JERUSALEM - Prime Minister Ehud Barak issued a 48-hour ultimatum to Yasser Arafat on Saturday, saying that unless the Palestinian leader stops violence in the West Bank and Gaza Strip, Israel will call off peace talks and let Israeli troops act with full force.
The strong statement from the embattled prime minister came after Hezbollah guerrillas seized three Israeli soldiers in an ambush Saturday at the Israeli-Lebanese border.
Within just hours of Barak's announcement, Palestinian gunmen intensified shooting attacks in Israeli positions in the West Bank and Gaza Strip, and Israel deployed tanks at several locations, including the edge of Jerusalem, after having withdrawn them two days earlier as part of a U.S.-led attempt to reach a truce.
Gunmen fired on an Israeli bus in Gaza, injuring seven passengers, including two who were in serious condition. Near the West Bank town of Ramallah, Israeli tanks shot their machine guns at Palestinian positions, a first in 10 days of clashes that have claimed the lives of 67 Palestinians, 10 Israeli Arabs and three Israeli Jews.
Jewish settlers blocked major roads in the West Bank, burning debris and stoning Arab motorists. Near the West Bank settlement of Ariel, settlers and Palestinians exchanged fire. In the Israeli town of Tiberias, home to one of the kidnapped Israeli soldiers, hundreds of residents chanted ''Death to the Arabs.'' Shots were fired at Palestinian homes in an Arab area of Jerusalem.
Arafat's top adviser, Nabil Aburdeneh, said Barak was employing ''blackmail that can only lead the region to wars we don't want,'' but did not say what the Palestinians' next move would be. Arafat, speaking before Barak's announcement, said Israel was responsible for a ''dangerous escalation.''
Barak vowed to win the soldiers' return, warning Lebanon and Syria - the main power broker in the country - that they were responsible for the captives' safety.
If the soldiers are not returned quickly, Lebanon ''will pay a heavy price,'' said Israeli Cabinet minister Binyamin Ben-Eliezer.
Deputy defense minister Ephraim Sneh said Israel was ready to ''fight on two fronts'' - the Lebanese border as well as in the West Bank and Gaza Strip. ''We have enough strength for that. We shall have to be less restrained than we were in the past,'' Sneh said.
Barak said he no longer believed Arafat was ready for a peace agreement and blamed him for the clashes between Israeli soldiers and Palestinian protesters that have killed 80 - most Palestinians.
Arafat ''has apparently chosen violence and he will bear the responsibility for the consequences of that choice,'' Barak told a news conference after convening his Cabinet and army commanders for an emergency session.
''If we do not see a change in the patterns of violence in the next two days, we will see this as the cessation of the peace talks by Arafat,'' he said, ''and will instruct the Israeli Defense Forces and the security forces to use all means at their disposal to stop the violence.''
Until now, the army has used assault rifles, snipers and rockets launched from helicopters to disperse Palestinian gunmen. Barak has come under growing pressure to take tougher steps.
Late Saturday, Barak held talks with leaders of different parties, amid growing signs that he prepared to invite the hawkish opposition and form a so-called national unity government. That would make resuming negotiations with the Palestinians difficult, since the hawkish Likud party is vehemently opposed to concessions.
President Clinton, trying to prevent his Mideast policy from disintegrating, repeatedly spoke by phone to Arafat and Barak. U.N. Secretary General Kofi Annan had also been in touch with Barak.
Barak's ultimatum to Arafat followed the trashing Saturday morning of Joseph's Tomb, a holy site in the West Bank town of Nablus, by Palestinians.
Barak ordered Israeli troops withdrawn from the site, putting it in control of Palestinian security forces. Within hours, a mob overwhelmed the site, burning parts and tearing up Jewish holy books left by seminary students. The scenes, broadcast on television, were considered a humiliation by many Israelis.
Developments at the Israeli-Lebanese border, meanwhile, ended the relative peace enjoyed there since Barak decided to withdraw Israeli troops from southern Lebanon in May.
Earlier Saturday, hundreds of Palestinian refugees charged toward the border fence from the Lebanese side, hurling stones at Israeli soldiers. Troops opened fire, killing one Palestinian and wounding 14.
Barak said he was holding intense diplomatic contacts to try to win the freedom of the three Israeli soldiers who were captured in what appeared to be a carefully planned Hezbollah ambush. A Hezbollah group attacked the Israeli patrol with rocket-propelled grenades and automatic rifle fire, grabbing three soldiers. At the same time, another guerrilla squad engaged seven Israeli positions in fierce clashes to prevent them from providing support for their colleagues. Six soldiers were hurt. Six soldiers were hurt.
Israeli helicopters later searched the area, while helicopter gunships lay down machine-gun fire on roads, injuring a family of four, Lebanese security officials said.
Hezbollah said in a statement that it dedicated the raid to 12-year-old Mohammed Aldura, a Palestinian boy killed by Israeli fire during a gunbattle in the Gaza Strip last week. The boy's terrifying last moments, as he and his father huddled behind a metal barrel, were broadcast around the world.
Meanwhile, one Palestinian was killed in clashes in Gaza, and two died of injuries sustained Friday. The protracted violence was triggered by a Sept. 28 visit of Israeli opposition leader Ariel Sharon to a contested holy shrine in Jerusalem.
In the Gaza Strip, meanwhile, Nafez Azzam, a spokesman of the militant group Islamic Jihad, thanked Hezbollah for the capture of the Israeli soldiers.
''This will give us a push to continue our struggle against the occupiers,'' Azzam told Associated Press Television News.