[Israel occupation soldiers
                            maintanining tight closure
                            imposed on the West Bank
                            city of Nablus-More in
                            photo caption below] 

Israeli-Palestinian Ceasefire Enters Critical Stage

JERUSALEM (Reuters) - CIA chief George Tenet's cease-fire agreement entered a make-or-break stage on Thursday, after a flareup in fighting shook the pact before it had had a chance to take root.
Only hours after it was agreed at a trilateral security meeting on Wednesday, the truce came under strain when a Palestinian driver was shot dead in the West Bank, possibly by Israelis, and two Palestinian children were reported hurt in Gaza.
The Israeli army said it had tightened rules of engagement for soldiers in the West Bank and Gaza Strip and eased a blockade to allow the free movement of Palestinian security officers and goods from Palestinian areas.
The killing of the Palestinian in a West Bank road ambush and reports in Gaza that two Palestinian children had been hit by Israeli gunfire highlighted the difficulties ahead.
The United States called on both sides to start implementing the truce plan despite the fighting, which included a mortar attack on a Jewish settlement in Gaza and an anti-tank grenade attack on an Israeli army position nearby.
There were no reports of injuries in the attacks late on Wednesday, which included several cases of shooting at Israeli military positions in the West Bank. The army held its fire in some of the incidents, but returned fire at least twice.
President Bush, speaking in Brussels, said Tenet had told him he was ``cautiously optimistic'' about the plan to halt the fighting, which erupted last September when Palestinians revolted against Israeli occupation after peacemaking stalled.
``All the parties must now take additional steps that will place them on the road to a just and lasting peace,'' Bush added. ``All the parties must build trust by demonstrating good faith in words, but more importantly in deeds.''
ISRAELI ARMY GIVES SOLDIERS NEW ORDERS
Israeli Major-General Giora Eiland, who attended Wednesday's security meeting, said soldiers were issued with new, strict rules of engagement allowing them to open fire only ''when they feel they are under immediate risk to their life.''
``We are going to do and to implement whatever is possible according to the security situation on the ground,'' Eiland said.
``We are fully committed to do whatever can be done. Even much more than what is in the (Tenet) paper to give some momentum to what we have now,'' he told Reuters.
Israeli police said they were investigating the killing of one Palestinian man and wounding of at least two in a West Bank shooting ambush late on Wednesday. Also in the West Bank, Palestinian gunmen shot and wounded a Jewish settler woman.
In Gaza, Palestinian witnesses and hospital officials reported two children, aged eight and 10, had been wounded by Israeli gunfire.
The Israeli army denied its troops shot any children, but said soldiers fired at the legs of two teenagers aged about 18
who were leading a group of Palestinians trying to tear down a fence round a Jewish settlement.
The Palestinian Authority issued a statement after a cabinet meeting on Wednesday, saying the ``preliminary understandings'' brokered by Tenet were ``part and parcel of an integral package to implement all recommendations of Mitchell's report.''
The report on the violence by former U.S. Senator George Mitchell's committee called for a total freeze of Jewish settlement building as a confidence-building gesture once a truce was implemented and a cooling-off period observed.
But Palestinian officials have said they want the report implemented as a package, not in stages. They say they cannot carry out some of Tenet's security requirements, such as arresting militants, without a sweetener for their people.
Israel has said it will not reward violence by agreeing in advance to limit Jewish settlement construction, but Foreign Minister Shimon Peres has indicated Israel would be willing to take some steps toward freezing settlements.
PERES SEES PROBLEMS AHEAD
Peres warned both sides could expect ``punctures'' as they tried to implement the cease-fire, but said that if they were serious about carrying out the agreement, even outbursts of violence would not derail it.
``We want to see a serious effort in the field, practical, clear, determined. The way he (Palestinian President Yasser Arafat) has shown in the past,'' Peres told Israeli television before meeting Secretary of State Colin Powell in Brussels.
A State Department spokesman said Powell stressed to Peres, and to Arafat in a telephone conversation, that ``we need 100 percent effort from both parties'' and that taking action on the ground was critical ``to achieve a cessation of violence.''
The militant Palestinian group Hamas said it would ignore any truce and continue its fight against Israel. Another fundamentalist group, Islamic Jihad, called the deal an insult to those who had died fighting Israeli occupation.
Under the Tenet plan, the Palestinian Authority is required to immediately ``apprehend, question, and incarcerate terrorists in the West Bank and Gaza,'' collect illegal arms including mortars, shut down bomb factories and prevent arms smuggling.
Palestinians have balked at the call to round up militants. Israel says it must be retroactive. Palestinians say it should only include those who plan attacks after the truce takes hold.
Under the cease-fire, within the next 48 hours, Israel must start lifting its blockade of Palestinian areas and begin redeploying troops in a gradual process aimed at bringing the region back to where it stood on September 28, 2000, the eve of the Palestinian uprising against Israeli occupation.
The revolt broke out after key negotiations for a final peace treaty deadlocked. Since then at least 455 Palestinians, 111 Israelis and 13 Israeli Arabs have died in the violence
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PHOTO CAPTION

CIA Director George Tenet met Israeli and Palestinian security officials June 13, 2001, hours after winning acceptance of a U.S. cease-fire plan to end eight months of violence. Israeli soldiers are seen using an army bulldozer to close small roads opened by Palestinians to break the Israeli tight closure imposed on the West Bank city of Nablus, June 12. (Abed Omar Qusini/Reuters)
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