Major Violence Foreseen in Israel

The Palestinian economy is on the brink of collapse and President Yasser Arafat's administration is starting to disintegrate, according to an assessment by Martin Indyk, Washington's ambassador to Israel.

"We are living in difficult times and I fear we are on the brink of a more serious situation," Indyk said "A state of semi-anarchy and gang rule is engulfing the West Bank and Gaza." The volatility of the situation contains within it the very real potential for an even bigger explosion, he said.

His assessment, after five months of a Palestinian uprising against Israeli occupation, was similar to a recent opinion from the UN envoy to the Palestinian Authority, Terje Roed-Larsen, who warned of the threat of bloodshed and instability unless the Authority's financial situation was improved.

"The hate that spews forth from official Palestinian organs and stirs up the Palestinian street must be curbed," Indyk said. "Although there is no comparison with the volume of incitement that comes from the Palestinian side, some Israelis need to tone down their rhetoric," he added.