Mideast Carrot And Stick

Israel presented Yasser Arafat with a carrot and a stick Sunday, reports CBS News Correspondent Robert Berger.

On the one hand, its Cabinet warned of retaliation for every Palestinian attack. On the other, while in Cairo, its foreign minister Peres was conciliatory.

"We don't have any intention whatsoever neither to have a ground attack nor to attack Arafat or expel Arafat," Shimon Peres said. "It's nonsense."

Peres met Palestinian leader Yasser Arafat in Cairo Sunday, a small step toward healing what the Israeli envoy called "sick and poisoned" relations.

Peres refused to reveal any details of their discussions, but said they talked about the shaky cease-fire declared June 13 and "ways and means to make it a reality. None of us wants fire or blood or victims."

"I'm leaving Cairo with the sense that there is hope," Peres said after his first meeting with the Palestinian leader since unproductive talks in Portugal two weeks ago.

Israel's defense minister back home was more blunt, reports Berger: He said Arafat must choose between peace and destruction.

In Israel, Prime Minister Ariel Sharon told Israel's Channel 1 television that the Peres-Arafat meeting "dealt with halting the terrorism, the violence and the incitement, as a condition for continuation of the (peace) process."

Arafat returned to the Palestinian territories without speaking to reporters. Earlier, both men had met separately with President Hosni Mubarak.

Meanwhile, Israel's Cabinet approved a proposal Sunday to build new communities near the Gaza Strip on Israeli territory that the previous government had considered giving to the Palestinians in a land-swap deal, an official said.

The decision drew criticism from Israeli opposition figures and environmental groups.

Sharon's Cabinet approved the plan to develop Israeli communities in the Halutza Sands region, a mostly desert area adjoining the southeast corner of the Gaza Strip, according to Sharon spokesman Raanan Gissin.

The Israeli press has reported the Israeli government is planning a large military operation against the Palestinian Authority which would include striking Arafat — an assertion at which Peres scoffed.

"Arafat in our eyes is the elected leader of the Palestinians and he represents them," Peres said.

Peres said he and Mubarak, considered a key moderate Arab leader, "discussed how to create a different atmosphere" between Palestinians and Israelis.

"The atmosphere as it is today is sick and poisoned. We have lost the capacity to listen to one another."

While the Halutza Sands land is Israeli territor, former Prime Minister Ehud Barak had proposed that Halutza Sands be given to the Palestinians in exchange for Israel's annexing Jewish settlement blocs in the West Bank.

Those negotiations collapsed amid the nearly 10 months of Israeli-Palestinian fighting, and the Halutza Sands proposal is no longer on the table.

However, Mossi Raz, a member of the dovish Meretz Party, criticized the government decision, saying it could complicate future negotiations.

"I think the government is tying its own hands," Raz said. "Even if a peace agreement doesn't happen today, what will happen in 10 years?"

Also, environmental groups oppose development of the area, which includes a national park.

Rightwing Israelis were quick to criticize Peres for meeting Arafat.

"What new things did Peres sell this time? We don't know," Cabinet member Rehavam Zeevi told Israel radio. "We have suffered enough from Peres' attitude."

Peres appeared to have anticipated such a reaction at home, telling reporters before he left Cairo: "Our position is that we don't negotiate under fire. We talk about how to stop fire."

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