JERUSALEM, 18 December 2004 — Israeli Prime Minister Ariel Sharon’s hope of annexing West Bank settlements and keeping all of Jerusalem under a final peace deal is a disaster that could torpedo efforts to restart peace talks, interim Palestinian leader Mahmoud Abbas said yesterday.

Meanwhile, Israeli troops raided the Khan Younis refugee camp, killing eight Palestinians, including a 12-year-old boy, in the deadliest day of fighting since Yasser Arafat’s death last month.

The fighting and Abbas’ comments came despite a rare feeling of optimism that has swept over the region since Arafat’s death, with both Israelis and Palestinians calling for new negotiations to end their conflict.

Israeli officials have promised to help ensure upcoming Palestinian elections go smoothly, and Palestinian leaders have been working to persuade fighters to halt attacks on Israel. Israeli officials had also expressed support for a possible Middle East conference in Britain next year. An Israeli official, speaking yesterday on condition of anonymity, said Israel did not plan to attend because the meeting would deal with Palestinian issues, including internal reform and increased donor funding.

In a major policy speech Thursday, Sharon said his plan to withdraw from Gaza next year, coupled with Arafat’s death, could turn 2005 into a “year of great opportunity.” He held out the prospect of an independent state for the Palestinians if they stop attacks.

But Sharon also reiterated his determination to hold onto some large West Bank settlements and all of Jerusalem in a final peace deal. The Palestinians want all the West Bank, Gaza and East Jerusalem for a future state.

In a telephone interview from the Gulf state of Qatar, Abbas called Sharon’s comments a “disaster.” “If (Sharon) puts these conditions on the table and says that he wants to negotiate on this basis, then I think he’s closing all the doors to peace,” Abbas said.

Abbas said Israel must honor the internationally backed road map peace plan, which called for the creation of a Palestinian state next year. The plan stalled soon after it was signed in 2003 with neither side meeting its initial commitments.

An American monitoring team, including former US President Jimmy Carter, will travel to the region to observe the vote, Deanna Congileo, a Carter spokeswoman, said yesterday. The US team will join a European Union observer mission.

Yesterday, the Israeli Army moved into the Khan Younis refugee camp in southern Gaza. Bulldozers and tanks knocked down buildings in the camp. Dozens of civilians took refuge in a local hospital, camping in the hallways and the lobby as an Israeli tank sat outside. Other families moved in with relatives, or spent the night at a local stadium.

Last night, an Israeli aircraft attacked a group of Palestinians. The attack killed one Hamas fighter and wounded three other people, Palestinian officials said.

The fighting throughout the day killed eight Palestinians, according to medical officials. At least 27 others were wounded, including an ambulance driver and five children under the age of 16, hospital officials said.

— Wiht input from agencies