Jerusalem, Sunday

LAST week Palestinian President Yasser Arafat appeared powerless against Israeli Prime Minister Benjamin Netanyahu's hard-line policies. Today, Arafat rides high after bloody confrontations with Israel.

Palestinian frustrations from deadlocked peace moves, rising economic hardships, and concern over the fate of Muslim holy places in Jerusalem exploded into violence last week in which about 70 people were killed.

The Arafat-instigated demonstrations, which soon developed into gunbattles between Palestinian policemen and Israeli soldiers, highlighted the volatility of the situation and put teeth into Arafat's warnings that a new uprising similar to the revolt that broke out in 1987 could erupt.

However Palestinian analysts said the violence could prove a gamble for Arafat if the Palestinian leader failed to reap political gains following the death of at least 55 Palestinians by Israeli gunfire.

There could be explosions in the whole region if Arafat felt compelled to continue escalation in response to Israeli rejection to implement accords.

``Frustration has been building up, and Arafat had no choice but confrontation,'' said political analyst Khalil al-Shikaki.

``But he has a dilemma because if demonstrations continue, he might lose control and if he tries to rein it in quickly, he might not be able to capitalise on it.''

Arafat, seeking political gains, rejected a request by Netanyahu for a two-way meeting to end the violence.

Netanyahu turned down an invitation by Egyptian President Hosni Mubarak for a three-way summit in Cairo. The United States, sponsor of Middle East peacemaking, has arranged a meeting in Washington this week to salvage peace moves.

A successful meeting in the White House just days before President Bill Clinton's first public debate with his competitor Bob Dole could boost the president's election campaign.

Arafat staked his political life on the interim self-rule deal he signed with Israel's previous government.

He renounced armed struggle and moved his leadership base into the self-rule areas, accepting to live under terms dictated by Israel, hoping that within a few years Palestinian self-rule would turn into statehood.

However the change in Israeli leadership following May's elections and Netanyahu's hard-line policies threatened the entire peace process and put his dream of statehood at risk.

Netanyahu, elected to a four-year term, offers Arafat limited autonomy in areas that have already been transferred to the PLO.

With the lack of international action to force Netanyahu to move the peace process forward, Arafat felt cornered.

Netanyahu's policies also soured Israel's relations with the Arab world, which flourished under the Labour Party. Tension rose even with Egypt, the first Arab state to sign a peace treaty with Israel.

While Arafat believes he made far-reaching compromises to Israel in his 1993 peace deal, Netanyahu disagreed and offered Palestinians even less than what was agreed upon.

To defend his peace accord Arafat risked popular support by ordering his 30,000-man paramilitary forces to crack down on Islamic militants seeking the destruction of the peace process by killing Israelis.

This time Arafat restored his credibility by allowing his forces to point their guns at Israelis in defence of unarmed civilians killed and wounded by Israeli gunfire. Backed by strong Arab and international opinion, he has also strengthened his negotiating position with Israelis.

The PLO insists that for a successful Netanyahu-Arafat meeting, Israel has to close the tourist-archaeological tunnel - whose opening in Arab East Jerusalem triggered the violence - and start immediately to implement self-rule deals.

``If these issues are not solved soon, Arafat has no option but to escalate in response and the whole peace process will collapse and the whole region will flare up in flames,'' said Terje Larsen, UN special envoy to Palestinian areas, mediating between Israelis and the PLO to resolve the crisis.

Netanyahu, however, has rejected calls to close the tunnel, which was reopened today after a two-day break for the Jewish Sabbath - and there are no indications that he would implement accords.

``The question is: If Netanyahu persists in his intransigence, will Arafat adopt a confrontational line or the wait-and-see approach which he tried and proved a failure?'' asked Shikaki said. ``Of course the only option is confrontation.''-Reuter.