He said there was a need to understand that "when push comes to shove," Israel would have to be prepared to "slow down" the Iranian nuclear threat by itself.

Having said this, he did not rule out the possibility of US military action, but said that if this were to take place, it would probably not occur until the spring or summer of 2008, a few months before President George W. Bush leaves the international stage. The US presidential elections, which Bush cannot contest because of term limits, are in November 2008.

Foreign Minister Tzipi Livni, in a meeting in Paris with French Foreign Minister Phillippe Douste-Blazy Wednesday, said Iran "poses a global threat" and needed to be dealt with by the whole international community.

"The first thing they need to do is stop the enrichment of uranium," Livni said. "Everyday that passes brings the Iranians closer to building a nuclear bomb. The world can't afford a nuclear Iran." She said the Iranian reply to the Western incentives was just an attempt to "gain time."

Government officials said Israel's role at this time is to warn the world of the dangers of an Iranian nuclear potential. Some government officials are sending the message to their counterparts abroad that the firm implementation of UN Security Council Resolution 1701 on Lebanon will send a strong message to Iran - which is testing the world's resolve - that it is serious about implementing Security Council resolutions.

Meanwhile, the Middle East Media Research Institute (MEMRI) reported Wednesday that the Iranian news service Al-Borz, which it said is known to have access to sources in the Iranian government, predicted that President Mahmoud Ahmadinejad would announce what the news service called Iran's "nuclear birth" on the first anniversary of his government later this month.

In addition, an article Tuesday on the Teheran Times Web site, considered to be affiliated with the Foreign Ministry, implied that Iran's nuclear technology had already reached the point of no return. "If the West is seeking to impede Iran's nuclear industry, it should realize that Iran has passed this stage," the report read.

Diplomats from Europe, the US, Russia and China were poring over details of Iran's counterproposal to the Western nuclear incentives package Wednesday. Initial comments from Russia and China made clear Washington is likely to face difficulty getting at least those nations to agree to any tough sanctions against Iran.

In Paris, however, Douste-Blazy made clear that his government was sticking by the UN demand for Iran to halt enrichment by the end of this month as a precondition to further talks. Israeli officials said France has consistently advocated a firm position with Iran regarding the nuclear issue.

"I want to point out again that France is available to negotiate, and to recall that, as we have always said... a return to the negotiating table is linked to the suspension of uranium enrichment," Douste-Blazy said.

However, Russia's Foreign Ministry said it would continue to seek a political, negotiated solution to the dispute with Iran. China appealed for dialogue, urging "constructive measures" by Iran but also urging other parties to "remain calm and patient, show flexibility, stick to the orientation of peaceful resolution and create favorable conditions for resuming talks as soon as possible."

In London, a British Foreign Office spokesman predicted "some hard discussions" when the Security Council takes up the Iran issue in the coming weeks.

Iran said Tuesday it was ready for "serious negotiations" on its nuclear program and cast the counterproposal as a new formula to resolve the crisis with the West. But a semiofficial news agency said the government was unwilling to abandon uranium enrichment.

The world powers, the five permanent UN Security Council members plus Germany, have given Iran until August 31 to accept the incentives package.

Eyewitnesses said that three Palestinian civilians were injured after an Israeli warplane fired two missiles at a house that includes a metal workshop in Gaza City, adding that the house was completely destroyed.

One of the missiles did not explode, said the residents, adding that explosives experts as well as ambulances and firefighters arrived at the scene and evacuated the three civilians to a Gaza hospital.

Shortly before the house was targeted, Israeli F16 warplanes targeted another house in Jabalia refugee camp in northern Gaza Strip, said local residents, adding that the house which consists of four flours was completely destroyed.

Palestinian medics said that seven Palestinians were injured in the airstrike on the house that belongs to a Palestinian militant, member of al-Aqsa Martyrs Brigades, Fatah movement's armed wing.

Palestinian security sources reported that the Israeli army notified the owners of the two houses on telephone that they should evacuate their homes because the Israeli warplanes would destroy them.

Buses pushed on -- some carrying as many as 200 people, tires flattened from the weight -- towards lines of preventative security forces trying to control the chaos. Over 7,000 passengers swarmed the terminal frantically trying to escape, but only 2,396 passengers departed and 341 returned, according to EU monitors stationed there. Students, medical patients, and foreign visa holders were permitted to leave. An estimated 30,000 are still waiting to depart, and as of Tuesday the border remained sealed.

