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Arafat's departure from the Palestinian leadership, regardless of when the doctors pronounce his death, creates a new reality in the territories. From Israel's perspective, the first problem is the absence of a clear Palestinian address with which to negotiate or coordinate moves, make demands from, or warn.

The immediate danger is that if chaos erupts in the territories, demands will be raised to place an international force in the territories. In the new reality, Israel must set new rules of conduct and perhaps even a new policy. The easiest thing is to decide how Israel must act militarily with regards to the Palestinians and Palestinian groups that wish to continue acts of violence and terror, as the Popular Front recently did in the attack in the Carmel Market.

Clearly, Israel must do everything to restrain military activity. It must not initiate military operations and must withhold planned operations. As a rule, the IDF must only react to clear, immediate "ticking bombs" that may endanger the lives of Israelis.

It will be necessary to maintain self-restraint, especially toward and during Arafat's funeral, which the prime minister decided not to allow to take place in Arafat on Temple Mount or in Jerusalem. Israel should also be open to other issues, including the arrival and departure of guests who may be considered confirmed enemies of Israel.

Arafat's demise will certainly increase the pressure on Israel to put off the disengagement plan from Gaza and northern Samaria. The reality after Arafat requires the opposite response - to keep or even escalate the disengagement timetable.

Even more important, Arafat's departure opens a possibility to turn the disengagement from a unilateral Israeli move into a fully coordinated one with the new Palestinian leadership.

Israel does not know whether the new reality will cause a deterioration and anarchy in the territories. Such deterioration could strengthen Hamas and turn it into the only Palestinian address.

Or perhaps a leadership of the "founding generation" of people such as Mahmoud Abbas (Abu Mazen), could be established and obtain a formal status, but will have no control on the ground.

Local leaders, commanders of gangs or Hamas could take control of the territories. In any case, it is clear an inheritance struggle will take place. It could be quiet or erupt in violence.

From Israel's point of view, the question is whether the new leadership, whether of the Tunis old guard or local Fatah young guard, could fight terror and stop it and halt the arms smuggling and incitement against Israel.

Would the new leadership be capable of carrying out the reforms the Palestinians undertook as part of the road map? Its status will also be determined on the basis of its efforts to stop the corruption in the Palestinian leadership.

Israel has an interest to prove wrong the assumption that only Arafat could be a partner to peace. Israel could help make this happen, but it can also deepen the anarchy on the Palestinian side and divide the territories into tiny enclaves, in which growing despair will prevail.