DATE= 3/31/02

TYPE=CORRESPONDENT REPORT -

TITLE=ISRAEL / ARAFAT (L)

NUMBER=2-288178

BYLINE=LAURIE KASSMAN

DATELINE= JERUSALEM

CONTENT=

INTRO: Israel's military has issued a statement denying Palestinian reports that soldiers have breached the offices where Palestinian leader Yasser Arafat has been under siege since Friday morning. Correspondent Laurie Kassman reports from Jerusalem there was a heavy exchange of gunfire in and around the compound early Sunday morning.

TEXT: From the confines of Mr. Arafat's office, a Palestinian spokesman told Arab T-V the soldiers had entered the dining room, which is separated from Mr. Arafat's office by a reception area.

A spokesman for Israel's defense forces says the claim is unfounded. But he does confirm an exchange of gunfire in the area. Military commanders say troops had responded to gunfire from inside the three-story building but they had not entered it.

Israel's military knows the layout of building well. They used the building as their headquarters before handing it over to Palestinian control after the 1993 Oslo peace accord.

Foreign Minister Shimon Peres has told Israel Radio that Israel has said it would not harm Mr. Arafat and, he added, that decision still stands. Mr. Peres says Israel does not want to turn the entire world against it or spark a regional war.

But, Palestinian negotiator Saeb Erekat says he fears for Mr. Arafat's life. In a telephone interview from his office, Mr. Arafat told American T-V he would never surrender to Israel and hoped to become a Palestinian martyr rather than be jailed or exiled.

Prime Minister Ariel Sharon ordered the assault on Mr. Arafat's compound Friday in order to isolate the Palestinian leader. A larger military operation, he said, aims to destroy terrorist networks.

Israeli troops in Ramallah have been rounding up Palestinian men between the ages of 15 and 45 for questioning. Officials also suspect several Palestinians wanted by Israel may be hiding inside Mr. Arafat's offices.

Israel's military campaign came after a series of attacks against Israelis that killed more than 30 people in four days.

Even as the military operation was underway on Friday a suicide bomber killed herself and two others at a Jerusalem supermarket. Another suicide bomber blew himself up Saturday night in Tel Aviv cafe, wounding more than two dozen people.

Both attacks were claimed by Al Aqsa Martyrs Brigades. The militant group, which is linked to Mr. Arafat's Fatah movement, is now on the U-S list of terrorist organizations. (Signed)

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