Back in the US, it is the worst of the American militarists, right-wing Christian evangelists, "dually loyal" Zionist conspirators, and fat-cat corporate tycoons -- a military-industrial-intellectual elite far more powerful and dangerous than when first warned about by President Eisenhower 50 years ago -- who are getting what they want, using Presidential political figureheads put in power by their money bundles and still-growing ownership of the means of communication to hoodwink the American people as to what is really going on in our world and what it is all likely to lead to in the future.

WASHINGTON (AP - 26 January - by Barry Schweid) - President Bush is holding a threat of diplomatic isolation over the head of Yasser Arafat to force the Palestinian leader to accept responsibility for a weapons smuggling operation and to take other steps to curb terror attacks on Israel.

Bush angrily accused the Palestinian Authority on Friday of ``enhancing terror'' by trying to smuggle a boatload of weapons from Iran. Despite repeated U.S. demands, Arafat has not acknowledged responsibility. The president and his senior advisers reviewed potential U.S. sanctions at a White House meeting that prompted outrage from Palestinian officials.

No deadline was set for Arafat to comply, senior U.S. officials said. But he will be watched closely for signs that he intends to dismantle terror groups and arrest Palestinian officials involved in the smuggling episode, the officials said on condition of anonymity.

A senior official told The Associated Press that sanctions could be imposed at any point, depending on how Arafat responds to what Secretary of State Colin Powell called ``a clear, stern message'' that he must accept responsibility for the smuggling operation. Sanctions could include cutting off contact with the United States and closing the Palestinian office in Washington. ``This kind of activity is constantly undercutting our efforts,'' Powell said on PBS' ``NewsHour.'' ``This is in some ways a moment of truth for Chairman Arafat.''

Senior administration officials said even the least hawkish option, recommended by Powell, would require Arafat to take specific anti-terror actions before the United States would renew its suspended mediation role in the Middle East. Declaring he was ``very disappointed'' with Arafat, Bush said, ``Ordering up weapons that were intercepted on a boat headed for that part of the world is not part of fighting terror. That's enhancing terror.''

Israeli commandos seized the Karine A in the Red Sea on Jan. 3 and rushed intelligence experts to Washington to inform the Bush administration. They said the rockets, mortar and explosives could have devastated Ben Gurion Airport outside Tel Aviv and spread terror throughout Israel.

In Ramallah, the West Bank town where Israeli soldiers have Arafat under virtual house arrest, a top adviser said severing ties would ``cause an earthquake'' in the Middle East. The adviser, Nabil Abu Rdeneh, said Bush should act instead against Israeli Prime Minister Ariel Sharon ``and not receive him in the White House.''

Jibril Rajoub, the Palestinians' security chief on the West Bank, said in a telephone interview that cutting ties would be irrational and unrealistic. He said the Palestinian Authority has no military relationship with Iran, and individuals involved in the smuggling attempt would be put on trial. ``I hope American leadership will not behave under the influence of extremists of the Jewish community in America,'' Rajoub said.

Sharon is due to meet with the president in Washington on Feb. 7, his fourth visit to the White House since last March. Arafat has never been invited by Bush.

King Abdullah II of Jordan will have a breakfast meeting with Bush next Friday at the White House. In their third meeting, Bush and the king will discuss terrorism and the Middle East, the White House said.

Bush sent letters last week to the king, Crown Prince Abdullah of Saudi Arabia and President Hosni Mubarak of Egypt with what U.S. officials said was proof the Palestinian Authority was involved in the smuggling operation.

On Capitol Hill, Rep. Gary Ackerman, D-N.Y., said a bill to close the Palestinian office in Washington and bar any U.S. assistance to the Palestinian Authority had ``picked up tremendous momentum.'' Ackerman said he had 84 co-sponsors. The legislation would include a waiver clause authorizing Bush to defer any action on national security grounds.

JERUSALEM, Jan 26 (Reuters, By Danielle Haas) - The Palestinian Authority called on militants on Saturday to stop attacks on Israel and a new wave of violence led U.N. Secretary-General Kofi Annan to say the situation in the region looked "hopeless." "For the moment it looks hopeless but we must not give up hope," Annan told a news conference while visiting Iran.

The situation is "tragic and very, very serious," he said.

U.S. President George W. Bush made his harshest comments yet on Arafat on Friday after a Palestinian suicide bombing wounded at least 25 people in Tel Aviv. Washington also essentially suspended a peace mission to the region by envoy Anthony Zinni.

Israeli warplanes fired missiles at Palestinian security targets in the West Bank and Gaza late on Friday to retaliate for the latest suicide attack. Two Palestinians were wounded in the air strikes, medical officials said.

Bush also discussed options with his foreign policy aides on punitive measures against Arafat over an arms shipment the United States blames on the Palestinians.

"I am disappointed in Yasser Arafat. He must make a full effort to rout out terror in the Middle East," Bush said.

