The latest bombing occurred while Israeli Prime Minister Ariel Sharon was meeting US President Bush in Washington. Sharon cut short his American visit to return home for discussions on what response to make to the attack. Israel said it believed the bomber was sent from Gaza by the Hamas group. This indicates that an offensive against Gaza is highly likely. Israel's previous military campaign, launched on 29 March after a suicide bombing in Netanya, concentrated on the West Bank.

Sharon took with him to Washington a dossier purporting to show that Arafat had used aid funds to finance terrorist attacks. However, US officials signally failed to endorse the report's claims, and Bush emphasised that Washington still regards Arafat as the leader of the Palestinians. The US is now pushing for internal reforms to the Palestinian Authority (PA) that might end up with Arafat's role becoming less central, and more powers being devolved to other officials. The idea of creating the position of a prime minister has been discussed. '[The PA should] put structures in place that respect the rule of law, has its own constitution, fights corruption, is able to spend money properly when it gets it from foreign sources,' Bush said on 8 May.

Bush has decided to send CIA director George Tenet back to the region to work on proposals to restructure the Palestinian security services and turn them into a more coherent, unified body.

The Gaza wing of the PA security services on 9 May arrested 14 activists from the Hamas group, following Arafat's instructions to crack down on groups involved in what he described as 'terrorist' operations. Bush responded to Arafat's statement by describing it as an 'incredibly positive sign'. PA officials were reported to have expressed anger at Hamas for carrying out a suicide bombing at a time when the Palestinians were seeking to derive political gains after Israel had been pressurised into pulling forces back from the West Bank and lifting the siege on Arafat.

US Secretary of State Colin Powell has emphasised that the fresh violence should not detract from the efforts needed to address the political roots of the conflict. The 'quartet' of the US, Russia, the EU and the UN have proposed to hold an international conference on the Middle East towards the end of the summer to try to regain the political momentum. The idea has received a cool response from Arab leaders. 'We've had lots of peace conferences,' said Egypt's President Mubarak on 8 May. 'If their resolutions had been implemented we would not need any new conferences.'

Mubarak was scheduled to hold talks on 10 May with Saudi Arabia's Crown Prince Abdullah about ways to push forward the Saudi peace plan, which was approved at the Beirut Arab summit on 27 March.

Political deliberations are likely to be pushed to one side over the next week, as attention will shift to the Israeli military operations in Gaza. Resistance is expected to be fierce, and there will be a high risk of heavy civilian casualties in the densely populated territory that houses some 1 million Palestinians, most of them refugees.