JERUSALEM -- Yasser Arafat's death brought a rare glimmer of optimism to the Middle East, with world leaders talking about the possibility of a new era. But the window of opportunity for peace could quickly close with a chaotic transition, a rise of militants or a failure by either side to seize the moment.

Arafat's death removes the chief excuse given by Israel and the United States for sidelining the Palestinian leadership. Both governments had dismissed Arafat as an unacceptable negotiating partner compromised by terror.

Israeli Prime Minister Ariel Sharon said Arafat's passing "could be a historic turning point for the Middle East" and President Bush called it "a significant moment in Palestinian history."

Sharon indicated Israel might be willing to resume peace talks, but didn't alter previous conditions for doing so.

It remained unclear if Israel might consider offering the new Palestinian leadership some gestures, such as lifting roadblocks or releasing prisoners, that could bolster their standing among Palestinians.

Sharon said in a speech that if Palestinian leaders emerge who are willing to stop "terror, violence and incitements," then "the appropriate opportunity will be created to coordinate different processes with this leadership and even to resume peace talks."

But the mention of peace talks is shadowed by fears of a chaotic transition and a strengthening of Islamic militants.

The burial arrangements in themselves showed how disrupted the region is. The international funeral was to be held in Egypt, because few Arab leaders would travel to Israeli-controlled Palestinian land; Arafat was to be buried in the West Bank town of Ramallah because Israel refused to approve interment in Jerusalem; and most mourners from the Gaza Strip would be barred from traveling across Israeli territory to Ramallah, a security official said.

Workers in Cairo scrambled to lay new carpet and mow the lawn at a small mosque near the airport where dozens of foreign dignitaries were to honor the Palestinian leader in a modest ceremony earlier today, before Arafat's body is flown to Ramallah for a burial service.

A credible replacement

The new Palestinian government -- led by former Prime Minister Mahmoud Abbas, a well-known moderate -- may not have enough street credibility to achieve what Israel is demanding, however.

And if Israel doesn't make the first moves -- allowing Abbas to show his people he can deliver results -- the Palestinian leadership may be consumed by internal rivalries. Militant groups such as Hamas and Islamic Jihad are ready to fill any power vacuum.

On the Israeli side, Sharon is battling intense opposition from hard-liners to his plan to unilaterally "disengage" from the Palestinians, withdrawing Israeli troops and settlers from the Gaza Strip and four West Bank settlements by next year.

Arafat's death is reinforcing calls from the left for Sharon to abandon his unilateral approach and begin coordinating with the Palestinians.

The United States will have to play an important role in bringing the two sides together. But doubts persist over whether Bush will inject the kind of energy needed to help resolve the Israeli-Palestinian conflict.

Bush and Prime Minister Tony Blair met Thursday in Washington, focusing part of their talks on exploring whether Arafat's passing offers new avenues for restarting Israeli-Palestinian talks. Blair has publicly declared that he is seeking a renewed U.S. commitment to the Israeli-Palestinian peace process. Blair's spokesman said the prime minister is expected to call on Bush to help shore up the Palestinian Authority.

Four years of Israeli-Palestinian bloodshed have damaged Bush's war on terror, firing up Islamic radicals worldwide.

Europe may well seek to carve itself a larger role in the post-Arafat Middle East. The European Union enjoys enormous economic clout in the region as the main donor to the aid-dependent Palestinians and the top commercial partner of the trade-dependent Israelis.

But breaking the deadlocked Mideast peace process will largely come down to the Palestinians themselves.

Abbas and Prime Minister Ahmed Qureia are expected to run Palestinian affairs at least until elections are held, presumably within 60 days.

Both men are considered more pragmatic than Arafat, but they lack the late leader's charisma.

The one potential leader widely viewed to possess both those traits is Marwan Barghouti, who is seen as the strongest candidate to succeed Arafat.

But Barghouti is serving multiple life terms in an Israeli prison after being convicted of involvement in terrorism. Israeli Foreign Minister Silvan Shalom told reporters Thursday that Barghouti "will remain in prison for the rest of his life because he's a murderer."

Any moves by Israel to shore up Abbas and Qureia could backfire, as they're likely to be branded traitors if they're seen as too cozy with Israel.

Abbas and Sharon know each other. Sitting side by side, the two men endorsed the U.S.-sponsored "road map" to peace in 2003.

The road map, which calls for an end to violence and the creation of a Palestinian state, was all but moribund by the time Arafat died.

Now the plan has a chance for revival, depending on whether Israelis and Palestinians will sit down together again.