Yasser Arafat vowed not to capitulate to Israel on Saturday after its occupation forces demolished parts of the building where he was under siege and fired a tank shell that showered him with dust. But in his first public statement since the siege began on Thursday, the Palestinian leader called for an end to attacks inside Israel, which sent in tanks to encircle his West Bank headquarters after seven people were killed in Resistance bombings.

"We are ready for peace but not for capitulation, and we will not give up Jerusalem or a grain of our soil which are guaranteed to us by international law," he said in a written statement released by the Palestinian news agency WAFA.

But the demolition of most of his presidential complex in the city of Ramallah has left him looking weaker than at any point since he returned to the Palestinian territories in 1994 under interim peace deals with Israel.

Israeli guns that roared overnight fell silent by the morning and a fire raged through the roof of one of the wrecked stone buildings in a dusty compound that has been turned into a wasteland by thundering explosions and armored bulldozers.
Israel demands Arafat hand over 20 wanted Palestinian militants it says are holed up in his headquarters.

Israel's tightest confinement of Arafat since its forces surrounded the former Resistance leader in 1982 during the Lebanon war raised fears of a new surge of violence that could complicate Washington's plans for possible war on Iraq.

Israel said the aim was to isolate Arafat, not kill him.

ISRAEL BLAMES ARAFAT FOR ATTACKS

Israel holds Arafat responsible for the two suicide bombings which ended a six-week lull in such attacks, charging he has failed to rein in militants during the two-year-old Palestinian uprising against Israeli occupation.

On Saturday morning, a mechanical excavator tore holes through the outer walls of Arafat's headquarters that was only three offices away from the first-floor rooms where he had taken refuge before the tank shell hit.

"This is going to affect our offices. It will weaken the already old and weak building," an official inside Arafat's offices said.
Arafat aide Nabil Abu Rdainah said Palestinian officials who were in contact with world leaders were told the United States had pressed Israel to stop shooting in the compound.

"The Americans should be aware that what Israel is doing and Washington's backing for Israel is endangering the interests of the U.S. in the region," he said.

SOME MEN LEAVE BUILDING

The occupation army confirmed tank fire was directed "near" Arafat's offices, saying it was intended to force the wanted men out.

CNN showed Palestinians coming out with hands up, and being bound and blindfolded by waiting soldiers. It put the number of detainees at 26. It was not clear whether any of them were on Israel's list of wanted militants.

A tattered Palestinian flag still flew over rubble near the gate to the complex that had been a symbol of Arafat's power in Palestinian areas where he now faces pressure to make security and anti-corruption reforms demanded by Washington.
The siege in the West Bank city of Ramallah drew censure from the European Union and a call for restraint from Washington, which also said Israel had a right to defend itself against suicide bombings.

The U.N. Security Council scheduled an emergency session on the Middle East crisis for Monday, at the behest of council member Syria, diplomats said.

PHOTO CAPTION

Israeli soldiers destroy buildings in Palestinian President Yasser Arafat's Ramallah headquarters September 21, 2002. Israeli forces have shelled Palestinian leader Yasser Arafat's private offices and demolished other buildings, tightening a siege of his headquarters after suicide bombings in Israel. (Osama Silwadi/Reuters)