"From now on we are going to totally ignore Yaser Arafat, who is no longer a partner for us, and wage war against terrorism as if he did not exist", Justice Minister Meir Sheetrit, a close ally of Sharon, announced.

"We hope that in Arafat's entourage certain responsible people will understand that they have to take things in hand," he added.

But an Israeli official assured that there was no intention to reoccupy permanently Palestinian autonomous areas or break up his Palestinian Authority.

However, White House spokesman Ari Fleischer said US Special Envoy to the region Anthony Zinni would discuss with Sharon the decision to cut off communication with Arafat.

The European Union, the Palestinian Authority's main diplomatic and financial backer, this week aligned itself with Washington's much tougher stance on Arafat.

The bus ambush in the West Bank and a commando attack on an Israeli settlement in Gaza was claimed by HAMAS, Palestinians largest and most popular organisations opposed to the Peace Process and "Al Aqsa Martyrs Brigade", an offshoot of Arafat’s personal organisation "Fatah".

The Palestinian Authority diplomatically isolated and under unprecedented pressure from international community, including the United States and the European Union to jail extremists responsible for a wave of bloody attacks, accused Israel’s hard line Prime Minister Ariel Sharon of launching an "official war" on the Palestinian people.

"We hold Israel fully responsible for the military escalation underway and for the repercussions it will have", he warned, calling on the international community and particularly the United States to put pressure on Israel to stop its aggression and its war, and to make it respect and implement the agreements" reached between the two sides.

"Coexistence with these organisations or acquiescence in their activities is simply not acceptable", US Special Envoy to the region Anthony Zinni said.

After a meeting of the cabinet’s security committee, Mr. Sharon, repeating that Mr. Arafat was personally behind the Palestinian terrorist suicide operations that have left more than 50 Israeli killed and over 200 wounded, some of them seriously, said Arafat was "irrelevant" and therefore all contacts with him were cut.

"These operations will be systematically carried out in the coming days, area by area", he said, warning that they would be "much tougher" than in the past.

"They will not only target the Islamists from Hamas or the Islamic Jihad, but also those Fatah and Force-17 members implicated in terrorist activity," added the official, referring to Arafat's own movement and his personal guard respectively.

The Islamic Republic of Iran that do not recognises Israel welcomed the unofficial but virtual abandoning of the Oslo Agreements by the Jewish State, saying that the international community had to "take up a new approach toward the ongoing crisis in the Middle East, since the old methods were too obsolete to tackle existing problems".
"The Middle East issues are getting complicated day after day, indicative of the fallacy of an approach which has been adopted so far", the Qods (Jerusalem) news agency QODSNA, created by the official Iranian news agency IRNA, quoted the Iranian Foreign Minister Kamal Kharrazi as saying.

Kharrazi also repeated Iran’s criticism against Washington for "siding with the racist Israeli regime in the crisis".

"The American approach toward the Middle East issues is one-sided and its policy a blunder in principle", for, instead of confronting the Israeli state terrorism, has been dealing with the defenceless Palestinian people", IRNA quoted QOSNA quoting Mr. Kharrazi

The United States also announced Thursday that it will offer rewards for information leading to the arrest and conviction of Palestinians involved in terrorist attacks in Israel, Gaza and the West Bank in which Americans were killed.

Mr. Arafat, visibly in very poor health and unable to control both the situation and Palestinian extremist groups in the areas under his authority, condemned the anti-Israeli attacks and, responding to calls from the Bush Administration and the EU, hastily ordered the closure of all HAMAS and Islamic Jihad offices after the last bloody operations.

Arab nations, meanwhile, called for a meeting of the United Nations Security Council. They plan to introduce a resolution calling for a cessation of violence, a pullback of forces and perhaps another attempt to place international observers as a buffer in the region, said Palestinian envoy Nasser Al-Kidwa.

Jordan, current chair of the Arab League summit, began contacting Arab and other countries urgently in a bid to avoid matters becoming worse, said Foreign Minister Abdel Ilah Khatib. ENDS ISRAEL PALESTINE CONTACTS ENDS 131201