TERENCE SMITH: A week after Israeli commandos seized a Palestinian ship laden with weapons, the incident has become a focal point in the Bush administration's attempt to get Israeli-Palestinian peace talks back on track. Israel has accused the Palestinian Authority of attempting to smuggle the arms into its territory, but Authority Chairman Yasser Arafat has denied any knowledge of the shipment. This morning, President Bush stepped into the controversy.
PRESIDENT GEORGE W. BUSH: Obviously, I want to make sure that the evidence is definitive, but I'm, like many, beginning to suspect that those arms were headed in the wrong to... to promote terror. And terror will never enable us to achieve peace in the Middle East. So long as there's terrorists trying disrupt the peace process, there won't be peace. I do believe that once the evidence is in, that... That those responsible need to be held to account. Mr. Arafat must renounce terror, must reject those who would disrupt the peace process through terror, and must work hard to... to get to the peace table. It seems like it's up to him to make these decisions.
TERENCE SMITH: At the State Department, Secretary Colin Powell said Arafat must act, whether or not he is directly responsible for the shipment of weapons.
COLIN POWELL, Secretary of State: The information we are receiving and developing on our own makes it clear that there are linkages to the Palestinian Authority. I have not seen any information that yet links it directly to Chairman Arafat. I have been in touch with Chairman Arafat. I spoke to him yesterday, and our consul general is going in to speak to Palestinian authorities today, to make it clear to them that this is a very serious matter. They have to give it their immediate attention. They have to conduct whatever inquiries or investigations are necessary to get to the bottom of this matter. We are deeply disturbed by the arrival of this ship in the region, and the fact that it could have completed its mission and offloaded weapons that would have been put to the worst kind of use against Israel and others in the region. I'm glad the Israelis intercepted it. And now we have to find all those responsible and accountable for this incident.
TERENCE SMITH: Israeli naval commandos seized the Palestinian ship last week in the Red Sea, about 300 miles south of the Israeli port of Eilat. They confiscated 50 tons of Katyusha rockets, ammunition and explosives reportedly supplied by Iran. The ship's captain has said he was working for the Palestinian Authority.
SPOKESMAN: I am an officer, and I am a Palestinian officer. I am taking my salary and I am an employee of the Palestinian Authority.
TERENCE SMITH: Something the Israelis charged from the start.
ARIEL SHARON: The Palestinian Authority is involved in terror. The strategy of Arafat is a strategy of terror. This operation was connected directly by the leaders of the Palestinian Authority, was led by Arafat. It was his initiative. He instructed to pay the money, he sent the people and he is fully responsible.
TERENCE SMITH: But the Palestinian Authority has continued to deny responsibility for the shipment.
YASSER ABED RABBO, Palestinian Information Minister: We want these four parties-- the EU, the United States, Russia, and the U.N.-- To participate in the investigation concerning this ship incident. We don't have anything to hide.
TERENCE SMITH: After four weeks of relative calm, the cycle of violence in the region has escalated once again. Yesterday, Islamic militants attacked an Israeli army outpost near the Gaza Strip, killing four Israeli soldiers. Two Palestinian gunmen died, as well. The Islamic group Hamas claimed responsibility, saying it was partly a response to Israel's seizure of the ship. Early today, Israel retaliated, bulldozing 32 homes in a Gaza refugee camp. Local officials said hundreds were left homeless. But despite the new violence, President Bush said the U.S. peace-making efforts will continue, and that his special envoy, retired General Anthony Zinni, will return to the region.