"They deal with us like animals," cried 37- year-old Riad Syiam, an electrical engineer trying to reach Abu Dhabi with his wife and three children. Like hundreds of families they came to Gaza to visit relatives and were trapped inside when Israel sealed the border after an Israeli soldier was captured by Hamas 25 June. Rafah (Gaza's only passenger crossing) has been closed by Israel for seven weeks, ostensibly to prevent the soldier from being smuggled outside the Strip as well as to cut off large amounts of cash Hamas leaders have been bringing across the border.

Palestinian officials and EU monitors are working to convince Israel to resume normal operation of the terminal, although according to Salim Abu Saifa, Palestinian Authority (PA) director of border security in Gaza and a chief negotiator with the Israeli side, there is no agreement in sight. Abu Saifa predicts erratic openings until the release of the Israeli soldier.

Shin Bet Chief Yuval Diskin told ministers at the weekly Israeli cabinet meeting Sunday that the Philadelphi Route along the Egyptian border is porous, allowing several tonnes of explosives and weapons to enter Gaza. "Recently, $1.5 million has been smuggled in through Rafah by the Hamas Agriculture Ministry," said Diskin. The intelligence chief charges that Egyptian supervision of the crossing is ineffective, calling for a review of the agreements signed with Egypt last year.

The Palestinian side securely operated the terminal for eight months, says Abu Saifa, asserting, "the crossing is used [by Israel] for collective punishment and other political gains." President Mahmoud Abbas's office controls the crossings, not the Hamas-led government, in a vain effort to keep them open. On 10 and 11 August, Rafah opened one-way, allowing 4,200 passengers to leave Gaza, according to the EU observer mission.

Meanwhile Karni -- Gaza's only commercial crossing -- has been sealed shut for four days, as of Monday, creating a shortage of basic commodities and food supplies across Gaza.

Fear and hostility amongst Gazans is brimming over into violent protests throughout Gaza City, as most Palestinians have not received a paycheque in nearly six months. PA employees stormed into banks Saturday morning demanding salaries and on Sunday angry mobs attacked the Legislative Council building. These outbursts come amid a recent string of auto thefts uncommon in the religiously conservative Strip. Palestinians are surviving under the intense pressure of a nearly nine-week-long Israeli incursion into Gaza to purportedly halt the launching of Qassam rockets into Israel and to recover the captured Israeli soldier.

On Saturday 170,000 PA employees received 1,500 shekels, half their monthly salary, from local banks. Funds were transferred directly from the Arab League and select Arab and non-Arab donor nations to the President's Office -- the fruits of Abbas's recent tour soliciting aid. Healthcare sector employees received their salaries directly from the EU, the first channel of the Temporary International Aid Mechanism that has reached Palestinians, presidential spokesperson Nabil Abu Rudeineh told Al-Ahram Weekly.

When PA employees discovered the payment amounted to only half their usual salaries -- and even less for those with outstanding loans in their accounts -- enraged crowds attempted to seize Gaza banks as frightened employees went into hiding. "My wife is expecting and my daughter is sick, I can't make ends meet," said Ossam Akhouli standing outside the Arab Bank to withdraw his salary. Abbas's presidential force and police deployed to secure the banks, as heated protesters tried to enter.

"The problem is the bank, they owe us our salaries -- this bank is against the Hamas government," shouted 20-year-old Baha Al-Buttish outside Jordan Bank, a member of the presidential security forces. After waiting for two hours under a scorching sun Al-Buttish walked away empty-handed.

"People are under pressure, but they know for sure the Israeli occupation along with the international embargo are responsible for this," Hamas spokesperson Sami Abu Zhouri told the Weekly, asserting that Hamas's popularity has increased since 25 June.

Meanwhile, unknown Palestinian militants kidnapped two Fox News crew -- cameraman Olaf Wiig, 36, of New Zealand, and American reporter Steve Centanni, 60 -- 14 August in Gaza City. Four militants emerged from a Magnum Jeep, threw the driver of Wiig and Centanni on the ground and swiftly snatched the two journalists from their TV van, recounted witnesses. The journalists are being held by Mumtaz Doghmush, commander of the Salaheddin Brigades, the armed wing of the Popular Resistance Committees, as a bargaining chip to put pressure on the Israelis to stop shelling houses and halt incursions into the Strip, according to a senior Palestinian intelligence official speaking off record. Hamas knows the location of the journalists, the official said.

