Bethlehem deal falters

Talks to resolve the five–week standoff at the Church of the Nativity in Bethlehem broke down today, after a partial deal appeared imminent.

The deal foundered over a Palestinian demand to allow a European monitor into the shrine to safeguard 13 suspected militants who were to remain there until they are deported. So far, negotiators have failed to find a country to host them.

Under the initial agreement, several dozen Palestinians were to have emerged from the shrine , including 26 wanted men who were to be driven to Gaza under US escort. 13 'senior militants' due to be deported were to remain behind until a host country could be found.

Each side accused the other of derailing the deal at the last minute.

Israeli negotiators said they rejected an unexpected Palestinian demand that a European monitor enter the church to stay with the 13 until they were deported.

Palestinian negotiators claimed that Israel had already agreed to the European monitor, and at the last minute changed its position.

In a sign of new delays, three buses that had been parked for most of the morning near Manger Square, ready to transport the Palestinians emerging from the church, drove away empty. Israel moved a battle tank into Manger Square and reinstalled a large crane that had been used during the standoff to get cameras close to the church.

Israeli Foreign Minister Shimon Peres said that Spain might be willing to take in three or four of the 13 men slated for deportation. Negotiations initially had designated Italy as the host country for the entire group, but the Italian government balked, saying it had not been consulted.

The Palestinian Authority arrested 16 Hamas members in a sign that Yasser Arafat was taking action against terror groups.

In Gaza City, Hamas officials reported that 16 members were arrested. "I do have reports that there is some kind of campaign that has targeted some members of the movement," said Hamas spokesman Ismail Abu Shanab.

Despite growing apprehension about an imminent Israeli offensive, the streets of Gaza City appeared normaltoday, filled with honking taxis and donkey–drawn carts. Shops and markets were open and busy. However, increased police patrols were visible in some parts of the city.