"This act is a clear-cut attack on the Palestinian capacity to advance the peace process and a slap in the face of those who are holding talks with us, namely Arafat. The responsibility for this matter is, nevertheless, Arafat's. With him we signed the Oslo agreement, and he must find a way to overcome this."

The attack followed the Jan. 22 suicide bombing by two guerrillas belonging to Islamic Jihad, another radical group from Gaza, that killed 21 Israelis, most of them young soldiers, at a military mustering point in central Israel.

That bombing prompted Rabin to close the Gaza Strip and West Bank, barring tens of thousands of Palestinians from going to jobs in Israel. Israel's Cabinet eased the restrictions slightly Sunday, and Rabin plans to discuss further moves with Arafat on Thursday.

Israeli Environment Minister Yossi Sarid, a member of the leftist Meretz Party, said Monday that he favors closing the West Bank and Gaza Strip permanently but proposed that Israel compensate the Palestinian Authority for the loss of workers' revenues.

"We'll buy more security for Israel for this particular sum of money," Sarid said, promoting his idea of paying the Palestinians about $333 million a year.