Administration, as well as the Legislative Branch, the U.S. House and the U.S. Senate. What are you telling your leadership about the Palestinian image in Washington right now?

RAHMAN: Well, there are things that I report about that I'm willing to talk about here, and others that I'm not going to talk about. But in general, I believe that there are issues that need to be addressed. Of course, there's a great deal of misinformation taking place in Washington. There's a campaign here to discredit the PLO and the Palestinians. This campaign is carried on by the lobby that supports Israel.

There are many Israelis who are in Washington and in the United States, working also to (inaudible) the Israeli position and to exert pressure on American officials. This has consequences in the United States. But you know what happened? I have noticed also that the American public opinion is really outraged at what they see as Israeli aggression against the Palestinians.

I have received hundreds of telephone calls from different quarters and different places in the United States supporting our position, because the American public is a fair minded public. They do not like to see abuse, and when they see the Israelis tanks and Israeli soldiers and helicopters bombarding Palestinian cities, they get upset. But unfortunately, that outrage... BLITZER: Mr. Ambassador ...

RAHMAN: Yes.

BLITZER: I was going to say, Ambassador Rahman, at the same time all of that good will that might be generated toward the Palestinian cause is immediately upended as soon as there's another Palestinian suicide bombing attack against Israelis.

RAHMAN: Well, listen, we have to explain ourselves, and we are doing that. We are saying to the American public that we do not like to see our children engaged in this kind of actions against the Israelis, not because it's against the Israelis, but we do not like to see our people killing themselves, and killing others in the process.

But also, the American public understands that the environment created by Israel in the Palestinian territories leads certain individuals to take that kind of action, because the situation in the territories, as you know very well, Wolf, is very desperate. If you can not buy milk for your children, if you can't bury your dead, that is a kind of situation that solicits the action from many people, violent reaction that you and I may not accept. But not everyone reacts in the same way.

BLITZER: Ambassador Hasan Abdel Rahman, the Chief Palestinian Representative in Washington, thanks so much for joining us.

In the previous hour, we had spoken to the former Israeli Ambassador to the United Nations, Dore Gold, now a former policy adviser to Prime Minister Ariel Sharon. We have much more ahead in our continuing coverage of the Middle East Crisis. When we come back, the Israeli government makes an offer that 200 people held inside the church, 200 Palestinian gunmen inside a church, the church in Bethlehem, the Israelis make an offer. Why those gunmen said no, just ahead.

(COMMERCIAL BREAK)

BLITZER: Welcome back to our continuing coverage of the crisis in the Middle East. Not far from here in Jerusalem is Bethlehem. In Bethlehem, at the Church of the Nativity, there's been a standoff for some two weeks, between some 200 Palestinian gunmen holed up inside that church and the Israeli military that surrounds the church. Our Sheila MacVicar spent the day there and has this report.

(BEGIN VIDEOTAPE)

SHEILA MACVICAR, CNN CORRESPONDENT (voice over): The sound of Bethlehem's 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.

(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)

BLITZER: And when we come back, we'll take a look at how Israelis are reacting to today's meeting between Colin Powell and Yasser Arafat, stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Many Israelis did not want Secretary of State Colin Powell to even meet with Yasser Arafat during his visit to this part of the world. Our Jerrold Kessel takes a look now at how Israelis are reacting to the meeting.

(BEGIN VIDEOTAPE)

JERROLD KESSEL, CNN CORRESPONDENT (voice over): It's a picture most Israelis didn't want to see, the U.S. Secretary of State sitting down with Yasser Arafat. Prime Minister Ariel Sharon has called Colin Powell's decision a tragic mistake, fearing it might serve to rehabilitate the Palestinian Leader as a peace partner. Still, one of his allies in the Knesset is hopeful the United States will come to its senses.

NATAN SHARANSKY, ISRAELI CABINET MINISTER: We hear in this unique situation, when terrorists are all over the world but the only place in the world where terrorists have their autonomy built by one man Yasser Arafat, I don't think that the administration of America will fall in this trap.

KESSEL: Yasser Arafat used to be identified for many Israelis with the promise of peace. At the beginning, when peace was going well, over two-thirds believed he was their partner. Support remained relatively high, over 50 percent, as the two sides, despite their (UNINTELLIGIBLE) continued working for a permanent end to their conflict.

During the past 18 months of struggle, Arafat has been increasingly identified as not only not a partner, but as the enemy, a terrorist with two-thirds now saying in the latest Israeli poll, they want him expelled from the region.

One sign of the Israeli public's distaste for the Powell-Arafat meeting, the harsh language used by some in the media. One editorial calls the meeting "Powell's Suicide Mission," saying "it looks as it Yasser Arafat isn't alone these days in wanting to be a martyr to his cause." Ariel Sharon's tactics seeking to isolate Yasser Arafat are broadly endorsed, even if it is at a cost.

EHUD YA ARI, ISRAELI ANALYST: Since the outbreak of this cycle of violence 18 months ago, it's Arafat's finger on the trigger of the Israeli guns. It's Chairman Arafat who decides what Israel does. He is forcing Israel, including Prime Minister Sharon, to take actions, which are probably against the best Israeli interest. It was not our interest to reoccupy Palestinian cities. It may not be our best interest to expel Mr. Arafat from the territories. There may be a situation in which you don't have any other way.

KESSEL: Within Mr. Sharon's national unity government, what to do with Arafat is becoming strategically divisive. Israel needs to be realistic, argues Foreign Minister Shimon Peres, the man who helped conclude the original Oslo peace deal.

SHIMON PERES, ISRAELI FOREIGN MINISTER: We can not force the Palestinians to change their leaders, but we have to press upon the Palestinians to change their policies.

KESSEL (on camera): But if the argument with the United States over Arafat isn't going exactly his way for now, Ariel Sharon is still trying to keep the initiative in another respect. In practice, he's abandoned his long insistence that there should be no negotiating under fire. Now he's the one who's pressing for negotiating a cease- fire under fire, under his fire. Jerrold Kessel, CNN, Jerusalem.

(END VIDEOTAPE)

BLITZER: And I'll be back after this break with another look at all the latest developments here in the crisis in the Middle East. Secretary of State Colin Powell has now met with both Ariel Sharon and Yasser Arafat. We'll have details when we come back.

(COMMERCIAL BREAK)

BLITZER: Now a summary of what happened today here in the Middle East. Colin Powell's day, a very busy day in the region. He met with the Israeli Prime Minister Ariel Sharon tonight, but failed to get a firm timetable for an Israeli pull-out. Powell also welcomed the idea of an international on Mideast unrest and said the United States is prepared to lead it.

Earlier today, the secretary met with Yasser Arafat, who reportedly told him that Israel's siege in the West Bank must end. Powell reportedly told Arafat the suicide bombings have to end. Nevertheless, Powell described his meeting with Arafat as "useful and productive."

We'll have much more coverage on the crisis in the Middle East. Coming up tonight, first of all, at 7:00 p.m. Eastern, our Bill Hemmer will have a special report live from Jerusalem, 7:00 p.m. Eastern. And at 10:00 p.m. Eastern, Bill will return with another comprehensive wrap-up of all of today's events.

I'll be back tomorrow, 5:00 p.m. Eastern, for another edition of WOLF BLITZER REPORTS, live from Jerusalem. Among other things, I'll have an exclusive interview with the Israeli Prime Minister Ariel Sharon.

Until then, thanks very much for watching. I'm Wolf Blitzer in Jerusalem.

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