NABLUS, Israeli-Occupied West Bank -- The first test of the new Israeli government is at a Palestinian university here where students and the Israeli army have been in a standoff for three days.
Inside the walls of An-Najah University, several thousand students marched and chanted yesterday, demanding the army retreat from its positions encircling the school.
Outside the university, in streets emptied by a curfew, the military waited for the opportunity to arrest Palestinians it says are armed and hiding on the campus.
The situation was being watched closely to see how the new administration of Prime Minister Yitzhak Rabin would react. He took office Monday, promising a new era in Israeli-Arab relations.
Late last night, mediators between the two sides were exploring a compromise in which the wanted men would be escorted out of the country, and the army would withdraw.
"What happens here will set the tone for the next eight months of negotiations" between Israel and the Palestinians, said Saeb Erakat, a professor at the university and a Palestinian member of the peace talks negotiating team.
Palestinians throughout the West Bank and Gaza called a general strike yesterday in support of the students. Palestinian leaders, including Faisal al-Husseini, head of the peace talks team, have been in Nablus since Wednesday. Yesterday they began a fast at offices of the Arab Red Crescent society.
The army has not permitted food onto the campus since it began the siege Tuesday. It has said those students who are not wanted are free to leave after being searched and questioned, but those inside have largely refused the offer.
Estimates of the number of people inside the campus ranged from 1,500 to 4,000.
Maj. Gen. Danny Rothschild, who is in charge of the forces, said the incident began when armed men came onto the campus to try to influence an election for the university student council.
A plain-clothes border patrolman shot and wounded one man, according to authorities, and the army was called in.
"Free and democratic elections are elections which are held without threat of gunmen around the polls," General Rothschild said.
But staff and students at the university denied that account.
"It's just not true," said Dr. Sami Yaish, an assistant biology professor who was on the election supervising committee. "There was no chance for any irregularities."
Universities in the West Bank have long been at the center of the struggle between Palestinians and Israelis, and student elections have traditionally been the stage where inter-Arab struggles occur.
In Tuesday's student council election at An-Najah, candidates supporting the Fatah branch of the Palestine Liberation Organization won all 11 council seats. They defeated other factions, including Hamas, an Islamic fundamentalist group that has been challenging Fatah in the occupied territories.
Mr. Rabin clearly did not relish this confrontation, especially coming just before the planned arrival Sunday of U.S. Secretary of State James A. Baker III.
In an interview with Israeli television Wednesday night, the new Labor Party prime minister blamed the incident on the previous Likud administration, and suggested the Army should have checked for wanted men as people filed onto the campus.
"The An-Najah case is a stumbling block created unwisely on our part," he said.
That admission initially had buoyed the Palestinians.
"After we listened to Rabin's speech, we expected it would be over," said Mamdouh Aker, a surgeon who is also a member of the Palestinian peace talks delegation. "It's in the interest of everyone to diffuse this situation."
But in the day following Mr. Rabin's comments, no word came from the new prime minister to resolve the standoff. Nablus, a commercial center of 100,000 that is the largest Arab city on the West Bank, was put under curfew and declared a military area closed to journalists.
By circumventing the roadblocks, one could find a city quiet and shuttered, its streets empty but for army patrols searching for any violators of the restrictions.
Mr. Rabin has promised to make concessions and negotiate peace with the Palestinians. But he is regarded warily by those who remember him as the defense chief who used iron-fist tactics to try to end the Palestinian uprising that began in 1987.
"This is a very bad situation for Rabin," said Nawaf Massalha, an Israeli Arab Knesset member who belongs to Mr. Rabin's Labor Party. "If they use force here, it will rise the violence all over Israel."