Bethlehem resolution near

Associated Press

WASHINGTON — Israel and the Palestinians reached a deal early today to resolve the 35-day standoff at the Church of the Nativity in Bethlehem, but with a catch.

Meanwhile, in Washington, Israel intensified its campaign Monday to link Yasser Arafat to terror attacks in the face of the Bush administration’s insistence that Israeli Prime Minister Ariel Sharon must deal with him as leader of the Palestinians.

Palestinian leaders have agreed to exile 13 militants holed up in the church, the traditional birthplace of Jesus, but each of the 13 must agree to the deal, a Palestinian official said.

Two Palestinian officials entered the church to talk to the gunmen inside, the official, a Palestinian policeman in the church told The Associated Press.

Under terms of the deal, the official said, the 13 would be sent first to Egypt and then to Italy, and another 26 militants would be transported to the Gaza Strip.

The outline of the deal was put together in intensive negotiations over the past few days, when Israel dropped its demand for the surrender or exile of all the gunmen in the church, and the Palestinians agreed to exile some of them. Over the past day, the haggling has been over the number to be exiled.

On the eve of White House talks with Sharon, President Bush prodded Arafat to play a constructive role to stop the cycle of violence.

"He has disappointed me. He must lead. He must show the world that he believes in peace," Bush said.

Sharon called Monday for reform of the Palestinian Authority, including its security forces, and suggested it needed a new leader and more accountability, but he did not call outright for the ouster of Arafat as he has in the past.

An avalanche of allegations from Israel, which also seeks to ascribe a direct role to Saudi Arabia in financing terrorists, could complicate Bush’s meeting today with Sharon, as well as the administration’s attempt to push Israel toward a land-for-peace deal with Arafat’s Palestinian Authority.

In their meeting today, Bush plans to urge Sharon to help find ways to bolster the Palestinian security apparatus as a way of curbing terrorism so the two sides can get back to political talks, a senior U.S. official said.

Israeli officials previously had presented documents and other material seized in raids on the West Bank and obtained from captured terrorists as evidence of what the Israelis say is a direct Arafat role in supporting and sponsoring terror.

Then on Monday, officials traveling with Sharon accused Saudi Arabia of encouraging Palestinian bomb attacks against Israelis, including one that killed a U.S. citizen in 1995.

They said a committee under the auspices of the Saudi interior ministry knowingly funneled money to the families of suicide bombers, to jailed attackers and to the radical Islamic Hamas movement.

The Saudi ambassador in Washington, Prince Bandar bin Sultan, issued a statement calling the allegations "totally baseless and false, … a smokescreen intended to distract attention away from the peace process."