End To Church Of Nativity Siege
Delayed As Italy Balks
By Michael Georgy

BETHLEHEM (Reuters) - Efforts to end a 36-day-old armed standoff at Bethlehem's Church of the Nativity stalled on Tuesday when Italy refused to accept 13 Palestinian militants holed up inside one of Christianity's holiest shrines.
Israeli and Palestinian negotiators, in talks brokered by U.S. and European Union officials, had reached an agreement under which the gunmen on Israel's wanted list would have been sent to Egypt and then into exile in Italy.
But Italy said it had been kept in the dark and could not consider accepting the men for now, blocking a deal that would have given Israeli Prime Minister Ariel Sharon a boost in talks with President Bush Tuesday.
Under the agreement, another 26 militants sheltering inside the church were to be transferred to the Gaza Strip. Both groups would be under U.S. escort, diplomats said.
But as night fell, hopes for a quick resolution faded.
"We have reached an understanding to resolve the Church of the Nativity crisis," Israeli army spokesman Olivier Rafowicz told reporters in Bethlehem. "The implementation is being delayed because no country is willing to accept the terrorists."
Palestinian officials held out hope that a solution could be found to end the standoff, a source of alarm for the Christian world, which reveres the site of the Church of the Nativity as the birthplace of Jesus Christ.
"We hope the Israeli troops will leave and never return," said Bethlehem Mayor Hanna Nasser.
The deal, which took shape while Sharon was in Washington waging a diplomatic assault against Yasser Arafat, would end the last major standoff of Israel's West Bank offensive, begun on March 29 after a wave of Palestinian suicide attacks.
It would also pave the way for Israeli forces to withdraw from Bethlehem, the last city still occupied after the campaign.
Bush has demanded a full withdrawal from Palestinian-ruled areas -- an Arab condition for attending a peace conference that world powers want held to seek an end to a 19-month-old Palestinian uprising against Israeli occupation.
But in Rome, the Foreign Ministry released a terse statement saying Italy had not received any official request to grant exile status to Palestinians "accused of acts of terrorism."
"The possibility of receiving Palestinian citizens in Italy has never been raised (officially) and therefore at the current state of affairs it cannot be considered," the statement said.
It confirmed what a senior government official had told Reuters earlier -- Italy was bitter that it had been kept in the dark by the United States and Britain and felt it had been steamrollered into playing a part.
"We were treated in an arrogant and intolerable way," the official said.
A source familiar with the talks said efforts were still under way to win Italy's cooperation. There was no word of any other country willing to step in and accept the militants.
The deal hit another snag over weapons belonging to Palestinian security men who sought refuge in the church along with more than 100 clerics and other civilians when invading Israeli forces chased militants into the compound. The security men were asking for written assurances before handing their weapons in to the Israelis, that they would be returned.
Bethlehem Governor Mohammed al-Madani said from inside the church that the militants being sent to Gaza would not be tried. But diplomats said a decision had not been taken on their fate.
Militant groups behind attacks that have killed scores of Israelis have made clear their opposition to the deportation of their members in the church. Relatives of some wept as they kept vigil at Manger Square, saying the men should not be exiled.
In preparation for lifting their siege, soldiers came down from the rooftops surrounding the church, bringing down floodlights that had been hung there. They also dismantled a crane overlooking the church compound.
Troops set up metal detectors outside the church to check whether those departing were carrying weapons. But there were no immediate signs that the soldiers were pulling out.
Progress toward ending the siege coincided with an incursion by Israeli tanks in the West Bank city of Tulkarm, where the army said it had arrested 30 wanted militants.
Israeli forces also launched a raid into the Rafah refugee camp in Gaza. Witnesses said troops had shot dead a 17-year-old youth. The army said it was searching for arms smuggling tunnels and had shot at Palestinians who had fired on them first.
In Washington, Sharon called for a restructuring of the Palestinian Authority to sideline President Yasser Arafat.
Sharon said Israel would be able to implement a peace plan -- details of which he did not disclose -- only if the Palestinian Authority was revamped and Palestinian "violence, terrorism and incitement" ceased.
He was set to repeat this in talks Tuesday with Bush.
At least 1,345 Palestinians and 459 Israelis have been killed since the Palestinian uprising began in September 2000.


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