Wiig's wife, Anita McNaught, a freelance journalist, made emotional pleas for her husband's release in a televised appeal Friday. It is the first time Palestinian kidnappers have not identified themselves or their demands. Waves of kidnappings, commencing last summer, went largely unpunished under Fatah as the kidnappers' demands were promptly met, arguably encouraging further incidents. "It is a reprehensible act on the part of any faction, and it serves the Israeli occupation," said Abu Zhouri.

Hamas, elected into office on a campaign promise to restore law and order in Gaza, asserts the perpetrators will be punished. The Fatah bloc of the Palestinian Legislative Council affirmed the Palestinian people have suffered as a result of the kidnappings, which have even further discouraged foreign investment coupled with the inability of exports to leave the Strip.

Until now, Israel's offensive in Gaza has been overshadowed by its war on Lebanon, leaving Gaza's population in a media blind spot and even more vulnerable to Israeli terrorism. Israeli forces have destroyed three major bridges, along with roads, crops, and infrastructure crushed by rolling Israeli tanks. Gaza's main power station was destroyed 28 June, leaving households, businesses and hospitals across the Strip without electricity and water in the sweltering heat of summer while sanitation systems also collapsed.

Israeli forces have killed over 200 Palestinians, with over 1,000 injured, since 25 June.

Sources indicate that the judge continues to grant the delays to give Israeli intelligence more time to come up with a reason to hold the Palestinian official, or something to charge him with.

As has been well-documented by the Palestinian Prisoner Society, if a charge is levied, the Israeli military courts often use a vague charge regarding "security," while defense attorneys and the accused are not allowed to view the evidence, also for "security" reasons.

The continued detention of the Minister of Jerusalem Affairs, accordingly, was said to be in the light of fact that "intelligence did not succeed in bringing logical and persuasive material" to continue imprisoning Abu Arafa. However, the judge postponed charging or trying him the last time as they were expected "dramatic developments" with which to condemn Abu Arafa. But the new day came up as empty as the first.

Israeli forces arrested Abu Arafa in June and have put him before a military court judge in a Jerusalem military camp seven times since then.

What the Israeli military prosecution is going for is a charge beyond that the Minister of Jerusalem Affairs is a member of the Hamas party, which the Israelis coin a "terrorist organization."

After the Hamas party was democratically elected during the 25 January elections and then later assumed their Legislative Council seats and ministry positions, Israeli forces began arresting them.

On 29 June, Israeli forces arrested the Minister of Jerusalem Affairs and seven other ministers. In all Israeli forces also are imprisoning 31 Palestinian Legislative Council members, including the Speaker, Dr. Azzi Dweik, and the Deputy Prime Minister, Dr. Nasser Addin Al Sha'er.

Additionally Israeli forces arrested many members of local governments, including Qalqilia's Mayor and Deputy Mayor, during the past several months.

Interior Minister Saeed Seyam said contacts had been made with unidentified "Palestinian parties" that were seeking to free the two captives. He suggested the government had made indirect contact with their kidnappers.

"Things are going in a positive direction," Mr Seyam, of Hamas, said in a statement. He offered no details.

The statement was the first on efforts by the Hamas-led government to free Fox correspondent Steve Centanni and New Zealand cameraman Olaf Wiig.

Asked to elaborate, Interior Ministry spokesman Khaled Abu Hilal would only say there was "an important development and progress" in the case.

New Zealand-born Wiig, 36, and American Centanni, 60, were seized on August 14 as they were working on a story in central Gaza City. Theirs is the longest-lasting abduction in Gaza in more than a year.

Palestinian Prime Minister Ismail Haniyeh of Hamas said freeing the captives was "a top priority".

"I have urged the brothers, the kidnappers, yesterday to release the two journalists unharmed," Mr Haniyeh said. Asked if he thought they would be released soon, he said: "I hope so."

On Wednesday, the previously unknown Holy Jihad Brigades claimed responsibility for the kidnapping and gave the United States 72 hours to free Muslim prisoners or else the captives would face unspecified consequences.

