Israel's bold strike in Gaza City has embarrassed Arab leaders into dropping talk of peace and will force them to sound a tough note at their summit in Tunis on Monday, even if it is only to defuse popular rage, analysts said.

Arab governments had discussed relaunching the Saudi-sponsored peace initiative, but Israel's assassination of Hamas spiritual leader Sheikh Ahmed Yassin has turned the agenda upside down.

"It could be embarrassing to have a peace initiative" emerge from the summit, Saudi-based political scientist Turki Hammad said.

"Maybe we have to wait a long time before we renew any peace initiative".

Hundreds, even thousands of people have rallied in Egypt, Iraq, Jordan, Lebanon, Libya and other Arab countries to protest the killing and denounce the repeated Arab failure to defend the Palestinians.

While some have called for Arab states to take military action or open borders for holy warriors to fight Israel, others demand that Egypt and Jordan, which have diplomatic ties with the Jewish state, expel Israeli ambassadors.

Hammad, retired as a professor at King Saud University in Riyadh, said by telephone the Saudi initiative never had much chance anyway because Israel rejected it from the start.

The initiative, adopted at the Beirut summit in March 2002,called for all Arab states to normalise relations and security with Israel in exchange for a full Israeli withdrawal from lands it occupied in the 1967 Middle East War.

However, the plan was forgotten when Israel invaded the West Bank as it was adopted and efforts to relaunch it have been overshadowed by Sheikh Yassin's killing on Monday.

Israel defended both moves as responses to Palestinian "terror".

Though the killing has pushed the Palestinian-Israeli conflict to the top of the agenda, an Arab diplomat said it is not clear what the Arab leaders will discuss or what stand they will take.

The killing has "complicated" matters, according to the diplomat, who asked not to be named.

Arab foreign ministers will probably discuss the fate of the Saudi initiative, other peace moves and ties with Israel and the Palestinians when they meet in Tunis Friday and Saturday to prepare the summit agenda, he said.

"The assassination of Sheikh Yassin will affect relations somehow" between the Arab states and Israel, the diplomat acknowledged.

"It's a setback for the peace process".

It has already affected ties with Egypt, which along with Jordan has signed a peace treaty with the Jewish state.

The day Yassin was assassinated Egyptian President Hosni Mubarak cancelled plans to send a delegation to the Israeli Knesset this week to attend the 25th anniversary celebrations of Egypt's peace treaty with Israel.

Mubarak said the killing "aborts all efforts" being made to revive the Arab-Israeli peace process.

When Israeli Foreign Minister Silvan Shalom visited Cairo earlier this month, the Egyptian government promised to ensure security on the border with the Gaza Strip if Israel acts on a unilateral plan to withdraw from most of it.

Prime Minister Ariel Sharon has vowed to implement a "disengagement plan" if no progress is made toward implementing the internationally drafted peace roadmap, which calls for a Palestinian state living in peace alongside Israel.

Although Egypt would welcome any withdrawal from Palestinian territory, it fears Sharon will do little beyond pulling settlers out of Gaza and transferring them to the West Bank, while ignoring the Palestinian Authority.

Hammad, the Saudi analyst, said he does not expect the Arab leaders in Tunis to do much more than issue an appeal to the United States, Israel's main ally and the main broker in the peace process.

"They will call for more of a US role in solving the problem," Hammad said.

Though such an appeal would hardly change the situation, he said, it would be aimed more at defusing the anger of their own people who "don't expect anything from" the Arab leaders anyway.

"All Arab summits achieve nothing. It's just to make a point," he said. – Sapa-AFP.