JERUSALEM - There they were, the leaders of Israel and the Palestinian Authority, taking their familiar roles.

There was Israeli Prime Minister Ariel Sharon, saying yesterday in Tel Aviv that the region will not see peace under the Palestinian leadership of Yasser Arafat, whom he accused of waging a "cruel campaign against us."

And there was Arafat, emerging once again from his presidential compound after being surrounded by the Israeli army for the second time in two months, defiantly proclaiming that Sharon's government "won't terrorize us."

Each said he and his people would be victorious in the end. Each said peace would be impossible as long as the other remains in power. And each vowed to continue a violent conflict that has produced no tangible gains for either side.

Meanwhile, the dead were being buried. In cities and towns along Israel's Mediterranean coast, families mourned the victims of a suicide bombing Wednesday that killed 17 passengers on board a bus.

Three months ago, after a suicide bomber killed 29 Israelis in Netanya, the Israeli army launched an offensive in the West Bank and stormed Arafat's compound in Ramallah, keeping him under siege for 34 days.

When the army withdrew, on May 2, U.S. and European diplomats pressed Arafat to reform his security forces and Israel to hold cease-fire talks. But Palestinians resumed attacks on Israelis, and Israeli forces resumed daily raids in Palestinian cities.

After a Palestinian teen associated with the militant group Islamic Jihad attacked the bus Wednesday, the Israeli army returned to Arafat's headquarters.

"We were all waiting for someone to come and fill the peaceful void that we had in May with a plan," said Ghassan Khatib, a Palestinian political analyst in Ramallah. "But no one came up with anything. The Saudis were slow and the Americans were slower. We were left on our own, and we quickly retreated to violence, led by the militants on the Palestinian side and by the Israeli army under Sharon."

Early yesterday, six Israeli tanks and nearly 30 armored vehicles stormed the south side of the walled presidential compound and unleashed a six-hour barrage on the buildings. Guards fired back. One Palestinian was killed and six wounded in the exchange.

Arafat remained in his second-floor room as a tank shell ripped through a wall of a third-floor sleeping quarters. The room was covered with dust and debris, and his mirror was smashed.

Israeli troops blew up three buildings used by Palestinian security agencies, badly damaged six other buildings in the compound and pummeled a walkway between Arafat's living quarters and an office used for news conferences and meetings with foreign dignitaries.

Arafat accused Israel of trying to kill him.

"They will not terrorize us," he said, making a victory sign with his fingers as he stood on the steps to his building, as he had done back in March.

"I ask the world to come and see this racism and fascism and this massive attack on the Palestinian leadership compound," Arafat said. "This will not affect the Palestinian people. On the contrary, it will increase the steadfastness of this people."

The Israeli army pulled out during the morning. Foreign Minister Shimon Peres said the attack was intended to send a message and to highlight Israel's charge that Arafat does nothing to rein in militant groups.

"Our main complaint is that they are hardly lifting a finger at a time where they have to bear responsibility for security and order in the territories," Peres said.

Israeli officials denied that the Palestinian leader was a target.

"If there had been any intention of harming Arafat, it would not have been a problem," said Capt. Jacob Dallal, an army spokesman.

After the bus bombing, Sharon vowed an immediate and painful response, but cautioned his military to show restraint so as not to derail initiatives undertaken by the United States and Arab nations to find a political way out of the crisis.

Sharon, who is scheduled to meet Monday with President Bush in Washington, presumably prefers that attention be focused on the bus bombing rather than on an army occupation of a Palestinian city.

Sharon and U.S. officials disagree as to whether Arafat should have a role in a reformed Palestinian government, but American officials seem to be losing patience with Arafat. Aides to Israeli Cabinet ministers said yesterday that Sharon wants to capitalize on that sentiment during his visit.

"Clearly, Israel cannot but respond to the terror," wrote Zeev Schiff, military columnist for the Israeli newspaper Haaretz. "There is no point to international calls for Israel to restrain itself. But while Palestinians made sure to foil [CIA Director George J.] Tenet's mission as they previously did to Anthony Zinni's efforts to reach a cease-fire, Israel does not want to appear to be compounding the failure."

Khatib said leaders on both sides say they are close to winning, making it difficult for them to acknowledge that their tactics may have failed.

"Sharon says that we are almost there, just one or two more military operations and the Palestinians will stop blowing us up," Khatib said. "Militant Palestinian groups like Hamas keep saying that just one more bombing, and we'll have Israel."