The Israeli Prime Minister, Mr Benjamin Netanyahu, has said Israel would retaliate if the Palestinians proclaimed an independent state, even as Mr Yasser Arafat hinted that such a declaration could be delayed.
"I am issuing a new warning to the Palestinian Authority: Israel will react in the toughest possible way in the event of a unilateral declaration of a Palestinian state with Jerusalem as its capital," Mr Netanyahu told Israeli radio.
"Such a violation of the Oslo accords would trigger the collapse of the peace process, which would not be good for the Palestinians," the hardline prime minister warned from Ukraine during a tour of former Soviet Union countries.
Mr Netanyahu has repeatedly threatened to annex the parts of the West Bank and Gaza Strip still under Israeli control if the Palestinian leader, Mr Arafat, unilaterally proclaims an independent state on May 4th. Israel still controls the bulk of the West Bank and less than half of the Gaza Strip.
Mr Arafat, on a six-day tour of world capitals to drum up support for the declaration of an independent state, hinted during a visit to Vienna yesterday that such a proclamation could be delayed.
"In compliance with the Oslo accords, it is clear that we have the right to declare [a state] at the end of the five-year transition period," Mr Arafat said.
Asked about the date, he replied: "It's under discussion with our friends in the European Union and the United States."
The EU and the US have advised Mr Arafat not to proclaim statehood until some days after Israeli general elections on May 17th.
But Mr Arafat is also looking for greater recognition of the Palestinians' right to their own state at some point in the future, officials said. That would allow him gracefully to postpone the actual proclamation. At stake is not only Palestinian self-determination but also the future of the peace process with Israel, as the end of the five-year interim period set out by the 1993 Oslo peace accords approaches.
After May 4th existing arrangements on Palestinian autonomy in the West Bank and Gaza Strip are due to end and the peace process itself enters uncharted waters, an uncertain situation aggravated by Israel's elections.
An Israeli newspaper reported yesterday that justice and foreign ministry officials had warned Mr Netanyahu against any annexation of occupied Palestinian lands. Such a move would "damage Israel's standing on the international scene", the Yediot Aharonot said.
The officials said Israel should make clear to Mr Arafat that he would find himself with only a makeshift state, because "he will no longer be able to demand that Israel cedes more territory if he breaks the Oslo accords".
Israel's intelligence services nevertheless believe Mr Arafat will delay any proclamation at least until the May elections.