Saying Israel could not accept a "new Iraq or Iran" on its doorstep, Prime Minister Benjamin Netanyahu warned Monday that Israel would retaliate if Palestinians declare a state before reaching a peace agreement.
The Israeli leader, in one of his toughest statements yet on Palestinian statehood, refused to say what steps might be taken. The most likely option would be the annexation of disputed West Bank land by Israel.
"We cannot accept and mustn't accept the formation of a new Iraq or Iran next to our doorstep," Netanyahu said. "If the Palestinians react with unilateral actions, so will we."
The statement came in reaction to a warning from Palestinian leader Yasser Arafat, who told reporters in the autonomous Gaza Strip over the weekend that he would press ahead with a declaration of statehood if there was no peace settlement by May 4, 1999, the deadline set in the Oslo accords.
"It's our right, and we're going to declare it," Arafat said. He has made similar assertions before.
The exchange of threats came as U.S. mediators Dennis Ross and Martin Indyk were in Israel seeking to narrow gaps in advance of peace talks in London next Monday.
Netanyahu recently raised hopes for a breakthrough in the 14-month stalemate by suggesting a full summit would be held.
But U.S. officials said Secretary of State Madeleine Albright plans only to meet separately with Netanyahu and Arafat, and there is no indication of a summit.
On Monday, Netanyahu was subdued in his assessment of the possibilities for success after his latest meeting with Ross.
"We hope there will be progress, but I cannot guarantee that," said Netanyahu, adding Israel was trying to be "flexible" but it would take equal effort from the Palestinians.
Ross and Indyk met Monday with Palestinian negotiators Mahmoud Abbas and Saeb Erekat and held a third round of talks with Netanyahu. Israeli President Ezer Weizman, considered to hold more moderate views than Netanyahu, also met with Erekat and Abbas.
Palestinians accused Netanyahu of foot-dragging and warned that a failure in London could lead to an explosion of violence.
"The upcoming London talks are the last chance to get the peace process back on track," said Ahmed Quraei, the speaker of the Palestinian legislative council.
In Washington, President Clinton held out hope Monday that Israel and the Palestinians can "close the gap" on stalled peace negotiations.