MIDDLE EAST: The most severe political blow delivered to Mr Yasser Arafat since he became head of the Palestinian Authority eight years ago - the resignation of his cabinet on Wednesday to avoid a no-confidence vote by parliament - was met with caution by some Israeli leaders and enthusiasm by others.
The head of the country's military intelligence said the event could signal the beginning of the Palestinian leader's demise.
While heralding parliament's unprecedented defiance of Mr Arafat as a "democratic watershed", Israeli Foreign Minister Mr Shimon Peres immediately cautioned that the political reform process was still in its infancy and that elections - Mr Arafat has set January 20th as the date for a parliamentary and presidential poll - represented "a door to democracy, not democracy itself. You could have someone elected who does not act in a democratic fashion."
Declared irrelevant by Israeli Prime Minister Mr Ariel Sharon, written off as a failure by President Bush, and under growing pressure by his own people to reform what they view as a corruption-riddled government, Mr Arafat saw his cabinet resign en masse after it became clear the Palestinian Legislative Council - in session in Ramallah - would vote no-confidence in the new cabinet he appointed in June.
Buoyed by the events, the head of Israeli military intelligence, Maj Gen Aharon Zeevi-Farkash, described them as an "earthquake" in the Palestinian Authority and said they would eventually lead to Mr Arafat's replacement.
However, some Israeli leaders counselled circumspection. "I warn ourselves not to get involved, but to \ observe what is happening there," said deputy Internal Security Minister Mr Gideon Ezra.
Palestinians have accused Israel and the US of trying to dictate who their leaders should be, especially after Mr Bush's speech in June in which he called on the Palestinian people to choose a leadership not tainted by terror - a clear reference to Mr Arafat.