Defying US pressure and infuriating the Palestinian leadership, Israel's Prime Minister, Mr Ariel Sharon, yesterday cancelled a much-anticipated meeting between his Foreign Minister, Mr Shimon Peres, and the Palestinian President, Mr Yasser Arafat.
The US Secretary of State, Mr Colin Powell, called Mr Peres last night to repeat that the US greatly wanted the meeting to go ahead. Mr Peres is threatening to resign unless the meeting is approved.
President Bush had been urging Mr Sharon to sanction the meeting, which was intended to formalise a fragile ceasefire that has held since the middle of last week and pave the way to an eventual resumption of peace negotiations. Critically, the Americans said they regarded the meeting as an opportunity to start rebuilding Israeli-Palestinian relations, and thus help broaden support in the Arab world for the coalition against terrorism.
But Mr Sharon began a cabinet meeting yesterday morning by announcing that the meeting - which was to have taken place last night at Gaza Airport - could not be held because Mr Arafat failed to meet a precondition: 48 hours without Palestinian attacks on Israeli targets. Specifically, Mr Sharon cited mortar fire on an Israeli settlement in Gaza on Saturday, and the release after questioning by Mr Arafat's security forces of Mr Atef Abidat, whom Israel alleges shot dead an Israeli woman in the West Bank last week. Some Palestinian sources said last night Mr Abidat was still in custody.
Mr Sharon reportedly told his ministerial colleagues that it was "inconceivable" for Mr Peres to meet with Mr Arafat in such a climate. Mr Shlomo Benizri, a minister from the ultra-Orthodox Shas party, invoked the comparison Mr Sharon has been making recently between Mr Arafat and Osama bin Laden, stating: "Like they (the Americans) aren't going to go and talk to their bin Laden, so we shouldn't have to go and talk to our bin Laden."
The Palestinian Information Minister, Mr Yasser Abed Rabbo, accused the Sharon government of behaving like "a gang, not a responsible government of a state". Palestinian sources say "90 per cent" of the Intifada violence has been reined in; and the Hamas leadership has indicated a willingness to "suspend" suicide bombings.
Mr Peres, who heard by radio that the meeting was off, boycotted the cabinet session, muttered to his Labour colleagues about being made "a laughing stock" by Mr Sharon, and threatened to resign. Labour leaders are to meet with Mr Sharon today, but a serious coalition crisis seems unlikely - especially since, officially, Mr Sharon says the talks can still take place if the required 48 hours of quiet are achieved.
The real crisis could come in Israeli-US ties. The US ambassador, Mr Dan Kurtzer, had urged that the meeting go ahead to remove what he reportedly called a "thorn in the side" of Israeli-US relations, and enable the completion of various urgent arrangements for bilateral co-operation in the light of the war on terrorism.