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JERUSALEM — Whatever else the renewal of the intifada is doing, it's unifying Arab leaders against Israel and causing them to cut off any diplomatic links they may have had with the Jewish state.

As of this week, no Arab country has an ambassador in Israel.

Egypt on Tuesday became the latest to recall its ambassador to Israel, longtime envoy Mohammed Basiouny, because of the ongoing violence in the West Bank and Gaza Strip — a sudden switch from its role of mediator in the regional conflict.

Egyptian Foreign Minister Amre Moussa cited "Israeli aggression" for the decision, adding that it reflected Cairo's "extreme displeasure" with the way Israel was treating the Palestinians.

The last time Egypt recalled its ambassador was during Israel's 1982 war in Lebanon.

Jordan, the only Arab country besides Egypt to have signed a peace treaty with Israel, has delayed sending its newly appointed ambassador to Tel Aviv to protest what it also sees as Israeli aggression against the Palestinians.

The ongoing violence has also prompted Morocco, Qatar, Tunisia and Oman to sever the low-level economic links that each established with Israel during more promising times in the Israeli-Palestinian peace process.

Egypt's announcement came one day after Israel launched missile strikes on Gaza City to retaliate for a deadly terror attack hours before on an Israeli school bus elsewhere in Gaza.

Egypt's recall of Basiouny — which could lead to an eventual downgrading of relations between the two countries — caught the Israeli Foreign Ministry by surprise and prompted diplomatic scrambling to understand its implications.

Israeli officials expressed disappointment with Cairo's decision but said they do not believe the development indicates the Israeli-Palestinian violence was heading toward a wider conflict.

Israeli President Moshe Katsav said it was reasonable for Egyptian President Hosni Mubarak to want to consult with Basiouny.

But Foreign Minister Shlomo Ben-Ami called the move "very grave," and said it would impede Egypt's ability to play a role in peacemaking.

Moussa later dismissed Ben-Ami's comment, saying Egypt "shall participate in the peace process. The peace process has no tickets that Israel issues."

Israeli officials said Tuesday they hope to persuade Egypt not to recall Basiouny. They also said they had no plans to recall the Israeli ambassador in Cairo.

An Islamic summit held last week in Qatar "invited" Arab and Muslim states to sever all relations they have with Israel but left it to the individual capitals to decide whether to follow this suggestion.

The Egyptian move threw into sharp relief the gulf between expectations and realities as the Israeli-Palestinian crisis lurches from incident to fatal incident.

Only two days earlier, former Israeli President Ezer Weizman and the prime minister's security chief, Danny Yatom, returned from talks with Mubarak saying they believed he now better understood Israeli concerns in the conflict.

And just hours before Cairo's announcement Tuesday, Israeli sources had been saying that Mubarak would make a last-ditch effort to head off a looming escalation.

They said he had summoned Palestinian Authority President Yasser Arafat for urgent talks Tuesday, following an impassioned telephone call from Weizman, who assured Mubarak that Arafat is capable of reining in the violence if wants to.

Palestinian sources said Arafat had not been summoned but rather had been planning a trip to Cairo on Tuesday, one of the frequent visits he makes to the Egyptian capital.

In any event, Arafat decided not to go, citing the situation in the wake of the Israeli missile strikes the night before.

Israeli hopes of an 11th-hour Egyptian mediation effort seemed to have been built on sand, and the situation looked bleaker than ever.

The change in atmosphere was as swift as it was dour.

Indeed, over the weekend, the situation had looked relatively promising.

Last Friday, Arafat ordered Palestinian gunmen to stop firing at Israelis from Palestinian-ruled areas.

Some Israeli army officers were skeptical, saying it was possible Arafat had given implicit approval for Palestinians to shoot from areas under Israeli control.

This criticism, however, seemed for a time to be disproved by events on the ground.

Israel Defense Force commanders throughout the West Bank and Gaza noticed a drop in the number and intensity of shooting incidents following Arafat's announcement.

True, one serious episode took place in Gaza on Saturday, when a Palestinian police officer attacked an army installation, killing two soldiers before he himself was shot dead by Israeli troops.

But apart from that, the violence appeared to be subsiding.

At the same time, the diplomatic track seemed to pick up in intensity.

U.S. Middle East peace envoy Dennis Ross held separate talks with Israeli and Palestinian officials, and signals from Washington suggested that Barak and Arafat had agreed that President Clinton should try to convene another three-way summit sometime next month.

It was to be the outgoing president's final effort to salvage the peace process in which he has invested so much time and energy.

There were even hints from Israel that it might soften its opposition to the Palestinians' demand that the United Nations dispatch an international observer force to the West Bank and Gaza as part of an effort to stop the violence.

Optimists suggested that Clinton could cobble together an agreement that would award the Palestinians their state in more than 90 percent of the territories, with the issue of Jerusalem sovereignty left for subsequent negotiations.

Under that agreement, Israel would recognize the new state. The Palestinians, for their part, would pledge that the remaining issues would be resolved only by peaceful diplomatic means.

The package would be less than the "end of conflict" that Barak had hoped to bring home from Camp David in July. But the hope was that he would be able to drum up a majority for the deal among the Israeli electorate.

Now, after Israel's helicopter strike on Gaza City, the Palestinians' demand for the protection of a U.N. force has grown more strident.

And Israel, for its part, has reverted to its refusal to allow "the internationalization of the conflict," as Israeli officials describe the Palestinian demand.

With hopes of a return to the negotiating table dimmed again, attention is focusing on the imminent advent of the Muslim holy month of Ramadan, which begins this week.

Ramadan traditionally is a time of prayer.

But in the past weeks, Israel has barred all but elderly Palestinians from praying on Jerusalem's Temple Mount compound.

Experts say a continued policy of restricting entry could trigger further violence in Jerusalem and throughout the West Bank and Gaza.