Jerusalem (CNSNews.com) - A fierce gun battle raged in a Gaza refugee camp early Wednesday, after the Israeli army sent in bulldozers and tanks to raze abandoned buildings used by Arab gunmen to fire mortars at Israeli targets.
Coming a day after President Bush said that the violence must end before full negotiations can resume, the battle cast doubt on the likelihood that a U.S.-arranged meeting between Israeli and Palestinian security chiefs would take place.
Two Palestinians were reported killed and some 50 wounded when Israeli forces stormed a section of the Khan Younis refugee camp.
Shooting broke out after hundreds of armed Palestinian policemen and civilians ran into the streets to defend the area. Eyewitnesses were quoted as saying mosque loudspeakers were used to relay messages urging anyone with a weapon to fight a jihad (holy war) against the Israeli troops.
Witnesses said the bulldozers had pushed some 350 yards into the camp and had demolished buildings there. The bulldozers and accompanying tanks were later withdrawn.
The army said in a statement the action was taken to destroy structures used by gunmen to fire mortar shells at nearby Jewish settlements and army bases.
On Tuesday, Israel launched its first daytime attack against Palestinian targets after one such mortar attack.
In reaction to Wednesday's occurrence, Nabil Abu Rudeineh, an advisor to PA Chairman Yasser Arafat, said Israel would "pay a high price" if it continued its aggression against the Palestinian people.
He said Israel was fully responsibility for violence in the disputed territories. There would have to be peace and security for everyone - or no-one would have it, Israel Radio quoted him as saying in an interview in Arabic.
Israel's Defense Minister Benjamin Ben-Eliezer called the army action "clearly defensive."
"Positions in which mortars were set up and fired, and from which our settlements were shelled - these are positions to which we don't want the Palestinians to return," Ben-Eliezer said.
The action marked an increase in the scope of Israeli retaliatory attacks. An army spokeswoman said it was the largest Israeli incursion into PA-controlled territory since the beginning of the confrontations more than six months ago.
Prime Minister Ariel Sharon had no comment after the operation. He is scheduled to hold talks with his dovish Foreign Minister Shimon Peres on Wednesday to discuss ways of calming the situation, and the possibility of resuming political negotiations when the fighting stops.
Lawmaker Yossi Beilin, one of the architects of the Oslo peace process, was also reportedly scheduled to meet with Arafat in PA-ruled Ramallah on Wednesday.
On Tuesday, President Bush reiterated the U.S. position that, "in order for there to be discussions that will lead to peace, first and foremost, the violence must stop."
Speaking after a meeting with Jordan's King Abdullah II in Washington, he said Washington was "working hard to convince the parties to stop the violence."
Abdullah, the second Arab leader to be invited to the White House since Bush took office, said that the key at present was to find a way of "de-escalating the violence." He suggested that the best plan was to build on the idea of security cooperation.
Shortly before the fighting broke out a PA official was quoted as saying that a second meeting of security heads was scheduled for Wednesday. The meeting, proposed by Secretary of State Colin Powell, has already been postponed twice this week.