 GABY RADO: If it counted as deadly skirmishing yesterday, today it was a full scale battlefield. It's a picture of war, announced Israeli army radio. The first deaths of Israeli soldiers took place on the Gaza Strip after hundreds of Palestinian youth charged an army post near the small isolated Jewish settlement of Netzarene. (gun shots) Once again, the overwhelmed Israeli forces opened fire, which brought a retaliation with bullets form the Palestinian police.
And even more than yesterday, it exacted a terrible toll in human lives and injuries, proof again that the old low intensity conflict, the stone-throwing intifada, has turned deadly to the addition of high-powered weapons on both sides. In Jerusalem's old city, Palestinians defied a ban on demonstrations to protest against the opening by the Israeli government of the contentious tunnel under the western wall.
FAISAL HUSSEINI, Palestinian National Authority: During the last 100 days it was a build up of ending, of killing this peace process. And what we are seeing now here is a result of all of these activities. What happened in Bethlehem is not a matter of--itself--but it is more than that--as a result of the whole Israeli police force against the peace process.
 GABY RADO: What happened next was almost inevitable. Israeli security forces moved in to stop the Arab demonstrators getting tot he entrance of the newly completed tunnel inside the old city. Faisal Husseini, himself, one of the most respected Palestinian leaders, became a bruised and jostled victim of the confrontation.
(gunfire in background) Some of the most savage fighting took place around the West Bank town of Nablus, from where reports came of two more deaths of Israeli soldiers. Here the focus of Palestinian attacks was a Jewish Religious Foundation of Joseph's Tomb, which was eventually surrounded. A number of Israeli troops inside were early this evening still besieged, and negotiations were underway for their evacuation. As the day went on, though, it became clear that superior weapons and numbers of Israeli forces meant the Palestinians suffered more deaths and injuries. The message from the Israeli government was an uncompromising one.
AVIGDOR KAHALANI, Minister of Public Security, Israel: I'm not happy but I realize that maybe it's good that it happened today and not tomorrow because if we don't have the rights to do in Jerusalem what we have done in the future, we are going to--it's not intifada--maybe a war between us and the Palestinians.
GABY RADO: As the fighting raged on, the Israeli prime minister, Benjamin Netanyahu, phoned the Palestinian leader, Yasser Arafat, from Germany, demanding an end to the violence. President Arafat replied that the Israelis have crossed a red line by their actions on the western wall tunnel but also called on the security forces to observe a cease-fire. That was less than successful. The former Israeli prime minister who helped formulate a peace plan which had put weapons into the hands of the Palestinian forces defended that decision and accused the new government of serious miscalculations.
 SHIMON PERES: Well, the Palestinians used weapons to fight--all the time. They didn't shoot at us. They shoot actually their own people who try to introduce terror. And Jerusalem too must be based on the wise policy, not on controversies, and before we open the tunnel, you have to ask yourself, what will be the consequences? It is a sea change in policy, and before we agree, we have to consider very carefully if it is worthwhile, if it is needed, if it is timely.
 GABY RADO: The overwhelming firepower of the Israelis leaves no doubt that from a military point of view, they're fully capable of crushing even a full scale Palestinian revolt if that comes about.
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