US Secretary of State Colin Powell said on 9 January that he had told Arafat that it was vital for the Palestinian leader to provide a detailed explanation of the affair. 'The allegations are quite serious and more evidence will be forthcoming, and he needs to deal with this evidence as it comes forward because the whole world will be watching,' Powell said.

Israel alleges that the weapons were loaded onto the ship on 11-12 December at Kish island in Iran, with the involvement of members of Lebanon's Hezbollah. The deal was worth $10 million, and senior figures in the PA were involved, Israel says. Israel is yet to make public the evidence it claims to have establishing the PA connection. However, the evidence has been presented to the US. 'We had some pretty extensive briefings with an Israeli intelligence team today and feel the case is very compelling that senior Palestinian Authority figures and Fatah people were involved with this shipment,' an unnamed senior US official told Reuters on 9 January. 'From the information provided by the Israelis, we would strongly suspect that Arafat knew about the shipment.'

The US, which supplies some $2,000 million a year of weapons to Israel, says it objected to the alleged shipment of weapons to the Palestinians on the grounds that it would contribute to the escalation in violence.

Arafat has been working since 16 December to consolidate a ceasefire. These efforts appeared to be going well until a 9 January attack by Palestinian gunmen from the Hamas group on an Israeli security post in the southern part of the Gaza Strip.

US peace envoy Anthony Zinni headed back to Washington on 6 January after four days of talks with Israeli and Palestinian officials. 'It is clear that, while serious challenges remain, there are real opportunities for progress,' a US State Department official said, adding that Zinni will return to the region to continue with his initiative.