Arafat Sounds Warning on Jewish Settler Crisis

By Colleen Siegel

JERUSALEM, Sept 17. 1997 (Reuter) - Palestinian President Yasser Arafat

sounded a warning on Wednesday of a ``very negative reaction'' unless Israel

swiftly resolved a crisis over the takeover by Jewish settlers of two homes in

Arab East Jerusalem.

Prime Minister Benjamin Netanyahu's right-wing government offered the four

Jewish families, who moved into the Ras al-Amoud neighbourhood on Sunday,

a compromise proposal to quit the site temporarily and leave behind a

token presence.

Settlers immediately dismissed the offer. Palestinians condemned the

proposal.

Israel Radio said the American Jewish millionaire who bankrolled the

settlement bid had asked the High Court of Justice for an interim order

banning the government and police from evicting the families.

In Gaza, Arafat called the settlement a violation of his peace deals with

Israel.

``We hope it will be solved very quickly. Otherwise, it will be a very

negative reaction,'' he said in English, without elaborating.

A year ago, Netanyahu's opening of a new entrance to an archaeological

tunnel near Moslem holy sites in East Jerusalem touched off violence that

took the lives of 61 Palestinians and 15 Israelis.

Israel regards East Jerusalem, captured in the 1967 Middle East war, as an

indivisible part of its ``eternal capital'' Jerusalem. The PLO wants East

Jerusalem as the capital of a future Palestinian state.

Netanyahu has condemned the settler move but said he had no legal power to

expel them from the buildings they say were lawfully purchased by

Miami-based magnate Irving Moscowitz.

Political analysts said Netanyahu could invoke public security to force

the settlers out, but such a move would put him on a collision course with

his right wing.

``There was a proposal in which the prime minister would acknowledge the

legality (of the settlement) and the right of Jews to settle in Jerusalem,

on the Mount of Olives,'' said Deputy Education Minister Moshe Peled.

``On the other hand, the families would not stay in the buildings at this

stage but 10 young men would remain to study the Bible and carry out

(winter) maintenance,'' Peled, a negotiator in the crisis, told Israel

Radio.

``When the repairs are completed, the families will be able to enter the

buildings,'' he said.

Ahmed Tibi, an adviser to Arafat, reacted angrily to the proposal and said

all the settlers had to go for good.

``The only solution that will be acceptable is a complete, comprehensive

and immediate evacuation of all the settlers who entered the Ras al-Amoud

neighbourhood,'' he said.

Hagit Harel, a spokeswoman for the settlers who moved on Sunday into the

two homes in the Arab neighbourhood of Ras al-Amoud, said the offer to

leave temporarily was unacceptable.

``Proposals were made but there is no compromise,'' she told the radio.

Public Security Minister Avigdor Kahalani said he planned to meet

Moscowitz later in the day to try to end the crisis without having to

evict the settlers forcibly from the neighbourhood where 11,000 Arabs

live.

``We don't rule out (forcible eviction) but this is not the way to go

right now,'' Kahalani told the radio.

Netanyahu cancelled the Romanian leg of a three-country European tour

scheduled to open on Thursday to tackle the crisis.

The Israeli leader is caught between warnings from his chief of police,

Palestinians and left-wing Israelis that the takeover could trigger

bloodshed and threats from his right wing that the eviction of the

settlers could spark a coalition crisis.

The settlers' move under the cloak of darkness took place just days after

U.S. Secretary of State Madeleine Albright urged an Israeli ``time-out''

to settlement expansion and other unilateral steps deemed provocative by

Palestinians.

At the site -- just outside the walled Old City but in the glare of the

golden Dome of the Rock -- the leader of a Jewish group that wants to

rebuild the biblical Jewish Temple where the Moslem shrine now stands

surveyed the scene with satisfaction.

``There are only three things involved in real estate: location, location