Sharon defies America with demand for exile of Arafat

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America issued a blunt warning to Israel yesterday that it considered Yasser Arafat essential to negotiating peace in the Middle East and dismissed a suggestion that the Palestinian leader should be forced to accept a "one-way ticket" into exile.

On a day that saw continued bombardment of Mr Arafat's besieged headquarters and dozens of armed Palestinians shooting their way into the Church of the Nativity, forcing priests to grant them sanctuary from Israeli troops encircling one of Christianity's holiest shrines, Ariel Sharon, the Prime Minister, upped the tension even further by saying European diplomats should fly the Palestinian Authority's President into exile.

At least nine Palestinians and an Israeli soldier were killed in the violence, which raged at times outside Bethlehem's Church of the Nativity, considered by Christians to be the birthplace of Christ.

Israeli forces today continued to push into other West Bank cities, launching pre-dawn incursions in Salfeet and Jenin, a city known to have been home to suicide bombers.

At least 30 tanks rumbled into Jenin before dawn. They exchanged heavy machine gun fire with Palestinians at the entrance of a refugee camp and a Palestinian woman, Fadwa Jammal, aged 27, died after she was shot in the abdomen. Another Palestinian, Hani Abu Irmaileh, 18, died in a gunbattle, witnesses said.

Samir, a Palestinian policeman inside the Church of the Nativity, said about 20 of the gunmen were wounded and were being tended to by nuns and priests. "First of all, most of the guys have run out of bullets and secondly, we're completely surrounded," he said by telephone.

About 120 armed men were hiding in the church, according to Marc Innaro, a correspondent for Italy's RAI TV, who was trapped in the compound by the fighting, along with five colleagues.

Mr Sharon, stating publicly an idea that many in the Israeli government have been privately expressing for some time, said yesterday that he had proposed to the European Union envoy Miguel Moratinos that he or other diplomats should fly Mr Arafat into exile.

"I told him if they would like, they will fly with a helicopter and will take [Mr Arafat] from here," Mr Sharon said, adding that such a decision would require cabinet approval but that "it has got to be a one-way ticket. He would not be able to return".

Outraged Palestinian officials immediately dismissed the suggestion. The chief Palestinian negotiator, Saeb Erekat, said Mr Arafat, who has sworn to die a martyr rather than bow to Israel, would never accept exile.

A spokesman for the Foreign Office, said: "President Arafat is the head of the Palestinian Authority and he should be allowed to remain in Palestinian areas and exercise his responsibility and be allowed to move freely within and into and out of the Palestinian areas.

"He remains the key interlocutor on the peace process ­ however stalled the peace process may now seem."

More importantly, Washington ­ Israel's most staunch ally ­ drew a very clear line in the sand, emphasising that Mr Arafat was the legitimate leader of the Palestinians and that he had a vital role to play in negotiating a peaceful settlement.

In a round of television interviews, the US Secretary of State, Colin Powell, said that forcing Mr Arafat into exile would not help. "We think that Chairman Arafat still has a role to play," he said. "We believe that, as a leader, he can speak out against the kind of terrorist activity we have seen. We think he can do a better job in calming the passions of his people. We think he could do more with respect to bringing organisations under control.

"Sending him into exile will just give him another place from which to conduct the same kinds of activities and give the same messages that he's giving now. So until he decides that he's going to leave the country, it seems to me we need to work with him where he is. And where he is, is in Ramallah."

Later, he added: "I don't think [exile] would help the situation. He is in Ramallah. He is seen as the leader of the Palestinian people. Whether that is attractive to others or not, that is the role he has. He is the head of the Palestinian Authority, an organisation that we helped create some years ago."

General Powell's comments are a further indication that Washington is stirring from its torpor in respect to the Middle East. After days of repeating its demand that Mr Arafat stop the suicide bombers and voicing its support of Mr Sharon's position, Mr Bush made clear on Monday he did not consider Mr Arafat a terrorist.

The US President is under mounting international pressure to do more to broker a ceasefire. There are also growing calls for General Powell to take General Anthony Zinni's place as America's representative in ceasefire negotiations.

As Israeli tanks and helicopters continued to shell Mr Arafat's compound for a fifth day, hundreds of Palestinians trapped inside surrendered in a deal brokered by American and European officials yesterday. About eight men remained inside. Israel had assaulted the compound saying top militants were inside, a claim denied by the Palestinians.

The EU foreign policy chief, Javier Solana, said it might be time for Mr Sharon and Mr Arafat to give way to new leaders. "Sharon and Arafat ... have lived through this conflict for too long," he said. "I do not wish them any harm, but it would not appear bad to me if they allowed other people to lead this conflict. "Neither of the two is a saint, and sometimes I think that new generations of people in Israel and Palestine could strive in the 21st century for the solution of this conflict."

The International Red Cross appealed to Israeli and Palestinian forces to respect the lifesaving efforts of medical staff trying to help victims. It said a "sudden degradation" in relations with Israeli officials was a serious problem.