(1st add includes comment by the State Department.)
Jerusalem (CNSNews.com) - Israeli political leaders Wednesday said without exception that the assassination of Tourism Minister Rechavam Ze'evy represented a turning point in Israel's relations with the Palestinians, sure to complicate President Bush's war on terrorism.
The 75-year-old right-wing minister was shot in the head outside his room at a Jerusalem hotel at 7:00 Wednesday morning.
The Popular Front For the Liberation of Palestine claimed responsibility for the attack, calling it revenge for the killing of its leader Ali Abu Mustafa in August. Mustafa, who accused of being behind a string of car bombings, was killed in an Israeli helicopter missile strike on his office in Ramallah.
Nevertheless, the government made it clear that it was holding Palestinian Authority leader Yasser Arafat responsible for the murder.
"The full responsibility falls squarely on Arafat, as someone who has controlled, and continues to control, terrorism, and as one who has not - to this day - taken even one serious step to prevent terrorism," Israeli Prime Minister Ariel Sharon said in a special Knesset session.
Sharon said the situation in Israel had changed after Ze'evy's murder as it had in the U.S. after the September 11 terror attacks. He suspended all diplomatic contacts with the Palestinians until the violence stops.
Public Security Minister Uzi Landau said the assassination had brought about a "change in relations" with Arafat.
"Part of the advice I'm giving the government is that we should send a clear message to Yasser Arafat that if the murderers of Rechavam Ze'evy are not brought to Israel this evening, all bets are off," Landau told reporters at a press conference in Jerusalem.
Minister of Housing and Construction Natan Sharansky called for a national emergency government. It was Sharansky who began to call for a national unity government eight months before Sharon formed one.
Even his bitter political opponent, left-wing Meretz leader Yossi Sarid, said he was "devastated" over the loss of his friend, Ze'evy.
"[The PA] cannot be silent when confronted with the spilled blood of Ghandi, and will be forced to take measures," Sarid said, referring to Ze'evy by his nickname.
The PA issued a statement condemning the killing and Arafat pledged to arrest the perpetrators..
"Despite the hard line positions of minister Ze'evy and out of the PA's commitment to peace, it reiterates its condemnation for this action," the statement said.
PA Information Minister Yasser Abed Rabbo said the PA felt "sorry" about the assassinations and called for an end to the violence.
"We reject all forms of political assassinations," Rabbo said. "We want to put an end to this vicious cycle of killings, although Mr. Ze'evy had adopted a hostile position and policies against our people."
The State Department condemned the killing in the strongest possible terms.
"It?s a despicable act of terrorism," an embassy spokesman in Tel Aviv said. "Yasser Arafat must do everything [possible] to clamp down on these [perpetrators]."
British Prime Minister Tony Blair condemned the attack and urged restraint "in response to the men of violence who only want to wreck any proposals for peace."
Likewise, German Foreign Minister Joschka Fischer said everything had to be done "to avoid a further escalation of violence."
It was not clear what action Israel planned to take, but Landau said Israel was going to follow the lead of the Americans in fighting terrorism.
"They don't say that you cannot fight [terrorism] and there is no military solution ... They don't say that you have to negotiate [with terrorists]. They don't negotiate with terrorists, and they don't negotiate with those who sponsor them," he said.
"What's good for them is good for us," Landau added, emphasizing that he was not advocating a bombing raid on the PA.
Washington has been encouraging Israel to ease restrictions on the Palestinians, despite ongoing violence, in an effort to fulfill a truce and garner support in the Arab and Muslim world for the fight against terror.
Israeli government spokesman Avi Pazner said that Palestinian terrorism had continued "unabated."
"The group who perpetrated this act is a well-known Palestinian terrorist organization, and they are working openly in Palestinian-controlled territories of the West Bank and Gaza," Pazner said.
"The PA knows about their activities and is doing nothing to stop them or arrest them," he added.
The prime minister's office issued a statement Wednesday saying that Israel had issued a list of 108 wanted terrorists to the PA but they had not been arrested.
Israeli military sources said two PA-controlled refugee camps, around which restrictions had been eased in the last few days as part of a truce agreement, have now been closed.
This is not the first time Palestinian terrorism has targeted Israeli officials, but Ze'evy was the highest ranking government representative to ever be hit. (The late Prime Minister Yitzhak Rabin was assassinated by a Jewish extremist.)
Israel's Ambassador to London, Shlomo Argov, was shot in the head on June 3, 1982 by the Palestinian Abu Nidal faction. Argov survived the attack but was left completely physically and mentally incapacitated.
The attempted assassination was the last straw. Three days later, Israel invaded southern Lebanon in what it called Peace for Galilee operation, in an attempt to rout Palestinian factions holed up there.
Palestinian groups, among them Arafat's PLO, had become entrenched in Lebanon and used it as a base from which to launch international and cross-border terror attacks on Israel.