HIGHLIGHTSPalestinians Appear to Have Successfully Rebuilt Their Resistance Infrastructure||Palestinian-ruled Territory Effectively Divided into Eight Cantons||Deal on 13 Palestinian Exiles Being Finalized||STORY: Israeli Prime Minister Ariel Sharon's government was plunged into crisis after he kicked ministers of the linchpin Shas party out of his government for voting against an emergency economic package.

He faced the challenge of governing with a narrowed parliamentary majority and the possible threat of new elections.
Sharon also fired deputy ministers of the United Torah Judaism (UTJ) party, who also broke ranks on the vote, which could cut the number of government Knesset seats to 60, still a majority under Israeli law if the UTJ bolts the coalition.

A Sharon fight for political survival could push aside international pressure for reforms in the Palestinian Authority and restarting peacemaking after more than 19 months' violence.

PALESTINIANS REBUILDING RESISTANCE INFRASTRUCTURE

Two Palestinian bombing attacks in as many days have meanwhile demonstrated attackers still have the means and the will to strike despite Israel's military offensive across the West Bank.

At the same time, Israeli officials disclosed that a Palestinian plan to detonate a one-ton bomb in the parking lot beneath twin 50-story towers in Tel Aviv was thwarted three weeks ago. Troops raided a West Bank town, preventing the planned car bombing, according to an Israeli military officer and a government official. Last year, Israel arrested two Palestinians who had also planned to bomb the towers.

The officer, appearing at parliament's Foreign Affairs and Defense Committee, said Palestinian militants were trying to rebuild their infrastructure for bombing attacks. The officer and the government official, who was contacted by The Associated Press, both spoke on condition of anonymity.

Also Monday, Israeli troops entered the West Bank town of Tulkarem and arrested a woman who planned to carry out a bombing, Israeli occupation army sources said. Palestinian officials identified her as Thawriyeh Hamamreh, 24, from the village of Jaba near Jenin. (Read photo caption)

PALESTINIAN-RULED TERRITORY EFFECTIVELY DIVIDED INTO 8 CANTONS

In another development, Palestinians say they are now required to obtain Israeli permits to travel from one Palestinian city to another, institutionalizing tough travel restrictions in place throughout the 20 months of Mideast fighting.

In a meeting with foreign diplomats Monday, Arafat said the Israelis had effectively divided the West Bank into eight separate cantons.

Ofir Haham, spokesman for the Israeli department responsible for the Palestinian territories, confirmed that Palestinians traveling from one West Bank area to another needed to apply to Israel for permits and said the policy began several months ago. However, Haham denied Israel had divided the West Bank into Cantons.

Also, Israel's Housing Ministry is asking for bids to build almost 1,000 apartments in the West Bank at existing Jewish settlements.

EXILES' DEAL FINALIZED

On another diplomatic front, Spain said on Monday a deal had been reached on the fate of 13 Palestinian militants taken to Cyprus to end the siege of the Church of Nativity in Bethlehem.

At the sidelines of a Mediterranean conference on the island of Mykonos, Spanish Foreign Minister Josep Pique said 12 of the 13 would be taken by Spain, Italy, Greece, Belgium, Ireland and Portugal and one would stay on in Cyprus for the moment.

PHOTO CAPTION

An Israeli soldier arrests a Palestinian boy at Qalandia check point in the entrance of the West Bank city of Ramallah May 20, 2002. In northern Israel, a Palestinian blew himself up in the second bombing in less than 24 hours, despite an unusually fierce condemnation of the tactic by Yasser Arafat's Palestinian Authority. (Mahfouz Abu Turk/Reuters)
- May 20 1:32 PM ET