JERUSALEM, July 24 (JTA) — Relations between the Bush administration and Ariel Sharon’s government moved toward a critical test this week.

At the weekend summit of the G-8 leading industrialized nations in Genoa, Italy, President Bush for the first time backed the international community’s push to send monitors to the strife-torn West Bank and Gaza Strip.

Moreover, reports citing Israeli and Palestinian sources indicated that Bush is willing to have U.S. forces undertake the monitoring.

Sharon long has opposed the idea of international observers, saying Palestinian militants would use them as cover for continued attacks on Israel.

But on Monday, Sharon made an important departure, indicating that he would be ready to discuss with Washington the nature and deployment of such a U.S.-staffed contingent.

The Palestinians trumpeted the development as a major diplomatic achievement for Palestinian Authority President Yasser Arafat, who for months has demanded international “protection” from Israeli “aggression” against the Palestinians.

Sharon also made it clear this week that he is reluctant to escalate the hostilities.

He said this despite mounting political pressure from within his own Likud Party, and despite fears abroad that Israel was only waiting for the G-8 summit to end to launch a major assault on the Palestinian-ruled territories.

“I will not drag this nation into war just because some people are stridently shrieking,” the prime minister said Monday.

Sharon was making a thinly veiled reference to the booing he received Sunday night at a session with some 2,500 members of his Likud Party’s Central Committee. He was heckled by party members who disagreed with his policy of restraint in dealing with Palestinian terrorism.

During his speech, Sharon tried to convince the central committee that he has not gone soft on terrorism.

Former Prime Minister Benjamin Netanyahu, who also addressed the delegates, refrained from directly attacking Sharon but presented himself as better able to fight Palestinian terror. Netanyahu is considered a challenge to Sharon’s leadership of the party, even though scheduled elections are two years off.

Political analysts were unanimous in describing Netanyahu as the clear winner of the evening’s fight.

While professing to urge unity, Netanyahu delivered a withering attack on Sharon’s policy of restraint.

“The difference between me and you,” Sharon told his opponents, raising his voice above their yelling, “is that while you yell, I fight terrorism. Yelling is easy. But the responsibility is on me.”

Brave words. But given the palpably hawkish mood of the central committee, there were many in the Israeli political community who believe that Sharon would not be able to withstand the pressures from his own ranks and that he ultimately would increase the scope and intensity of military confrontation with the Palestinians.

Sharon took to the airwaves the next day in an effort to refute such speculation.

He poured scorn on the “shriekers” and sought to assure a worried public that he is not about to give up his “policy of restraint.” As part of that policy, he insisted, Israel would continue to target Palestinian militants directly involved in terrorism.

Ironically, Sharon’s apparent unpopularity among party activists may have the unintended effect of strengthening his unlikely but remarkably resilient alliance with Foreign Minister Shimon Peres of the Labor Party.

Given the mood of the Likud Central Committee, Sharon is in no rush to hold early elections, which would be preceded by primaries for the Likud party leadership.

Meanwhile, on the diplomatic front, Sharon, Peres and Defense Minister Benjamin Ben-Eliezer are maneuvering to obtain the most comfortable — or least uncomfortable — format for bringing international peacekeepers to the region.

Israel’s original resistance to any outside presence appears unable to withstand the weight of world opinion manifested at Genoa.

Israel’s fallback position, which the ministers are now accepting, is to ensure that the international presence includes only forces from friendly countries, preferably the United States alone.

Sharon told the Knesset’s Foreign Affairs and Defense Committee on Monday that he would be prepared to allow more CIA officers to operate here.

Leaked reports surfacing this week, however, envisage a broader deployment, possibly of American military and civilian personnel working closely with Israeli and Palestinian representatives.

The purpose, enunciated at Genoa by the G-8 leaders and their foreign ministers, is to get on track the “Mitchell Process,” the series of measures laid out earlier this year by an international panel led by former U.S. Sen. George Mitchell.

Among those measures is a freeze on all Israeli settlement activity — even construction work required for the natural growth of existing settlements — in the West Bank and Gaza Strip. The widespread presumption abroad, and in some Israeli circles, is that Sharon will not or cannot allow himself to reach that point because of domestic political pressures.

The prime minister meanwhile has reiterated that he will be prepared to make painful diplomatic concessions if a cease-fire and sustained period of quiet are achieved.

Any presence representing the international community could, arguably, serve to ease tensions and head off clashes or contain them before they expand dangerously.

However, many Israelis — including leading doves like Peres — fear that the peacekeepers will prove as ineffective at containing militants’ activities as they were in Lebanon, but will have no problem documenting the Israeli army’s response.

In any case, the situation on the ground remains highly explosive.

Israeli security officials managed to prevent a suicide bombing before it could wreak havoc in downtown Haifa on Sunday.

If the outcome had been different, all hope of a helpful contribution by the international community could instantly have been washed away in a new wave of blood.

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