The deadline is set to expire around midday on Saturday GMT.

A videotape released on Wednesday showed the men, dressed in tracksuits, sitting on a blanket in front of a black background. They appeared fairly relaxed and in good health. Both said that they were fine and being treated well.

Several Palestinian militant groups are active in Gaza, including Islamic Jihad and Hamas, the group that runs the Palestinian government, have denied any involvement with the kidnapping and have said that the men should be freed.

The controversial MP for Bethnal Green and Bow, who alarmed his constituents earlier this year with his Lycra-wearing antics on Celebrity Big Brother, is to broadcast his show live from Beirut tomorrow and Sunday.

Mr Galloway said: "I'm the first British political figure to visit the wreckage of Beirut and the south of Lebanon, seeing for myself the enormous toll taken by 33 days of aerial bombardment.

"I'll be reporting to TalkSport listeners on just what I've found here and inviting guests from across the spectrum in Lebanon who know what they're talking about."

Mr Galloway will be taking calls from UK listeners as usual during the shows, which will focus on the conflict in the Middle East, its causes and possible paths to peace.

When the Respect MP was unveiled, in March, as the latest addition to TalkSport's roster of loud-mouthed and opinionated presenters, he said he wanted to make his show the "most talked-about talkshow on radio".

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The French government was heavily involved in the UN negotiations that led to the ceasefire 12 days ago. But Mr Chirac was derided, especially in the US, when he announced last week that France would contribute only 200 troops to the international peacekeeping force.

There were conflicting views last night on whether Mr Chirac increased the force because of the criticism or had always intended to make a significant contribution. Whatever the reason, it has been a public relations disaster for France, whose reputation in the US has sunk back to the levels in 2003 in the run-up to the war in Iraq.

Mr Chirac insisted last night in a televised address he had been awaiting the necessary guarantees from the UN about the mandate and rules of engagement. He does not see the international force's role as disarmament of the Shia militia Hizbullah, as demanded by Israel. Although France fears confrontation with Hizbullah - 58 French troops died after intervention in Lebanon two decades ago - it is also worried about Israeli attacks.

At a European Union foreign ministers' meeting today, Italy will reiterate its offer of 3,000 troops and Spain could pledge about 1,000. Germany has offered troops mainly in support roles, and smaller countries, such as Finland, have promised contributions. It would be one of the biggest and fastest EU deployments.

Malaysia, Indonesia and Bangladesh have offered troops but Israel ruled out the presence of countries with which it has no diplomatic relations. A UK official said he hoped Israel's objections were only tactical, and argued that a precedent had been set by the existence of Unifil, a 2,000-strong UN force on the border which has contained troops from countries with which it has no diplomatic ties.

Mr Chirac said last night he hoped France would command the new force. Romano Prodi, the Italian prime minister, said yesterday that President George Bush told him he took a "positive" view of an Italian offer to lead the force. Among compromises under discussion, France, which has command of Unifil until February, could lead the new force on the ground while Italy could take command of the overall operation at UN headquarters in New York.

Soul-searching continued in Israel yesterday over conduct of the military campaign. Chief of staff Lieutenant General Dan Halutz acknowledged for the first time "shortcomings" in the war with Hizbullah and promised a full investigation. The comments, made in a letter from Gen Halutz to his troops, come at a time of mounting criticism within Israel about the conduct of the war.

Angry reservist soldiers and parents of troops killed in battle gathered in Jerusalem yesterday, some demanding the resignation of Gen Halutz as well as the prime minister, Ehud Olmert, and the defence minister, Amir Peretz.

Mr Olmert is expected to decide in the coming days whether to announce a potentially embarrassing state commission of inquiry. It would have power to call for the sacking of senior officers and politicians.

Soldiers and critics in the press have complained about shortages of food and water on the battlefield as well as poor intelligence about Hizbullah's capabilities. Most of all, they are angry that Israel failed to emerge from the 34-day conflict with a clear victory over Hizbullah. About 160 Israelis, mostly soldiers, were killed and the two soldiers whose capture triggered the war have still not been freed.

