Police detonated a 1,300 pound car bomb Thursday, one of the largest ever discovered, and Israel's foreign minister said Israel averted a catastrophe that could have changed the face of the Middle East.
In the Gaza Strip, Palestinians carried out twin attacks on Israeli troops:
A bomb blew up under an Israeli tank, killing one soldier and wounding three. The blast tore off the turret, pinning down the soldiers for several hours and complicating rescue efforts. Elsewhere in Gaza, gunmen fired on an army patrol, killing an officer and wounding a soldier. Militiamen linked to Palestinian leader Yasser Arafat's Fatah movement claimed responsibility for both attacks.
Israel is bracing for a possible new wave of attacks by Palestinian militants during the Jewish New Year's holiday, which begins at sundown Friday. Israeli-Palestinian fighting erupted during the New Year's holiday two years ago.
Near the northern Israeli town of Hadera, police chased two suspicious cars early Thursday and discovered that one, a pickup truck, was rigged with 1,300 pounds of explosives, as well as two barrels with fuel and metal fragments. A cell phone, which was to have set off the charge, was attached.
Israeli Foreign Minister Shimon Peres said the discovery of the bomb was a "miracle." Police officials, speaking on condition of anonymity, said they had averted a so-called mega attack.
Had the bomb gone off, Peres said, "it would have cost such loss of life that it would have changed almost the entire political situation in one moment."
The incident began when volunteers serving with the police spotted two vehicles speeding on a winding dirt road leading from the West Bank into Israel. The volunteers gave chase and the drivers abandoned the cars and got away on foot.
The bomb squad detonated the charge, destroying the car. The second vehicle apparently was to have served as a getaway car. Police using tracker dogs and helicopters were searching for the drivers.
Israel has traditionally tightened security during Jewish holidays. The deadliest Palestinian attack in two years came on the eve of the Passover holiday in March when a homicide bomber killed 29 guests in a hotel banquet hall.
In a Tel Aviv court, meanwhile, Palestinian uprising leader Marwan Barghouti went on trial on charges he helped orchestrate 37 attacks that killed 26 Israelis in the past two years. Barghouti, wearing a dark brown prison uniform, told the three-judge panel that he does not recognize the court's right to try him.
"The one who should be sitting here (as a defendant) is the government of Israel," Barghouti said in fluent Hebrew. He has said he hoped to turn the trial into a showcase for what he said were the crimes of Israeli occupation. He has denied the accusations, saying he is a political leader.
Relatives of terror victims and Barghouti's three children were in the packed courtroom. In the hallway outside, there were scuffles and shouting matches between Jewish and Arab spectators.
Prime Minister Ariel Sharon, meanwhile, said in a series of holiday interviews that for the first time since September 2000, he sees hope for a peace agreement with the Palestinians.
Sharon has ruled out talks with Arafat, charging he has encouraged militants to attack Israel. However, Sharon said he could talk to "Palestinians who have reached the conclusion that by terrorism nothing can be achieved." He said discreet contacts with Palestinians are continuing, but would not say with whom.
"Now for the first time I see a possibility of opening the road to a political settlement," he told Israel TV's Channel Two. He did not say what kind of settlement he envisioned.
Sharon and Peres expressed reservations about a European peace proposal that envisions Palestinian statehood by 2005. Sharon believes the timetable of the plan, presented by visiting Danish Foreign Minister Per Stig Moeller, is "not realistic," an Israeli official, speaking on condition of anonymity, said Thursday.
Arafat said he accepted the plan in principle, but would study it further.
Moeller said the European Union's concept is to combine all the plans now on the table and present a unified program to the "quartet" dealing with the Mideast: the United States, Russia, EU and United Nations.
Denmark holds the rotating presidency of the European Union.
In the past, Sharon has said he would consider creation of a Palestinian state at the end of a long process. First there would be a yearslong interim stage under which the Palestinians would maintain control of the territory they now hold under interim peace accords -- about 40 percent of the West Bank and two-thirds of Gaza.
If the interim period passed without incident, Sharon has said he would suggest negotiations on key issues like the future of Jerusalem, Jewish settlements in the West Bank and Gaza, Palestinian refugees and borders.
Palestinians reject the concept of another interim accord. They want a state in all of the West Bank and Gaza, with the Arab section of Jerusalem as its capital.