Israel dismissed the General Assembly resolution, which passed 133-4, with 15 abstentions, and said the Palestinians should focus their energies on fighting terrorism. Israel also insisted that a new government being formed by incoming Palestinian Prime Minister Ahmed Qureia cut links to Arafat. Israel says Arafat is tainted by terrorism.
In Tel Aviv, several thousand Israelis marched to the Defense Ministry, protesting their government's tough policies in the West Bank and Gaza Strip and calling for an end to occupation. In the past three years of fighting against Palestinian militants, Israeli troops have reoccupied most West Bank towns, enforced stringent travel bans on civilians and carried out frequent arrest raids.
However, Israeli public opinion has shifted to the right since peace talks collapsed in 2000, and polls suggest a majority supports the government's policies.
Also Saturday, two Palestinian gunmen were killed in the West Bank town of Tulkarem in clashes between rival factions of the Al Aqsa Martyrs' Brigades, an armed group linked to Arafat's Fatah movement, Palestinian security officials said. The firefight erupted during an argument over control of the group, the officials said. One man from each faction was killed.
At Arafat's West Bank compound, hundreds of Palestinians chanted "Bush, Bush, you're the failure," after President Bush said earlier this week that Arafat had failed as a leader.
Addressing the crowd, Arafat praised the 133 nations that endorsed a resolution in the U.N. General Assembly Friday demanding that Israel retract its threats to "remove" Arafat.
"This decision is of the utmost importance, we thank all the countries of the world that voted in favor," Arafat said. The resolution "shows the international community ... stands by the Palestinian people, who have lived under this occupation that does not respect any laws."
About 2,000 people also marched in the West Bank town of Hebron on Saturday, carrying Palestinian flags and banners that read "Arafat is our hero" and "Arafat is our leader."
Reacting to the resolution, Israel's Foreign Ministry said in a statement: "Once again, the Palestinians have decided to focus their energies on rhetoric instead of fighting terrorism."
U.S. Ambassador John Negroponte called the resolution unbalanced for not condemning specific Palestinian militant groups. Only two other members — Micronesia and the Marshall Islands — joined Israel and the United States in opposing the resolution.
Arafat's popularity was given a boost by Israel's decision on Sept. 11 to "remove" him in a way, and at a time, of its choosing. Israeli officials have suggested he may be exiled, killed or further isolated at his partially destroyed compound in the West Bank town of Ramallah.
A first attempt at the United Nations to condemn the Israeli decision was thwarted by the United States, which vetoed a Security Council resolution because it did not censure the Palestinians for suicide bombings that have killed more than 400 Israelis in the past three years.
Friday's U.N. vote came as Qureia defended Arafat, saying he is key to peace efforts and the United States should treat him as a real partner. Qureia's criticism of U.S. policy was the strongest sign yet he does not plan to challenge Arafat.
"Arafat is the elected leader of the Palestinian people and represents the will of these people," Qureia told The Associated Press on Friday. "President Arafat is a real partner."
Israel and the United States say the Palestinians must take action against militant groups as required under the U.S.-backed "road map" peace plan. Both have said they don't believe the Palestinians will crack down as long as Arafat retains power.
U.S. envoy John Wolf has made clear in recent conversations that the United States wants "an empowered prime minister" and a "reform-minded government," said chief Palestinian negotiator Saeb Erekat. "Wolf told us they would judge us by our deed and not words."
In a separate development, an International Monetary Fund official said an audit of the Palestinian Authority revealed that Arafat had diverted $900 million in public funds to a special bank account he controlled and that most of the money was later invested in Palestinian assets.
Speaking at a meeting in the United Arab Emirates, Karim Nashashibi, IMF resident representative in the West Bank and Gaza, credited openness and transparency in accounting under Finance Minister Salam Fayad for disclosing the transfers between 1995 and 2000.
A former IMF official, Fayad was appointed by Arafat in June 2002, following complaints of corruption in the Palestinian leader's administration and Israeli charges that government funds were being funneled to terror groups. Fayad has said no money has gone to terrorist activity.
Palestinian legislator Hanan Ashrawi said she and others have been aware of past misuse of funds for some time. Speaking by telephone from Sweden, she also said "there is nothing innocent about the timing" of the release of the information. "This is a campaign against the president (Arafat) and the (Palestinian) Authority," she said.