As the participants were busy the convince Iraq to accept a declaration they had agreed upon, Israel was rocked by a third explosion, the second in as many days operated by a Palestinian "suicide bomber" who killed himself and three young Israeli school children waiting for their bus in the Israeli settlement of Kfar Sava.

Israel responded immediately by launching air and land strikes against Palestinian targets in Gaza and Ramallah, in the West bank, setting fire on buildings and cars, knocking out electricity and killing at least two Palestinians in Ramallah.

Palestinians denounced the strikes as "state terrorism" but Israel said they were punishment for the wave of bomb attacks and vowed to hit militants whenever necessary.

"This is a dangerous escalation and it destroys the last chances of peace," Nabil Abu Rdainah, with Arafat in the Jordanian capital Amman, told Reuters. "We hold the Israeli government fully responsibly for this deterioration."

Senior Palestinian negotiator Sa’eb Erekat said the chances of peace were not yet dead. "We don't condone the death of Israelis. We want to salvage the situation," he told CNN.

"We want the revival of the peace process and we seriously need the American administration's help and we need the European help and we need the help of everybody that can get us back to the negotiating table", he added.

"The operations, though laudable and in response to Israeli occupation and military violence, as also mentioned by UN Secretary General Kofi Annan in his address to the Summit, but coming right during the meeting, restores Israeli image in the international public opinion in the one hand while tarnishing that of both the Palestinians and the Arabs", commented one leading Arab journalist who asked not be named.

The diplomats also blamed Iraq for the failure of the Summit, the first since the occupation of Kuwait by Iraq in 1990 On Iraq, observing that under pressures from Jordan King Abdallah and the Egyptian President Hosni Mubarak, Kuwait had accepted to withdraw one of its main condition for reconciling with Baghdad, namely demanding full and official excuse from Iraq for the brutal occupation of the Sheikhdom in 1990 and a pledge to not attack Kuwait anymore and also publicly recognise their borders.

According to "Jordan Times" published in Amman, the leaders had drafted a statement calling on Iraq to "complete all commitments mentioned in the Security Council resolutions in order to find a speedy and final end to the problem of prisoners of war, missing Kuwaitis and others and returning Kuwaiti properties" and demanded an end to all unresolved problems related to weapons of mass destruction and (weapon) control means through negotiations between Iraq and the Security Council.

But Iraq rejected the resolution, saying it was "too similar to what the Americans were imposing.

In a 25 minutes speech read by Mr. Izzat ebrahim, the head of the Iraqi delegation at the conference, the Iraqi dictator Saddam Hussein did not have a single word on the United Nations sanctions on his country nor did he touched on the crucial issue of Kuwait, but concentrated on the Palestinian’s intifada, calling on all Arab and Islamic nations to support the struggle of the Palestinian people and cut all relations with both Israel and the United States.

"Let bygones be bygones. We extend our hands to our Palestinian brothers to say that we stand by them now to serve the Palestinian cause," Assad said in his summit speech.

Here are excerpts from the final communiqué of the Summit, as translated by Reuters:

-- The Arab leaders salute the Palestinian people on its heroic uprising against the ferocious aggression launched by Israel and its confrontation of the barbaric oppression exerted by the occupation. The leaders declare their backing for the Palestinian people in its heroic struggle and support for its uprising and legitimate right in resisting the occupation until their national and just rights are achieved, including the right of return and the establishment of an independent Palestinian state with its sacred capital Jerusalem.

The leaders declare their backing for the Palestinian people in its heroic struggle and support for its uprising and legitimate right in resisting the occupation until their national and just rights are achieved, including the right of return and the establishment of an independent Palestinian state with its sacred capital Jerusalem.

-- The leaders denounce Israel's continuous aggression against the Palestinian people and its violations of human rights, especially the collective punishment and continued attacks on vital institutions and which constitute war crimes against humanity and racist practices.

-- The leaders express their dismay at the U.S. veto at the Security Council that blocked the formation of an international observer force in the occupied territories. They declare their total rejection of the American justifications that do not conform with the role of the United States as a co-sponsor of the peace process and a permanent member at the Security Council.

-- The leaders hail the Higher Council for the al-Aqsa Fund and the Jerusalem Intifada Fund for its quick response to support the budget of the Palestinian Authority by paying $15 million of a soft loan that was approved from a total of $60 million in line with a proposal submitted by Saudi Arabia.

-- In view of the difficult financial and economic situation lived by the Palestinian people, they delegate the Higher Council of the two funds to respond to the Palestinian Authority's request to pay an additional amount ($180 million) to support the authority's budget for the next six months.

-- The leaders welcome Iraq's allocation of one billion euros from its oil export sales to secure humanitarian and basic needs for the Palestinian people and to help the families of the martyrs of the Intifada.

-- The Arab leaders warn Israel against the repercussions of departing from the foundations and principles of the peace process laid down in Madrid in 1991 and warn against the outcome of ignoring it or presenting alternatives that do not conform to the basis of international legitimacy.

-- They call for setting a clear Arab strategy to uncover Israeli schemes that do not seek peace and threaten security.

-- They pledge their support for Lebanon and Syria and reject Israeli threats that have escalated recently against the two countries. They praise the Lebanese resistance against Israeli occupation and call for the release of all Lebanese detainees and prisoners in Israeli prisons.

-- The leaders affirm that achieving peace and security in the region require Israel to sign the Non-Proliferation Treaty and to put all Israeli nuclear installations under international inspection. They confirm the importance of ridding the region of nuclear and mass destruction weapons.

-- The Arab leaders renew their backing and solidarity with Libya in demanding that the Security Council immediately and completely lift the sanctions imposed on Libya ... after Libya fulfilled all the commitments stipulated in the Security Council ... The leaders support Libya in its demand to obtain compensation for human and material losses it incurred because of the sanctions.

-- The leaders agree that the next annual summit would be held in Lebanon in 2002.