The worsening security situation has been accompanied by an escalation in Israeli military activity in the Occupied Territories, where dispute still surrounds the make-up of the Palestinian leadership.

Tel Aviv said the air strike on Syria targeted a terrorist training camp run by the militant Palestinian group Islamic Jihad, which had claimed responsibility for the Haifa bombing in which 19 Israelis were killed. However, Damascus denied that Islamic Jihad operated any camps in Syria, insisting instead that the Israeli bombs hit a Palestinian refugee camp.

While international diplomats queued up to criticise Israel for escalating already-fraught tensions in the region, US President Bush stopped well short of condemning Washington's closest ally. 'Israel must not feel constrained in terms of defence of the homeland,' he said on 6 October, while he advised Israeli Prime Minister Ariel Sharon against exacerbating the situation, saying: 'It's very important that any action Israel takes should avoid escalating and creating higher tensions.' Bush repeated his refrain that the onus to ending the violence lies on the Palestinian leadership.

Damascus, which already has frosty relations with Washington, has sought to respond to the Israeli raids through diplomatic channels, with the country's UN representative tabling a draft resolution before the Security Council calling for the condemnation of Israel's actions as 'military aggression'. However, the US is expected to veto what it considers to be such a one-sided proposal, particularly as the hawks in Washington are trying to increase the pressure on Syria, which the US has accused of being on the wrong side in the 'war on terror'. Pressure is growing for the administration to take an even harder line against Damascus, with a new bill now going through Congress calling for additional sanctions to be imposed on Syria (see News Digest).

In the wake of the Haifa bombing, Palestinian leader Yasser Arafat on 5 October announced a state of emergency in the Occupied Territories and named an eight-member skeleton cabinet with Ahmed Qurei (Abu Ala) as prime minister. Abu Ala said at the swearing-in ceremony on 7 October that his cabinet's first task would be to end the 'chaos. and assert control over security'. However, like his doomed predecessor Mahmoud Abbas (Abu Mazen), who resigned in September, the new prime minister insisted that he would negotiate with the armed groups such as Hamas and Islamic Jihad and not confront them as Israel has demanded.

But by bypassing parliament in appointing the emergency cabinet, Arafat has angered many Palestinian legislators, some of whom are threatening not to support the new team in a vote of confidence. The furore has led to the postponement of the parliamentary session to endorse the cabinet, scheduled for 9 October. There are indications too that Abu Ala himself may yet stand down as premier, with the Israeli daily Haaretz reporting on 9 October that he would quit if Arafat dismissed interior minister-designate Nasser Yousef.

The renewed crisis in the Palestinian leadership comes as concern is mounting over the health of Arafat. The 74-year-old leader is evidently not well and his officials have repeatedly been forced to deny reports that he suffered a mild heart attack in early October. During his long career, Arafat has assiduously avoided appointing a successor and it is still far from clear who would take over as leader if he dies.