In his letter, released yesterday by the Israeli military, Gen Halutz admitted there had been problems: "Alongside the achievements, the fighting uncovered shortcomings in various areas - logistical, operational and command. We are committed to a thorough, honest, rapid and complete investigation of all the shortcomings and successes.

"Questions will be answered professionally, and everyone will be investigated - from me down to the last soldier."

The Israeli military continued its operations in Gaza yesterday, killing one Palestinian and capturing his brother, a senior member of the ruling Hamas movement.

"There will be an initial 302 Belgian peacekeepers, and that will rise to 394, so almost 400," Prime Minister Guy Verhofstadt told a news conference in Brussels.

The Belgian contingent would include de-mining, medical and reconstruction units, he said.

Verhofstadt spoke ahead of an emergency meeting by European Union foreign affairs ministers and UN Secretary General Kofi Annan concerning the peacekeeping force, known as United Nations Interim Force in Lebanon (UNIFIL).

French President Jacques Chirac, who has offered 2,000 troops to the force, said 15,000 troops may not be needed to patrol the region.

"My feeling is that the figure that was put forward at the beginning of discussions - 15,000 for a reinforced UNIFIL - was a figure that was quite excessive," said Chirac.

A UN resolution ending the 34-day conflict between Israel and the Lebanese-based militant group Hezbollah called for an international force to be deployed in Lebanon.

Israel has said it will end its sea and air blockade of its northern neighbour when the international force joins a Lebanese army force of roughly the same size in patrolling southern Lebanon.

Annan confident in force

Annan said he believes European nations will answer the call for troop contributions.

"I am very confident that we will have a successful meeting this afternoon and that Europe will assume its responsibility and show its solidarity with the people of Lebanon," Annan said following a meeting with Verhofstadt.

He added that he doesn't expect to come out of Friday's meeting with the full contingent.

"Not today," Annan said, "but I will get the 15,000."

Other European countries expected to contribute troops are Spain, Poland and Finland. Germany has declined to send ground troops, but has offered to provide naval assistance.

The EU countries had been wary of offering troops until the force's mandate - including the right to defend itself if attacked - was clearly defined.

On Thursday, France offered 1,600 new troops, in addition to the 400 it had already pledged. Italy has offered roughly 3,000 troops.

Both nations have said they would be willing to command the force, with Italy proposing a joint command on Friday.

Fresh French troops on ground

As the political wrangling continued, about 170 French soldiers arrived in southern Lebanon, which was hit hard by four weeks of Israeli air strikes.

Roughly one million people fled their homes during the conflict. They're now returning to towns and villages without water or electricity.

French Rear Admiral Xavier Magne, who is in charge of getting the troops on the ground, says the soldiers have much-needed skills.

"They belong to engineering units and they have heavy equipment so they will be able to proceed to rebuild infrastructure, they will be able to neutralize unexploded ordinance," said Magne.

The U.S. State Department is investigating whether the use of three types of American cluster munitions - anti-personnel weapons that spray bomblets over a wide area - violated secret agreements that restrict when such arms can be employed, the New York Times reported Friday.

The newspaper quoted several current and former U.S. officials as saying they doubted the probe would lead to sanctions against Israel, but that it might be an effort by the Bush administration to ease Arab criticism of its military support for Israel.

The U.S. has also postponed a shipment of M-26 artillery rockets, another cluster weapon, to Israel, the newspaper said.

UN de-mining experts refused to comment on the U.S. investigation, but suggested Israel violated some aspects of international law.

"It's not illegal to use [cluster bombs] against soldiers or your enemy, but according to Geneva Conventions it's illegal to use them in civilian areas," Farran said. "But it's not up to us to decide if it's illegal - I'm just giving facts and letting others do analysis."

Israel said it was forced to hit civilian targets in Lebanon because Hezbollah fighters were using villages as a base for rocket-launchers aimed at Israel. Some 850 Lebanese and 157 Israelis died in the fighting.

Lebanon's south is also riddled with land mines that were laid by Israeli soldiers as they pulled out of the region in 2000 after an 18-year occupation. Hezbollah has also planted mines to ward off Israeli forces. Lebanon has long called for Israel to hand over maps of the minefields.

The UN Mine Action Co-ordination Center opened an office in the southern Lebanese city of Tyre in 2003 to deal with the land mine problem. Since the ceasefire, the office has redirected its efforts toward clearing unexploded Israeli bombs from the area.

