Arafat triumphant after Israelis relax siege of compound

Yasser Arafat toured the ruins of his presidential compound in triumph yesterday, after the Israeli army pulled back its tanks and soldiers and relaxed its siege.

Borne on the shoulders of his bodyguards, Mr Arafat made a Churchillian V-sign where Israeli bulldozers had reduced the heart of his administration to piles of rubble, and blew kisses to an adoring crowd of supporters where Israeli tanks had kept him a prisoner in his own office.

The Israeli army had pulled back, but only a little. This was a withdrawal staged for the benefit of American television cameras, after President George Bush went so far as to send Ariel Sharon a personal message asking him to withdraw. The Israeli army said its soldiers were staying in position a little back from the compound, and were going to arrest any "wanted men" who tried to leave. The Israeli government said the aim of the siege was to get Mr Arafat to surrender wanted militants inside the compound, though it never named more than a few.

"This is not withdrawal," Mr Arafat said. "This is only moving a few metres away. They are trying to deceive the world." But pictures went around the world of the damage the Israeli soldiers had done. One building had its front neatly shaved off, so you could see three storeys of offices inside. The garage for Mr Arafat's fleet of cars had been crushed into a pile of concrete and twisted metal.

Senior Palestinian ministers emerged, heavily bearded from not shaving. They had just spent 10 days sharing six bathrooms with 200 people. Food inside was heavily rationed.

Yet it was a triumph of sorts for Mr Arafat. For the first time in months, he appeared to have got the best of his old adversary Mr Sharon. The Israeli army had relaxed the siege without winning a single concession from him. More than that, Mr Arafat's standing among Palestinians has been transformed by the siege. Before it began, he was under pressure from Palestinians demanding reform. His entire cabinet had been forced to resign. Leading Palestinians were manoeuvring to push Mr Arafat into appointing a prime minister to take over his day-to-day work.

But the siege brought Palestinians streaming on to the streets to demonstrate in support of Mr Arafat. So revitalised is his popularity that Mr Arafat's aides and advisers coming out of the compound yesterday were confident enough to say that the question of a prime minister was finished with.

Last time the Israeli army besieged Mr Arafat in his compound, in the spring, his popularity dived after he made a deal to hand over wanted men. It appeared there was no deal yesterday – though there could yet be one. The Israelis have not withdrawn altogether.

Palestinians in Ramallah were under no illusions. It was American pressure that had made the Israeli soldiers pull back, and they had not withdrawn altogether, people said. But they seemed pleased that Mr Arafat appeared not to have backed down. "People trust Arafat more now," said one man who did not give his name. "If he had made a deal he would have lost his popularity."

Terje Roed-Larsen, the UN's Middle East envoy, who earlier warned that the siege could destroy hopes for a Palestinian state, rushed to the compound. This was an opportunity to move forward, he said. Now the Israelis had backed down, it was "up to Arafat".

Salam Fayyad, the Palestinian Finance Minister, said of the withdrawal: "It is a step in the right direction. But you have to remember that it is only that because it is a reversal of a step in the wrong direction."