Barak tells Arafat to end violence or face a major Israeli attack.

Byline: Hugh Dellios and Ray Moseley

JERUSALEM _ Israeli Prime Minister Ehud Barak on Sunday issued a 48-hour ultimatum to Palestinian President Yasser Arafat to end the violent clashes raging across the Palestinian territories or Israel would consider the Mideast peace negotiations dead.

The warning came as the bloody, 10-day conflict threatened to widen into a regional conflict when Israeli troops and Hezbollah guerrillas exchanged fire along the Lebanese border and the Iran-backed Hezbollah kidnapped three Israeli soldiers.

Barak warned that if Arafat failed to restrain Palestinian gunmen and rioters within the next two days, Israel would end the military restraint that Israelis claim has so far prevented much bloodshed among the Palestinians.

"In the next two days, if we do not see a change in the patterns of violence, we will regard this as an end of the (peace) negotiations by Arafat and we will instruct our army and security forces to do everything in their power to put an end to the violence," Barak said in a national address.

Barak, trying to soothe a nation suddenly confronted by the prospect of a two-front war with its Arab neighbors, said Israel had to be prepared for the "painful truth" that the Palestinians were not partners for peace after all, and that Israelis must face that possibility with "open eyes."

"A new situation has developed and it is a struggle, one of the most important in the history of Israel, a struggle for our right to live in this tormented and difficult region as a free people," Barak said.