"They (Israel) have aeroplanes, but I have the Palestinian children," he said, referring to Palestinian youths who led the seven-year uprising against Israeli rule that began in 1987.
The warning came after a two-day showdown between the Palestinians and the hardline Israeli government of Binyamin Netanyahu.
Frustrated by the slowness of peace talks, Mr Arafat had ordered a general strike in the West Bank, Gaza Strip and east Jerusalem on Thursday and asked Palestinians to come to the al-Aqsa mosque, in Jerusalem, to protest yesterday.
The protest failed to materialise, because of a combination of increased Israeli military deployment and Palestinian apathy, but the absence of confrontation did little to resolve the crisis between Mr Arafat and Mr Netanyahu.
Israeli and Palestinian authorities had expected 100,000 worshippers at the mosque, but only 10,000 to 20,000 came, less than a normal turn-out for Friday prayers.
While the bolstered military presence at Israeli checkpoints ringing Jerusalem prevented many Palestinians entering the city, the small turn- out also underscores how disenchanted ordinary Palestinians have become both with the peace process - and Mr Arafat.
The failed protest highlights the difficulty Mr Arafat has motivating Palestinians, who have seen their standard of living decline, mostly due to extended Israeli closure of the West Bank and Gaza, since the signing of the Oslo peace accords three years ago.
Critics have accused Mr Arafat's government of corruption and human-rights abuses and as serving as little more than a security proxy for Israel in controlling the population of the West Bank and Gaza.
Mr Arafat called for the demonstration on Wednesday at a meeting of the Palestinian Legislative Council, where he said recent moves by the Netanyahu government meant they had "declared war" against the Palestinian people.
The call came as part of a heated exchange between the Arafat and Netanyahu camps over the past week. Mr Arafat was incensed when Israel bulldozed a Palestinian centre for the disabled in east Jerusalem which officials said was built illegally, and released plans for building in at least one West Bank settlement.
While Mr Arafat remains defiant, he has sent mixed messages by continuing talks with Israel. Mahmoud Abas and Dore Gold, deputies to Mr Arafat and Mr Netanyahu, met on Thursday, although a spokesman said no progress was made. In addition, an Israeli-Palestinian committee which will supervise implementation of the Oslo accords is to start meeting next week.