Possible Bethlehem Deal For Christmas

There may be a deal regarding Christmas celebrations in Bethlehem.

Israel appears to be backing away from earlier declarations that it would not pull the army out of Palestinian-ruled Bethlehem by Christmas, reports CBS News Correspondent Robert Berger.

Now Israeli officials are talking about a compromise in which the army would withdraw from Manger Square, Jesus' traditional birthplace, where festivities take place. However, troops would remain in certain parts of Bethlehem, including a refugee camp and other flashpoints. The Palestinians say anything less than a complete withdrawal is unacceptable.

Meanwhile, Israeli Defense Minister Shaul Mofaz opened two days of talks with top U.S. administration officials Monday, calling for a "new and different" Palestinian leadership, and discussing the Bethlehem situation with senior U.S. officials.

New Palestinian leadership would make it possible for the Palestinians to act against terrorists and clear the way for Israel to resume peace talks, Mofaz said after seeing Secretary of State Colin Powell.

"The main goal is to bring the Palestinians back to the table," Mofaz told reporters.

The U.S. has declined to criticize Israel for barring Arafat from Bethlehem.

"We haven't gotten involved in that particular situation," said State Department spokesman Richard Boucher. Last year, the U.S. described Israel's decision to bar Arafat from Bethlehem as "regrettable."

Israeli soldiers Tuesday discovered a "mobile bomb lab" in the car of a suspected Palestinian militant in another West Bank city, Nablus, the army said.

The car was checked during an arrest raid in the West Bank city of Nablus. The army said soldiers found plastic explosives, weapons and fertilizers used for manufacturing explosives. A bomb lab blew up the car in a controlled explosion.

Meanwhile, an explosion set off a large fire in a compound of petrochemical plants in the northern port city of Haifa on Tuesday, sending a huge cloud of gray smoke over the Mediterranean, but Haifa's fire chief said he believed the blast was caused by an accident.

There has been growing concern in Israel that Palestinian militants will carry out a "mega attack" by targeting an oil refinery or fuel depot. The Haifa explosion fueled those fears.

Prime Minister Ariel Sharon's Likud party was slated to win big in Israeli elections on Jan. 28, but a political scandal may hurt the party's chances.

The Israeli media have been focusing on alleged irregularities in the Likud party primaries this fall, reports Berger. Police are investigating suspicions of bribery, in which candidates for parliament are said to have offered money to party members in return for votes.

And not only money. A secretary for one candidate told Israeli TV that her boss asked to her to hint at offering sex. Likud officials are worried that the scandal will hurt the party's chances in national elections next month.

Mofaz, while in Washington, recalled that President Bush earlier this year had called for Yasser Arafat's ouster. Mr. Bush said the Palestinian leader was entwined in corruption and terrorism.

Mofaz said leadership change was a precondition for a resumption of peace talks.

In an interview last Thursday with a London-based Arab newspaper, Powell said Arafat was still the leader of the Palestinian Authority, "but we believe that his leadership has failed, it has been flawed, so we have been advocating new leadership to come to the fore."

"We would like to see new leaders come forward who would be accountable and responsible, who would be successful in ending the terror and the violence," he said, according to the transcript released Monday by the State Department.

Powell said "it is up to the Palestinian people to judge who those new leaders should be."

And, he said, "the United States stands willing to work with a transformed Palestinian Authority with new leaders coming to the fore."

At the United Nations, Arab nations were pushing for condemnation of Israel for the recent killings of three U.N. workers, while the U.N. urged the Israeli government to stop using excessive force in civilian areas.

Syria circulated a resolution expressing "grave concern" at the killings by Israeli troops after U.N. Mideast envoy Terje Roed-Larsen on Monday strongly criticized Israel's conduct at an open Security Council meeting and called for its defense forces to behave "with greater restraint and discipline."

Several council diplomats said the resolution might get the backing of 14 of the 15 members — but the United States, Israel's closest council ally, was almost certain to oppose it and would likely cast a veto if necessary.

The killings of Briton Iain Hook and two Palestinians who all worked for the U.N. Relief and Works Agency, known as UNRWA, were also high on the agenda of a meeting earlier Monday between Secretary-General Kofi Annan and Defense Minister Mofaz, which Larsen attended.

Israeli soldiers shot and killed Hook on Nov. 22 during a gunbattle with armed Palestinians in the West Bank. The army said its soldiers mistook a cell phone Hook was using for a weapon and that gunmen had entered the walled U.N. compound. The U.N. relief agency denies that gunmen had entered the compound.

An Israeli diplomat said Mofaz, previously Israel's army chief of staff, informed Annan of the investigations into the killings of the U.N. staff. The secretary-general reiterated that the United Nations wants "a rigorous investigation" and written report on Hook's death, U.N. spokesman Fred Eckhard said.

Annan also urged Mofaz to improve security and access for U.N. and other humanitarian personnel, he said.