As Israel issues dire warnings to Yasser Arafat about the recent bloody violence against its civilians, the Palestinian leader has never looked a less powerful force that he does today.

The Israeli air strikes that have been slamming into Gaza and the West Bank have not only damaged his assets - and will severely limit his ability to travel abroad - but they have also amply demonstrated who is in charge in the region.

Putting on a brave face - Arafat on Saturday

And the Israeli Government has demonstrated the willingness to squeeze Mr Arafat's administration unrelentingly until it gets what it wants.

So Mr Arafat now faces some hard choices: to co-operate with Israel - which means cracking down even harder on Islamic militants and on some of his own supporters in the Fatah movement - or to stand up to Israel and in effect join those Israel designates "terrorists".

But taking either of these choices could be his undoing.

If Mr Arafat co-operates with the Israelis he risks sparking a Palestinian civil war.

If he opts for armed resistance, Israel could easily take him out, as it has done with dozens of less prominent Palestinians over recent months.

Moment of truth

In the end, Yasser Arafat will probably try do what he has always done - fudge the issue by making some arrests, but not quite enough to threaten his own power base.

Israel is responding to one of the bloodiest few days in its history

He will also do as much as he can to put the blame on Mr Sharon and the effects of the Israeli occupation for creating the current situation.

But whatever he does, the danger for him is that Palestinians will consider that he has gone too far and Israel may say that he has not gone nearly far enough.

His only ray of hope - if it can be called that - is that international opinion will deem Israel to have reacted too violently to the weekend's suicide attacks, tipping the propaganda balance against Mr Sharon, building pressure on him to calm down the crisis.

But whatever happens, it is hard to disagree with US Secretary of State Colin Powell's analysis of the situation - that Mr Arafat is now facing his moment of truth.