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Israeli Troops Leave Arafat's Compound

Israel bowed to U.N. demands and U.S. pressure Sunday, pulling troops and tanks out through the barbed wire that encircles Yasser Arafat's headquarters. The Palestinian leader said the move was only "cosmetic."

As troops removed sandbags, generators and debris from around the Ramallah compound to end the 10-day standoff, Israel said it still planned to arrest alleged terrorists it says are holed up with Arafat.

Nevertheless, both sides offered conciliatory gestures.

Briefly emerging from his building — one of the last still standing in the Palestinian government complex — Arafat flashed a V-for-victory sign to a crowd of several hundred supporters. He renewed his promise to order a cease-fire if Israel were to take troops and soldiers out of all Palestinian territory.

Israel demanded a Palestinian crackdown on terror but eased restrictions on Palestinian trying to enter Israel from the West Bank and Gaza Strip. Jobs in Israel are crucial to many Palestinian families.

Under the new rules, 25,000 Palestinian workers will be allowed to enter Israel daily instead of the current 15,000. The quota of Palestinian businessmen was raised to 8,000 from 5,000.

Nevertheless, Arafat accused Israel of continuing to violate Tuesday's U.N. Security Council resolution demanding an end to the siege as well as to Israel's months-long occupation of Palestinian cities and to terrorism and other violence from both sides.

"They are trying to deceive the Security Council," a stern and seemingly weary Arafat told reporters in his office, minutes after Israeli troops had moved away. He called the pullback a "cosmetic movement."

Some Israeli troops remained within a few hundred yards of the compound and Israeli officials said they still planned to arrest wanted men who were among the 200 people holed up with Arafat since the siege started on Sept. 19.

"We are talking about approximately 18 people who are in the compound who have direct involvement in organizing and conducting terror activities.... Some of them have blood on their hands," Israeli Foreign Ministry spokesman Jonathan Peled told the Associated Press.

Hesaid some others inside "may be wanted for interrogation," but Israel did not know the identities of all in the compound.

Asked if Israel would try to arrest the 18 if they leave, he replied: "That is our intention."

He indicated that Israel was not ready for an unconditional pullback from Palestinian cities, but would move "once we see a serious commitment from the other side in taking over those territories and showing us a halt to violence and terror."

Arafat issued a proclamation repeating "full commitment with all cease-fire decisions," though his aides have often said that his ability to control militant Palestinian factions is limited. Israeli officials have accused Arafat of doing little to try.

It was the second time this year that Israel has surrounded Arafat's compound. In March Israeli troops entered Ramallah to dismantle the Palestinian authority and confiscate weapons and secret files.

The Israelis captured tens of thousands of documents when they bulldozed into Arafat's compound. And in those files, the Israelis told
60 Minutes Co-editor and Correspondent Lesley Stahl , they were surprised to find connections between Arafat and a terrorist in Iraq.

Ido Hecht, a senior Israeli intelligence official, told 60 Minutes that Israel has caught and interrogated members of a Palestinian terrorist cell who admit they were trained in Iraq in June 2002.

"They were trained by people from the Iraqi intelligence," said Hecht. "So, this was an operation that was, that had full Iraqi backing."

Israel claims the cell was recruited by Abu Abbas, the notorious terrorist responsible for the 1985 hijacking of the Italian cruise ship Achille Lauro during which an American traveler was murdered.

Abbas' group, based in Baghdad, was recently reactivated by Saddam Hussein, Israel says , adding that there are documents showing that Arafat approved payments to members of Abbas' group operating in the West Bank.

Israel also says it has been interrogating thousands of captured Palestinians and found that some have been trained in Iran.

Israeli intelligence continues to mine their treasure of Arafat's documents, and to keep the Bush administration informed. In fact, Israeli intelligence officers were at the White House last week to brief the administration.

In those meetings, Israeli intelligence officials also shared evidence about contacts between al Qaeda and senior members of Saddam Hussein's Ba'ath party. The Israelis also briefed the administration on yet another threat from another country: Libya, they say, is getting close to having chemical weapons and the long-range missiles that deliver them.

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