Israel licked its political wounds after ending its siege of Yasser Arafat under White House pressure to avoid upsetting U.S. plans for possible war on Iraq. Blowing kisses and making a V-for-Victory sign, the Palestinian president emerged from his battered compound on Sunday in the wake of clouds of dust from tanks retreating from a 10-day-old blockade that drew international condemnation.

The pullback was an embarrassing climbdown for Prime Minister Ariel Sharon's government, which sent armor roaring into the sprawling West Bank complex on September 19 after back-to-back Palestinian Resistance bombings killed seven people in Israel.

Sharon had vowed to end the siege -- his latest attempt to sideline a leader Washington says should be replaced by Palestinians "not compromised by terror" -- only when Arafat turned over 50 suspected resistance activists holed up with him.

The about-face followed a message by President Bush to Sharon demanding a speedy end to a siege the United States apparently feared could raise regional tensions and hurt its efforts to win international support for war on Iraq.

But Bush's rare rebuke appeared to signal a new dynamic in Sharon's close relationship with the president and in the prime minister's policy toward the Palestinians, who have accused the White House of turning a blind eye to Israeli army clampdowns.

ISRAEL MUST WEIGH OPTIONS

Before launching any future action against Arafat or a possible Gaza offensive against resistance activists, Sharon would have to weigh the almost certain anger such moves would trigger in Washington as it prepares to confront Saddam Hussein.

The White House said Bush welcomed the Israeli pullback, which Arafat called deceptive because Israeli forces remained in Ramallah -- still under night curfew -- and other West Bank cities reoccupied in June.

"All parties need to live up to their responsibilities to promote peace, stability and reform in the Palestinian Authority," White House spokesman Gordon Johndroe said.

Hundreds of elated Palestinians rushed to the presidential complex in Ramallah after Israeli tanks pulled back from the compound they invaded 10 days ago.

The Palestinian flag was raised above a partly demolished building in the sprawling complex that Israeli armored bulldozers and explosives largely reduced to rubble in what Israel had hoped would be a blow to Arafat's prestige.

Instead, Palestinians rallied nightly in the West Bank and Gaza in support of a leader who had been under fire from his own people over the slow pace of reforms demanded by the United States as a condition for resuming talks on statehood.

It was unclear how long Arafat's domestic political honeymoon would last, but he was clearly invigorated by the cheers that greeted him as he emerged from his sandbagged office block -- the only building the army left standing.

Beaming at the crowd, Arafat raised his arms in a victory salute before returning to the office he has rarely left since June.

ARAFAT COMPLAINTS AGAINST ISRAEL

But in earlier comments to reporters inside, he said the Israelis had not complied with a September 24 U.N. Security Council resolution calling for an immediate end to the siege and "expeditious withdrawal...from Palestinian cities."

He repeated a call for a "complete cease-fire," an appeal unlikely to lead to any breakthrough without agreement by militant Islamic groups that are dedicated to Israel's destruction and have rejected truce efforts in the past.

The blockade caused tension within Sharon's ruling coalition, where the center-left Labour Party maintains an uneasy partnership with right-wing and religious parties.

"The whole world is against us," Foreign Minister Shimon Peres of the Labour Party was quoted by Israeli media reports as telling Sharon at the weekly cabinet meeting on Sunday.

"The whole world is always against us," Sharon was said to have replied

PHOTO CAPTION

Palestinian President Yasser Arafat flashes the victory sign as he walks out of his office after the Israeli occupation army withdrew from his headquarters in the West Bank city of Ramallah, September 29, 2002. Arafat said Israel's troop withdrawal from his headquarters was 'cosmetic' and aimed at 'deceiving the world.' (Ammar Awad/Reuter