Arafat reacts to pressure from US with election call

Israeli forces continue to occupy West Bank towns while judge decides Prime Minister is out of reach

A battered Yasser Arafat brandished the only strong card left in his hand yesterday with the formal announcement that there would be elections in January – an event that he is sure to use as a means of pressuring Israel to pull back its armed forces from Palestinian towns and villages.

One of his senior ministers, Nabil Shaath, confirmed that Mr Arafat would run for re-election, despite President George Bush's declaration that there must be a "new and different" Palestinian leadership as a condition for creating a provisional state.

Predictions abound that Mr Arafat will win, not least because the electorate – though highly critical of his performance – will vote for him as an act of defiance against America's attempts to dictate its leaders, which opened a rift between the White House and the Europeans, including Britain.

In Gaza, Islamic-nationalist groups Hamas and Islamic Jihad, which have repeatedly sent suicide bombers into Israel, said they would boycott the elections unless the Palestinian Authority (PA) renounced the Oslo accords. Elections could deliver a more radical and anti-Israeli government, because the Islamists may well put up independent candidates.

The elections, which follow Mr Bush's demand for reforms as a condition for US support for statehood, will be the first since 1996. The stage is set for a political confrontation in which Mr Arafat will press Ariel Sharon for an extensive withdrawal of its military – arguing that the poll cannot take place under the barrels of Israeli guns – and for international observers.

Yesterday, there was no sign of a reduction of Israel's extensive military presence in the occupied territories. At least 700,000 Palestinians were confined to their homes by a curfew imposed by the Israeli army, which has reoccupied seven of the eight main Palestinian- administered West Bank towns.

In one of these, Jenin, officials said a seven-year-old boy was shot dead by Israeli troops, the fifth Arab child to be killed by the army in the town within five days.

An Israeli army spokeswoman said the military was investigating the incident, but said the child was believed to have been hurt when troops used "riot dispersal methods" to break up an approaching crowd. Last week, Israeli troops killed three children, also in what it later said was an attempt to disperse a crowd – by firing tanks shells.

A separate election drama looms in occupied Arab east Jerusalem, which has long been regarded by Israel as part of its unified capital. Mr Sharon has steadily increased Israel's hold on the entire city, closing down the PLO's headquarters and several other Palestinian institutions. One senior Palestinian source said: "If there are no elections in Jerusalem, there will be no elections at all."

The elections – for the "presidency" of the PA and for the Palestinian Legislative Council – were announced by an Arafat loyalist, Saeb Erekat.

They were likely to be held between 10 and 20 January, he said. Municipal elections would follow in March. In the meantime, a 100-day plan would be enacted, under which the PA's financial, judicial and security branches would be reformed.

What is unclear is how reforms – though long overdue and widely supported by the Palestinian populations – will make Israel any more secure from attack by Palestinian nationalist militias, who consider themselves to be fighting against an illegal occupation, including the continued building of Jewish settlements on their land. Nor are Palestinians confident that an overhaul of their half-collapsed government, long known to be corrupt and inept, will satisfy Israel.

Israel is certain to scrutinise any election that maintains Yasser Arafat in power for signs of foul play. The last election in January 1996 was declared to be fair by international observers, including the former US president Jimmy Carter. Mr Arafat's Fatah movement won 30 per cent of the vote, but this translated into 51 seats on the 88-seat legislative council.