Even a year ago, with the Palestinians demanding a complete Israeli withdrawal to positions held before the intifada began, a plan for a withdrawal from just two areas would have been considered laughable.

Yet this week, people were hoping against hope that even a modest agreement might finally herald a return to brighter times.

Finalized at a Tel Aviv meeting Sunday night between Israeli Defense Minister Benjamin Ben-Eliezer and Palestinian Authority Interior Minister Gen. Abdel Razak Yiheyeh, the plan calls for Israeli troops to gradually pull back from Palestinian areas.

Israel originally wanted to withdraw only from the Gaza Strip, but gave in to Palestinian demands and included a West Bank city, Bethlehem, in the mix.

Even as skeptics were crying that the plan would never work, Israel pulled all of its troops out of Bethlehem on Monday. They remained surrounding the city and manning roadblocks in the area.

The agreement was tested by incidents throughout the week.

On Wednesday, Israel Defense Force troops tore down abandoned buildings in the Gaza Strip that the army said provided cover for Palestinian gunmen.

Palestinians said one person was killed and four injured in the Israeli operation Tuesday night in Khan Younis.

The army said the operation was in response to the killing in the Gaza Strip, earlier in the day, of Israeli soldier Kevin Cohen, 19, of Petach Tikva, by a Palestinian sniper.

A Palestinian youth, 15, also was killed in the firefight.

In the West Bank, Israeli troops operating in the Ramallah and Nablus areas detained three wanted Palestinians for questioning.

In another development, the Al Aksa Brigade of Palestinian Authority President Yasser Arafat’s Fatah movement vowed to carry out “massive attacks” to mark the first anniversary of the killing of its commander, Yasser Badwi, the Jerusalem Post reported.

Also on Wednesday, Israel arrested a Hamas cell believed responsible for several bombings, including one on July 31 at Hebrew University. The men, eastern Jerusalem residents whose Israeli ID cards allowed them to travel the country freely, also are believed to be behind the Moment Café bombing in March, which killed 11 people.

In total, they are considered responsible for 35 deaths, including five Americans killed in the university bombing.

Israel made the arrests Saturday night, but only released the information Wednesday. Israeli officials said the suspects also alerted them to a bomb planted on the Tel Aviv-Jerusalem highway.

Just the same, senior Israeli and Palestinian security officers were due to meet Wednesday to consider extending a truce plan to the West Bank city of Hebron. An Israeli security source said implementation of the cease-fire plan in Hebron would depend on calm there, Israel Radio reported.

After Tuesday’s shooting of the soldier in Gaza, Ben-Eliezer said he had warned the Palestinians that the agreement was in danger.

“I told senior Palestinian officials about what happened and said, ‘If you don’t take care of it, we will,'” Ben-Eliezer said. “If they want to live in peace, if they want to live in prosperity, if they want to open our gates to work in Israel…it is up to them.”

Hamas, Islamic Jihad and even the military wing of Arafat’s Fatah have said they will not honor any cease-fire, and will continue attacking Israel.

A Defense Ministry statement said a withdrawal was contingent on the Palestinians taking “responsibility to calm the security situation and reduce violence.”

The Palestinians will assume responsibility for security in the areas as the Israeli army evacuates.

In addition, Israel is to lessen restrictions on Palestinian civilians, and local commanders on both sides would meet in coming days, while Ben-Eliezer would continue to monitor the discussions.

After the ongoing violence of the past two years — which has almost removed the term “breakthrough” from the political lexicon — many see the “Gaza/Bethlehem First” plan as the best hope for restarting a political process.

Ben-Eliezer called the plan the most “real” of recent proposals, because the sides are proceeding “step by step.”

“There is a real opportunity here for the Palestinians to stop the violence and terror and set out on a new path,” he was quoted as saying.

Israeli media speculated that the move was a photo-op aimed at boosting Ben-Eliezer’s political chances if he runs for prime minister in elections that might be moved up to January 2003.

Analysts speculated that Ben-Eliezer was desperate for a political accomplishment to siphon some support away from Haifa Mayor Amram Mitzna, who recently announced his intention to challenge Ben-Eliezer for the Labor Party leadership and has emerged as a strong candidate.

After the withdrawal, Haj Ismail, a Palestinian security commander, arrived in Bethlehem to begin preparations to reduce the violence. Also Monday, Israel approved the transfer of 14 Palestinian police officers from other areas in the West Bank to Bethlehem.

Earlier Monday, a 13-year-old Palestinian was killed by Israeli tank fire near Jenin.

On Tuesday morning, an armed Palestinian was killed and another was injured in an exchange of fire with Israeli troops in the Tulkarm refugee camp. The army said the dead Palestinian was a senior member of Fatah’s Tanzim militia who was involved in several terror attacks, including suicide bombings, Israel Radio reported.

Israeli troops also found a cache of 25 pipe bombs in a building near the West Bank city of Jenin.

In Ramallah, Israeli troops killed the brother of Ahmed Sa’adat, the secretary general of the Popular Front for the Liberation of Palestine. Ahmed Sa’adat is being held in a Palestinian jail in Jericho for planning the assassination of Israeli Tourism Minister Rehavam Ze’evi last October.

The soldiers entered downtown Ramallah to arrest Mohammed Sa’adat, 23, who also is a PFLP member. Mohammed Sa’adat opened fire, wounding two of the soldiers. The troops returned fire, killing Sa’adat, the Israeli daily Ha’aretz reported.

The PFLP vowed “a deterrent and painful” response, said Rabah Muhana, a senior PFLP leader in the Gaza Strip, told Reuters.

Likud legislator Yuval Steinitz, like other right-wing members of the Knesset, called the agreement a “joke.”

“Eight years after the failure of the Oslo process,” Steinitz said, “again and again, we are prepared to forgive our enemies.”

Steinitz said it is obvious the agreement bears Arafat’s stamp of approval, and he believes Israel should expel Arafat from the territories.

For a few days this week, though, there was some hope that the worst might be over — but for most Israelis, the hope was faint and guarded.

“If there is, in fact, any light at the end of the tunnel,” Ha’aretz’s Arab affairs analyst Danny Rubinstein wrote of the agreement, “it is very, very dim.”

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