The decision by Israel's Prime Minister Ariel Sharon to quit his Likud Party and call new elections has surprised and shocked many Israelis. Mr. Sharon's political gamble has also caught many Palestinians off guard.

Mr. Sharon said Monday that the new party he is forming will follow the internationally-backed "Roadmap" peace plan, and that he does not envision unilateral Israeli pull backs in the West Bank.

Under the Roadmap peace plan, Palestinians are to end attacks on Israelis, and Israelis are to suspend settlement construction in the West Bank.

Saeb Erekat is the chief Palestinian Authority negotiator in talks with Israeli officials. He says Mr. Sharon's political gamble is extremely significant for Palestinians.

"I believe it is an eruption of a political volcano in Israel," he said. "I believe it is a restructuring of politics in Israel. I do not think this is happening because of economic or social program, it is happening because of us, the Palestinian-Israeli conflict. I have not seen anything more significant in Israel since 1967."

Many political observers in Israel and the Palestinian territories say the pending Israeli election campaign and Palestinian elections in January put the conflict between Israelis and Palestinians on hold.

Hanan Ashrawi, a long-time advocate for Palestinian rights and a member of the Palestinian Legislative Council, agrees, but she also says Mr. Sharon's political move could free up Israeli politics from what she describes as its current hardened positions.

"Ultimately it is healthy for Israel to do this, because the Likud was essentially just a competition between the extreme right and the more extreme right," noted Ms. Ashrawi. "The Labor Party was almost nonexistent and co-opted by Likud. So, now, the real political map will be drawn up, and there will probably be a period of a lack of external activity, or movement on the peace process. In preparation for the elections, I think, there will be heightened rhetoric to win votes, but in a post-election era, there probably will be a re-emergence of a peace camp."

Direct talks between Israelis and Palestinians were suspended last month, after a suicide bombing in Israel killed at least five Israelis. Israeli officials say they will not re-start talks until the Palestinian Authority does more to disarm militants who carry out attacks against Israelis.

The Palestinian Authority's Saeb Erekat says the Palestinian Authority has pledged to disarm militants, and he will be waiting to talk with Israeli officials when the elections are over.

"I hope that, once the dust settles down in Israel, that we will have a partner that is willing to re-engage in the end game, the end of conflict, in order to achieve a peace treaty between Israelis and Palestinians, which, I believe, is doable," said Mr. Erekat.

Mr. Erekat says Palestinians no longer view Israeli politics as a purely internal matter that has no effect on their lives. What happens politically in Tel Aviv or Jerusalem, he says, has an immediate impact on Palestinians in Jericho or Gaza, or anywhere else that Palestinians live.