Arafat finds rare acclaim in failed peace marathon

Palestinian leader feted for his stance over sovereignty as focus moves to the deadline set for declaration of statehood

Yasser Arafat, the Palestinian leader, returned home to the Gaza Strip yesterday after the failed Camp David summit to a rapturous reception in which he was hoisted on the shoulders of well-wishers eager to congratulate him for refusing to abandon his demand for sovereignty over east Jerusalem.

Yasser Arafat, the Palestinian leader, returned home to the Gaza Strip yesterday after the failed Camp David summit to a rapturous reception in which he was hoisted on the shoulders of well-wishers eager to congratulate him for refusing to abandon his demand for sovereignty over east Jerusalem.

He did so as the Israeli Prime Minister, Ehud Barak, was flying back to a cooler reception to begin rebuilding his government coalition and securing his political survival.

Mr Arafat, criticised in the Arab world for making too many concessions in the Oslo peace negotiations, was in the rare position of being cast as the defender of the Muslim world who stood up to the Americans and Israelis. For once he was relieved of the pressure to emulate the example of Hizbollah, which forced Israel out of south Lebanon. Supporters of his Fatah group rode around Gaza in vans with loudspeakers calling on residents to receive "the Saladin of this generation", a reference to the 12th-century leader who defeated the Crusaders. Banners read: "We are following Arafat on the way to Jerusalem" and "The Palestinian state is a sacred right". People chanted: "We are ready to give our soul and our blood to our great hero!"

In Gaza, after a stop in Egypt to see President Hosni Mubarak, Mr Arafat said negotiations with Israel would continue until 13 September. This had already been agreed in the 1999 Sharm el-Sheikh interim accord, which set the date as a deadline for a permanent-status treaty.

But its chief importance now is as the day when Mr Arafat is threatening to declare statehood, unilaterally if necessary. Yesterday - in remarks calculated to irritate Mr Barak and revive fears of violence - he again said he would announce his independent state on 13 September, "with Jerusalem as its capital, whether people like it or not".

Even before his plane had touched down, Mr Barak was on the phone to repair his government, which saw the resignation of 13 of his 22 ministers before he set off for the marathon negotiating session in the United States.

Among potential partners he spoke to was the secular Shunui party, and the head of the ultra-Orthodox Shas party, a component of his former coalition but one whose blackmail and treachery have been a continual source of friction.

Mr Barak can console himself with the knowledge that he will soon have some breathing space: in 10 days the Knesset goes into recess until 29 October. On Monday he faces a no-confidence motion that he is expected to survive. Once parliament goes on holiday, he is safe until its return.

Although both sides have said they will carry on talking, the mood has hardened, and attention has turned to Mr Arafat's threatened independence declaration. It is principally a tactic, to force the Israelis to soften their stance and to start paying more than lip service to UN resolutions, such as 242, that are supposed to underpin the peace talks but patently do not.

If he goes ahead, Mr Arafat's new Palestine may find itself without the annual $100m (£66m) of US aid and without Washington's recognition. But he is being pressed by Palestinians on the streets who have been promised a state and expect him to deliver.

Yesterday Israel issued a reminder of the possible consequences. Gadi Baltiansky, Mr Barak's spokesman, said: "It is clear to Arafat that if he takes a unilateral step, firstly he won't have negotiations and, secondly, there will be an Israeli response."

Yesterday details emerged of the offers allegedly made at Camp David. Quoting a Barak staffer, Israel Radio said he offered to return 88 per cent of the West Bank and to allow thousands of Palestinian refugees to be reunited with their families in Israel. Israel also proposed a "multi-sovereignty" arrangement for Jerusalem's Old City, falling short of Mr Arafat's demand for total sovereignty over east Jerusalem.

The same report said Mr Barak offered the Palestinians a capital which would include Arab neighbourhoods in the city and outside its boundaries. But the word sovereignty - so crucial to the Palestinians - would be avoided.