WASHINGTON -- President Bush is holding a threat of diplomatic isolation over the head of Yasser Arafat to force the Palestinian leader to accept responsibility for a weapons smuggling operation and to take other steps to curb terror attacks on Israel.
Bush angrily accused the Palestinian Authority on Friday of "enhancing terror" by trying to smuggle a boatload of weapons from Iran. Despite repeated U.S. demands, Arafat has not acknowledged responsibility.
The president and his senior advisers reviewed potential U.S. sanctions at a White House meeting that prompted outrage from Palestinian officials.
No deadline was set for Arafat to comply, senior U.S. officials said. But he will be watched closely for signs that he intends to dismantle terror groups and arrest Palestinian officials involved in the smuggling episode, the officials said on condition of anonymity.
A senior official said that sanctions could be imposed at any point, depending on how Arafat responds to what Secretary of State Colin Powell called "a clear, stern message" that he must accept responsibility for the smuggling operation. Sanctions could include cutting off contact with the United States and closing the Palestinian office in Washington.
"This kind of activity is constantly undercutting our efforts," Powell said on PBS' "NewsHour." "This is in some ways a moment of truth for Chairman Arafat."
Senior administration officials said even the least hawkish option, recommended by Powell, would require Arafat to take specific anti-terror actions before the United States would renew its suspended mediation role in the Middle East.
'Disappointed' with Arafat
Declaring he was "very disappointed" with Arafat, Bush said, "Ordering up weapons that were intercepted on a boat headed for that part of the world is not part of fighting terror. That's enhancing terror."
Israeli commandos seized the Karine A in the Red Sea on Jan. 3 and rushed intelligence experts to Washington to inform the Bush administration. They said the rockets, mortar and explosives could have devastated Ben Gurion Airport outside Tel Aviv and spread terror throughout Israel.
In Ramallah, the West Bank town where Israeli soldiers have Arafat under virtual house arrest, a top adviser said severing ties would "cause an earthquake" in the Middle East.
The adviser, Nabil Abu Rdeneh, said Bush should act instead against Israeli Prime Minister Ariel Sharon "and not receive him in the White House."