Annan said "collective international action" was needed to convince all parties to return to the negotiating table.

To strengthen Arafat's plea for calm, the Palestinian leadership called on militants to maintain a "comprehensive ceasefire and stop operations against Israel and Israelis."

The violence has raged on since early January despite Arafat's call for a ceasefire in mid-December.

"These operations do not serve our national cause at all," the leadership said in a statement.

Israeli officials said the statement amounted to empty words unless Arafat dismantles militant groups in his territories.

"All the steps Arafat must take are well known to him -- from dismantling the terrorist infrastructures to arresting terrorists," Israeli cabinet secretary Gideon Saar said.

"Of course there is no trust (in Arafat), not just for us but, in my view, the United States has understood that Arafat isn't only dealing in terror but is lying in a bald-faced manner," Saar told Israel Radio.

At least 820 Palestinians and 248 Israelis have been killed since a Palestinian uprising against Israeli occupation began in September 2000 shortly after peace talks stalled.

Two people were wounded when Israeli F-16 fighter planes destroyed a garage in Arafat's security complex in Gaza City, Palestinian security officials said.

Arafat was in his headquarters in the West Bank city of Ramallah, where he has been confined since December Israeli tanks. Israel demands he arrest the killers of an Israeli cabinet minister before it will let him go.

Huge plumes of smoke rose over the West Bank city of Tulkarm after missiles hit buildings belonging to the Palestinian security forces and intelligence service.

The Israeli military said the strikes were "in reaction to the terror activities of Palestinians."

The Palestinian militant who blew himself up in a busy street in downtown Tel Aviv, wounding 25 others, might have been accompanied by another militant. Police seized a second man believed to have planned a shooting in tandem with the bombing.

The bomber was a member of the Islamic Jihad, according to a television station run by Lebanon's Hizbollah guerrilla group.

Friday was the second time within says that an urban centre became a disaster zone. A Palestinian gunman killed two women on Jerusalem's Jaffa Road on Tuesday before police shot him dead.

In a sign more bloodshed may come, a leader of Hamas's politburo confirmed that the Islamic group was developing missiles with a range of up to six miles (8 km) capable of striking Israeli cities near Palestinian areas.

"We want to resist the occupation with these missiles...Are weapons only allowed for Israel and not the Palestinians?" Musa Abu Marzook told CBS television's 60 Minutes programme.

U.S. frustration deepened in early January after Israel seized a ship it said carried 50 tonnes of Iranian-made arms the Palestinians ordered in violation of interim peace deals.

Arafat denied he or the Authority was involved and ordered the arrest of three Palestinian officials who were implicated.

U.S. Secretary of State Colin Powell said the United States was considering "all kinds of options" in its response to the arms ship, adding: "We continue to review our policy with respect to the Palestinian Authority and Chairman Arafat."

Possible U.S. measures could include cutting ties with Arafat, closing Palestinian Authority offices in Washington or putting Arafat's personal security force on the State Department list of terrorist groups, sources said.

[AFI Research - Devon, UK]: The "Worst Case Scenario" for American interests in the Gulf region may be about to occur. The fragile alliances, built on Oil and clandestine support for minority, oppressive regimes is beginning to crumble. This comes as no surprise to the global intelligence community, for without the active involvement of massive clandestine support, the regimes would have joined the Shah of Iran, a long time ago.

What amazes many Analysts, is the death wish of these regimes. Instead of welcoming US forces on their soil, to protect them, senior Saudi officials openly complained to The Washington Post that the Saudi rulers believe the United States has ''overstayed its welcome'' and its forces have become a political liability. The future use of the Prince Sultan Air Base, where American forces have maintained a presence since the 1991 Gulf War, is at risk. The relationship between the United States, and the Saudi rulers, has been strained by the Sept. 11 attack on the World Trade Centre, blamed by the United States on Saudi-born militant Osama Bin-Laden.

This unwelcome attention to Saudi Arabia comes at a time of leadership turmoil, as Crown Prince Abdullah is effectively in charge, as the ruler, King Fahd, is reported to be in poor health, and effectively out of the loop of government. The vocal resentment to the Saudi family is growing, both at home, and throughout the region.

Commenting on the Saudi statements and the effect of the US being asked to leave Saudi Arabia, Washington Intelligence Expert, Wayne Madsen, stated "Without the protection of the United States military, the House of Saudi will be effectively defenceless. The United States has provided the country with practically all of its major defence, law enforcement, and intelligence systems, including its air defence systems, the Saudi Arabia Ministry of Interior System (SAMIS II) that keeps track of its citizens and visitors, its naval forces (Saudi Naval Expansion Project), National Guard (through Vinnell Corp., a US private military contractor tied to the CIA), etc. When we pull out, there are a lot of countries that would like to even old scores with the House of Saud. These include Iran, Iraq, Jordan, the Gulf States, and Yemen."

