WASHINGTON — He didn't exactly get a green light to remove Palestinian leader Yasser Arafat — or seek one. But Prime Minister Ariel Sharon came away from Washington this week with indications the Bush administration will not punish Israel if new terror attacks lead the Israeli leader to take that drastic step.

Asked directly about the possibility Sharon might "expel" Arafat from Palestinian-controlled territory, Bush did not hoist any caution flags.

"I don't think Mr. Arafat is the issue," he told reporters on Monday. "I think the issue is the Palestinian people. And as I have expressed myself, I am disappointed that he has not led in such a way that the Palestinian people have hope and confidence."

The underlying message was "one more big terrorist attack, with a lot of lives lost, and it's goodbye Arafat," said Robert O. Freedman, a top Mideast expert. "Arafat hasn't stopped terrorism, and he hasn't given even the appearance that he's trying. So Bush is very frustrated."

The implicit signal to Sharon: The United States may not officially give the nod to Arafat's exile, but it won't protest too hard and too long if it happens, especially after any new terror attacks.

But Edward S. Walker, a former U.S. ambassador to Israel and now president of the Middle East Institute, warned against reading too much into this week's diplomatic smoke signals.

"The president certainly was very understanding of Israel's need to defend itself against terrorism," he said. "But I don't think he made any implicit comments that would suggesting he is accepting the expulsion or assassination of Arafat."

According to other sources, Sharon did not seek Bush's go-ahead for harsh action against Arafat — but continued making the case that terrorism will not be stopped until there is new Palestinian leadership.

"Sharon is too smart to seek a direct endorsement from the president," one longtime pro-Israel leader said, "but he wants to keep building the case so that if it happens, there won't be a dramatic reaction in Washington."

Bush also rejected Arafat's claim that he has initiated genuine reforms in his Palestinian Authority, Walker said.

"There are cosmetic changes, but they do not go far enough, in terms of governance or transparency," he said. "For many of us it is a disappointment — as it was for the president."

The next day, Sharon staged a triumphal march across Capitol Hill, where support for Israel is at an all-time, bipartisan high.

His meeting with the House International Relations Committee was interrupted by an aide who informed the Prime Minister about the bombing in Herzliya.

Sharon also used the meetings to introduce his new ambassador to Washington, Danny Ayalon.

At a 45-minute meeting with Jewish lawmakers and in sessions with congressional foreign policy committees, he proposed an international "peace committee" to oversee reforms in the Palestinian Authority as a precursor to statehood.

He didn't mention his campaign to marginalize Arafat; in fact, "he spoke as if Arafat didn't exist," said Rep. Gary Ackerman (D-N.Y), who attended. "He said that Israel does not have a partner for peace, but that he is hoping they will someday have one."

How will Congress respond if Arafat is shipped back to Tunis?

"If Arafat no longer existed, there would be enough trees planted to reforest the entire Middle East," Ackerman said.

Still, he predicted Israel will make no immediate moves to get rid of the Palestinian leader because "they are smart enough to know that Arafat would become even more popular, and that whoever replaces him would not be able to do anything Arafat didn't approve of."

In meetings with lawmakers, Sharon did not mention pending legislation imposing sanctions on the Palestinian Authority.

He also raised the issue of an impending international peace conference. While Sharon was the one who proposed the meeting, "he emphasized that when it comes to actual agreements with the Palestinians, there must be bilateral agreements," said Rep. Eliot Engel (D-N.Y.). "He made it clear Israel will accept an international conference, but not on the nitty gritty issues."

On Monday, President Bush threw more cold water on the idea of a conference — which the State Department continues to actively promote. In response to a question, he said that the time is not right for a summit because "no one has confidence in the emerging Palestinian government."

Engel added about Sharon: "He was very relaxed, and he was obviously very pleased with his reception here. He was at the top of his game."