Retaliation will raise the stakes, warns Arafat

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Israel's day of lamentation

Israeli flag flies over Palestinians' peace symbol

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Yasser Arafat warned on Thursday that Israel's swift retaliation for the suicide bombing that killed 16 people would lead to a dangerous escalation of the violence that has already claimed more than 700 lives in 10 months.

Israel dispatched F-16 fighters overnight on Thursday to flatten a Palestinian police station in the West Bank town of Ramallah, after a Hamas suicide bomber blew himself up along with 15 others at a pizzeria in central Jerusalem.

Yesterday, as he made his way through the rubble of the smashed police station in Ramallah, the Palestinian leader warned: "This is a very dangerous (situation) against the Palestinian people and an escalation. But everyone should know that the Palestinians are the strongest and most faithful in this conflict."

More symbolic was yesterday's takeover of Orient House by the Israelis, the PLO headquarters in east Jerusalem where the Israeli flag was raised, and other Palestinian offices in and around the city.

The move angered Palestinians and was also criticised by the US government, which said that it would "increase the risk of further deterioration of the political situation".

A State Department official said: "Orient House has long symbolized the importance of political dialogue and reconciliation between Israelis and Palestinians. These actions represent a political escalation, undermine faith and confidence in a negotiated settlement of this conflict and increase the risk of further deterioration of the political situation."

Israel yesterday defended the strikes, saying it had taken "measured" steps which avoided unnecessary bloodshed and which would restrict Palestinian militants' ability to launch further bombings.

World leaders yesterday renewed their calls for restraint on both sides. Amid all the well-worn expressions of warning and hope, however, one voice made itself heard with unusually forthright words.

The Israeli ambassador to France, Elie Barnavi, said he thought the Americans should be taking a much more hands-on role in the region. Asked if he was disappointed by President Bush's reaction to the pizzeria bombing, he said: "I'm not disappointed by Mr Bush's reaction. I am disappointed by the way the Americans have handled the issue ever since the team changed in Washington.

"I think they are not doing much; what they do is little and not well done."

Mr Barnavi's views echoed those of many commentators in Europe and in the US, including the former US ambassador to Israel, Martin Indyk. Such views were known to be prevalent in some Israeli circles and among leaders of moderate Arab states. But this was an official of a major US ally taking Mr Bush to task for his reluctance to engage in the region.

Many American observers believe that each escalation of violence in the Middle East increases the pressure on President Bush – whether from the domestic Jewish lobby, from inside Israel or from moderate Arab leaders – to renew US involvement.

It took Mr Bush four months in the White House to dispatch his first special envoy to the region to sound out prospects for renewing talks. That timid attempt at shuttle diplomacy came to nothing, but Mr Bush sent his Secretary of State, Colin Powell, to the region last month to speak to all the parties again.

Mr Powell made no headway, either, and the Bush Administration in effect abandoned any public role in the area. Mr Bush's statement after Thursday's bombing said that the US was prepared to become involved again, but only if the two sides were ready to talk.

What has all the appearance of a non-policy has been increasingly contrasted with Bill Clinton's personal involvement in the peace process that nearly brought agreement at Camp David a year ago.

US Middle East specialists at the State Department in Washington and in the Middle East are said to be unhappy with the hands-off attitude, fearing that it threatens to undermine other efforts in the region – including the push for international agreement on more effective and more narrowly targeted sanctions on Iraq.

Some Bush critics fear the US will lose kudos around the world if it is seen as a passive onlooker in a conflict where it has taken an active role and the perception of Mr Bush as an isolationist will be reinforced.

This argument was made forcefully in the past week by the Senate Majority leader, Tom Daschle, who sees Mr Bush's reluctance to become engaged in the Middle East as symptomatic of an isolationist attitude at large – and a potential vulnerability in next year's Congressional elections.