Wayne Madsen, with many sources in the area, pointed to numerous reports in the local Arab media. "Saudi Crown Prince Abdullah recently verbally assaulted the Emir of Qatar at a Gulf Co-operation Council summit. Abdullah complained about Qatar's support for Al Jazeera for broadcasting anti-Saudi programs. A Qatar government official once told me that all the small Gulf States would like to see Saudi Arabia a thing of the past -- he said the Saudis are considered arrogant and hypocrites, citing the number of Mercedes Benz carrying Saudi Princes that wipe out on the ocean causeway from Bahrain to the Saudi mainland after nights of heavy drinking by the drivers."

Turning to sources in Turkey, their hostility towards the current Saudi regime came to a head, with the demolition recently, of a revered Ottoman 18th Century Castle, a historically invaluable relic. What has upset the Turks is that the US blasted the Taliban for destroying Buddhist statues, but remained silent when the Saudis bulldozed the pristine Ottoman castle, to build commercial property. The resentment of dual standards from Washington, throughout the entire region, is beginning to reach boiling point. The US is beginning to be perceived as a bully, intent on bombing cities, and infrastructure into ruins, yet unable to capture a solitary frail figure, in an Army Surplus Combat Jacket. The Bush Administration has elevated Bin-Laden to the status of a folk hero, a rallying call for Islamic Militants. These militants can be found and arrested in most counties, but around the Gulf region they have the potential of becoming the legitimate government in those countries supplying the bulk of the US oil supply.

The US desperately needs to occupy Somalia, to cover its interests, and oil supply in the Middle East. The fast foot work to secure Afghanistan, to route the oil from the old Soviet Oilfields, to a secure warm water port in Pakistan, will take time. The Bush/Baker plan to grab the oil in Southern Sahara, along with Morocco, will also take time. Where there is no longer time to spare is in the Gulf region.

In that region the important Iran is proving far from a compliant partner. There are many unconfirmed reports that Iran, and Iraq may seek a better understanding, even an alliance. The shipment of arms to Palestine, where Israel blasted Yasser Arafat, yet remained silent about the supplier, Iran, speaks for itself. Unconfirmed sources indicate that whilst this shipment was discovered by, or leaked to Israel, it amounted to the last of five shipments. Four having already been delivered. It is clear that Iran sees itself as playing a far more dominant role in the region, a desire not shared with the United States.

The advances in Iranian missile technology make the presence of US Carrier battle groups in the tight waters of the Persian Gulf, more risky than ever. The next war fought in the Gulf, according to several leading military experts, will not have the luxury of months of preparation, with no harassment, as did the earlier Gulf War.

Wayne Madsen summed up the situation, with "The United States had better start planning for life without the Saudis. The Bush's and their oily friends have linked to the Saudis for years -- their wealth is largely a result of Saudi oil and the wealth it has generated. Alternative, environmentally sound energy sources are a must. It is also likely that what will replace the Saudis will be a regime that leans heavily in the direction of extreme Wahhabism and Deobandi Sunni thought -- read that as the creed of the Taliban and Osama Bin-Laden."

RIYADH, Jan 26 (Reuters) - A senior Saudi cleric, hitting back at criticism in the U.S. media, said altering Saudi Arabia's religious or education systems because of pressure from Western media would be treason, newspapers said on Saturday.

The Muslim kingdom, the birthplace of Islam, has come under fire from some U.S. media and senators after the September 11 suicide attacks on U.S. cities for allegedly being too soft on "terrorism" and for "exporting" its austere brand of Islam.

Washington has said 15 of the 19 hijackers who crashed jets into U.S. landmarks were Saudis. The man the United States holds responsible for the attacks, Osama bin Laden, was also born in Saudi Arabia.

"Bargaining on Islam and on its unquestionable principles amounts to high treason and extreme madness," the Arab News daily quoted Sheikh Saud al-Shuraim, preacher at the Grand Mosque in the holy city of Mecca, as saying in a Friday sermon.

He said no ideological or educational concessions should be made to those who sought to impose "submission on Muslims."

Several U.S. columnists have penned critical articles of the kingdom, saying its system of government, religious institutions and education promote anti-Western Islamic militancy.

"The enemies of the Islamic nation will accept nothing less than that the nation abandon Islam, distance itself from the sharia (Islamic law) and make concessions so that it remains a reality only in name," Sheikh Shuraim said.

He decried the "smear campaign" against Muslim countries and Islamic teaching, saying it was not fair to blame Islam for problems it had not created.

Saudi Arabia's Crown Prince Abdullah in November asked clerics to tone down their sermons and to issue statements making clear the country condemned the attacks.

Diplomats said the move was significant because the government was acknowledging for the first time its concern about Saudi Arabia's image abroad as an Islamic state which fostered extremism.