RAMALLAH, West Bank - The meeting with Yasser Arafat was over, and his suit-and-tie-clad Cabinet ministers filed out of the office and made their way down a dimly lighted stairway, dodged the water dripping from the roof and passed empty windows stuffed with sandbags.
The Palestinian leader is confined to a few rooms in his crumbling presidential compound, surrounded by the same Israeli troops that nearly flattened his symbol of self-rule in a series of attacks last year. But the routine business of governing continues even under military occupation.
Yesterday, Arafat's advisers had two seemingly contrasting issues to confront. There was promising news that Israeli Prime Minister Ariel Sharon had renewed talks with Palestinian officials in a bid to end the conflict. At the same time, top Israelis were intensifying their talk of expelling Arafat.
Palestinian Minister of Information Yasser Abed Rabbo emerged from the battered compound into a pelting rainstorm, stood in front of a pile of cars crushed by Israeli tanks months ago and curtly dismissed the news as gimmicks not worthy of comment.
"We don't take these reports seriously," Rabbo said of the threats to oust Arafat.
Of the efforts to forge a cease-fire, he said, "We don't think that Sharon is serious about having genuine and responsible negotiations with the Palestinian Authority."
But what is clear is that Arafat and Sharon are contemplating the future - interpreted by them as the weeks and months after an American war in Iraq. Both leaders predict that will be a defining moment in their deadly conflict, now in its 28th month.
Arafat believes that, after a war in Iraq, he will re-emerge as the leader he once was - freed from his imprisonment in the ruins of his Ramallah office to play a prime role in forging a peace agreement with the help of American pressure on Israel.
Israeli leaders say the postwar period will give them the long-awaited opportunity to rid the region of Arafat and usher in moderate Palestinian leadership that is willing to end the violence and provide the proper environment for peace negotiations.
The Israeli newspaper Yedioth Ahronoth reported yesterday that should Arafat fail to relinquish power by appointing a prime minister before the end of a war in Iraq, Israel would have the White House's blessing to remove the leader from power.
The article was based on an unnamed Israeli government source, but it set the stage for the message sent daily by Sharon's office that Arafat would be the next target after the United States deals with Iraqi President Saddam Hussein.
A competing newspaper, Maariv, remained cautious. "Could this be an Israeli dream disconnected from reality or a well-based assessment?" the paper asked.
Sharon has made no secret of his desire to exile Arafat, whom he accused yesterday of leading a "coalition of terror." Although U.S. officials agree that Arafat should be sidelined, they have not expressed support for his forced removal.
American officials developed a peace initiative that calls for concession from both sides, and Sharon successfully delayed its announcement until after Israel's national election Jan. 28. The United States has said it intends to push the proposal even while building toward war with Iraq.
And so Sharon has begun a flurry of initiatives with the Palestinians and other Arab leaders. He sent aides to Jordan and Egypt and said he would fly to Cairo and meet with Egyptian President Hosni Mubarak after his new government is formed.
Last week, Sharon met with the speaker of the Palestinian parliament, Ahmed Qurei, better known as Abu Ala, and discussed ways to implement a cease-fire - despite his repeated vows never to negotiate as long as Arafat remains in power. More high-level meetings are scheduled this week.
The news media and political observers have ascribed many motives for the meetings. One is that Sharon is trying to form a broad coalition government with the center-left, and needs to prove that he is willing to reach a peace accord. Another possibility is that the United States is putting strong pressure on leaders to calm or contain the conflict so it does not interfere with Iraq.
After his Likud Party's decisive win over the center-left Labor Party, Sharon officially began the task yesterday of trying to form a government by persuading parties to join him and secure a majority in the 120-seat parliament.
In a ceremony marking the start of the six-week process, Sharon criticized the Labor Party for refusing to join his coalition. "Those who say no to unity are betraying the Israeli public," he said. If the Labor Party doesn't join, Sharon might have to form alliances with extreme right-wing and religious parties, creating a coalition that would make concessions to Palestinians difficult.
Sharon said his new government "will have to complete the campaign against terror, remove the terrorist leadership and create the conditions for the emergence of a new Palestinian leadership with which it will be possible to make real peace."
Meanwhile, in battered Ramallah, one of Arafat's top aides publicly confirmed that Sharon had met with Abu Ala. Nabil Shaath, minister of planning and international cooperation, said Sharon and Arafat have realized the obvious.
"There are facts of life," Shaath said. "Arafat recognizes them. Apparently Sharon is starting to do the same. They both know that they have to get back to the negotiating table."
Yet both sides know that militant groups can thwart discussions with a single bomb.
Yesterday in Gaza, despite at- tempts by Palestinian police to curtail attacks, three Palestinians were killed when their bomb-laden car blew up at a military post in Gaza. Four Israeli soldiers were injured in the blast, claimed as a suicide attack by the radical Islamic Jihad.
Shaath said Arafat's recent meetings in Cairo with militant groups failed to produce a cease-fire. And Sharon's decisive re-election silenced the voice of Israel's peace camp, leaving Arafat and other Arab leaders with little choice but to open a dialogue.
So Arafat "might as well meet with Sharon," Shaath said, cautioning that he does not believe the Israeli leader has softened.
Sharon "believes it is possible to defeat the Palestinians so that peace can require much less of Israel than it would otherwise," Shaath said. "If he can get it, then why not? But he won't. And the price will be more suffering for the Palestinians and the Israelis."