HEIGHLIGHTS: Israel's Security Cabinet Gives Green Light to Sharon & Ben-Eliezer to Respond to Latest Palestinian Bombing||Idea of Expelling Arafat Raised|| Deal on Bethlehem Sealed as 26 Palestinians Prepare to Leave Church of Nativity||Hamas Promises More Attacks||Annan to Pile Jenin Report||STORY: The muddy waters that have engulfed the Middle East since that ill-advised visit by the then Israeli opposition leader, Ariel Sharon to the Aqsa Mosque over two years are now getting even muddier since his election as Prime Minister later.

Israel's security cabinet gave the green light Thursday for military operations against what it calls "terrorist targets" after a Palestinian Resistance bombing that threatened to derail new Middle East peace efforts.

The decision coincided with a deal to end a five-week-old armed standoff at Bethlehem's Church of the Nativity, under which 26 Palestinian militants were expected to leave the church almost immediately and 13 were due to be exiled abroad. (Read photo caption)

The deal opens the way for a troop pullout from Bethlehem, the last major West Bank city occupied by Israeli forces in an occupation army offensive, but the security cabinet decision raises the likelihood of a tough military response to the bombing.

NO DETAILS OF ISRAELI RESPONSE

A government statement gave no details of what military operations had been approved but said the security cabinet had empowered Prime Minister Ariel Sharon and Defense Minister Binyamin Ben-Eliezer to decide what action to take.

A senior Israeli political source said one cabinet minister had raised the idea of exiling Palestinian President Yasser Arafat but it had not even been out to a vote.

In Washington, President Bush on Wednesday urged Israeli Prime Minister Ariel Sharon to heed a "vision of peace" when responding to Tuesday's bombing that killed at least 15 people, but stopped short of urging restraint.

However, observers expected a wide scale military operation and the expulsion of Arafat. At the same time, the Gaza Strip is bracing of an Israeli attack after it was announced that the bomber was from Gaza. Hamas declared responsibility for the attack.

HAMAS LEADER SAYS ATTACKS WILL CONTINUE

The spiritual leader of Hamas vowed additional attacks against Israel. Sheik Ahmed Yassin remarks came in an interview with The Associated Press a day after the group carried out the bombing.

Yassin pledged retaliation for massacres carried out by Israeli forces in the Jenin refugee camp and the West Bank.
Hamas' leadership is in Gaza and has survived the Israeli offensive pretty much in tact. Although Hamas' forces in the West Bank have been targeted by Israel.

ANNAN TO COMPILE JENIN CAMP REPORT

Responding to a General Assembly request, U.N. Secretary-General Kofi Annan will compile a report on Israel's military actions at the Jenin refugee camp and seek Israel's cooperation.

Annan, who couldn't get Israel's permission to send a fact-finding mission to Jenin this month, will need to request documents from Israel for his report, U.N. spokesman Fred Eckhard said.

Arab nations were unable to salvage the fact-finding mission in the Security Council but got a resolution passed in the 189-nation General Assembly on Tuesday night, keeping the subject alive.

PHOTO CAPTION

Israeli army vehicles and other cars are parked in front of the Bethlehem Peace Center, left, as Palestinian and Israeli negotiators meet inside near the Church of the Nativity, right, Wednesday May 8, 2002. (AP Photo/David Guttenfelder)
- May 08 8:05 PM ET