He acknowledged that Israel paid a heavy price in civilian and military deaths, but contended that his troops inflicted significant damage on Hizbollah, killing hundreds of fighters and seizing territory south of the Litani river. He congratulated his soldiers on striking a heavy blow to Hizbollah's capacity to launch long-range rockets, as well as destroying hundreds of operational and logistical facilities and dozens of launchers and command posts.

At the same time Yuval Diskin, director of the Shin Bet internal security service, admitted that the government had abandoned the northern towns and villages that came under attack from thousands of Katyusha rockets. He said: "The government system collapsed there completely. This is the truth. It should not be whitewashed. It should be investigated in depth."

Calling it "a fiasco", Mr Diskin added: "There were many failures, and the public sees and understands this. Someone has to give explanations and take responsibility." Ehud Olmert, the Prime Minister, toured some of the worst-affected areas of western Galilee yesterday, including a hospital in the border town of Nahariya that suffered a direct hit.

Like General Halutz, he is under siege. On the one hand he is still trying to convince a sceptical public that the war changed the political map of Lebanon, weakening Hizbollah and strengthening the central government and its army. On the other, he is promising to invest billions in rehabilitating the north.

"Next week," Mr Olmert said in Nahariya, "we will convene a special cabinet meeting in the north and discuss northern Israel. I estimate that in the course of more than one budget year, sums that could reach 10bn shekels [£1.2bn] could be collected."

Mr Olmert noted that foreign Jews had donated more than $300m (£160m) for developing the north. "More funds from existing budgets will also be invested," he pledged. "All this will be approved, not in one year, but within two weeks."

Disenchanted Israelis will judge him by his deeds. Dozens of reserve soldiers demonstrated in Jerusalem last night, urging the Prime Minister, the chief of staff, and Amir Peretz, Defence Minister, to resign.

"They had the guts to send people to battle," said First Sgt Baruch Eitam, "they must now have the guts to resign."

At least 1,110 people in Lebanon and 157 Israelis were killed in the conflict.

The Yedioth Aronoth poll showed for the first time a majority favoured Olmert stepping down. Several surveys suggested a big jump in support for the right-wing Likud party and its leader
Benjamin Netanyahu after the 34-day war.

A poll in the Maariv newspaper showed that only 14 percent of Israelis would vote for Olmert if new elections were held, while 26 percent would back Netanyahu, a former prime minister. The Yedioth poll said 45 percent would support Netanyahu.

Olmert, a career politician who lacks the combat credentials of many of his predecessors, has seen his public standing plummet for failing to crush Hizbollah, which rained some 4,000 rockets on northern Israel during the fighting.

"Olmert go home," read one sign at a protest by a few hundred army reservists and family members at the grave of former Prime Minister Golda Meir on Friday.

The protesters urged Olmert to follow the lead set by Meir, who was forced to resign after the 1973 Middle East war in which Egypt and
Syria scored initial successes that caused heavy Israeli casualties.

Yedioth, Israel's biggest circulation daily, called Friday's poll results a political "earthquake" for Olmert, whose centrist Kadima party crushed Netanyahu's Likud in general elections in March. A similar poll published a week ago showed 41 percent wanted Olmert to resign.

Twenty-two percent of Israelis in the poll deemed Netanyahu "most fit" to be prime minister, compared to 11 percent for Olmert.

Olmert also trailed ultranationalist Avigdor Lieberman with 18 percent and senior statesman Shimon Peres with 12 percent, according to Yedioth.

KADIMA TRAILING

Cameron Brown, an analyst at Israel's Herzliya Center, said Olmert's political troubles were compounded by a string of embarrassing government scandals, including an investigation into whether the Israeli president coerced a female employee to have sex with him.

"These politicians are under fire from several different directions at the same time and I think Olmert is clearly having a rough time. The question is will this force him to step down," Brown said.

The Maariv poll showed that if elections were held today, Olmert's Kadima party would win just 14 seats in parliament, compared with the 29 it won at the last polls. Likud would win 24, compared with 12.

The left-leaning Labour party would win just nine seats.

In addition to calling for Olmert's resignation, 74 percent of Israelis in the Yedioth poll said Defense Minister Amir Peretz, the left-leaning Labour party leader, should step down.