This is bad news for the region, but it may provide cover for Israel to remove Arafat once and for all.
RAMALLAH, West Bank (AP) – Palestinian Prime Minister Mahmoud Abbas, increasingly unpopular and worn out by a power struggle with Yasser Arafat, submitted his resignation Saturday, dealing a serious blow to a U.S.-backed peace plan.
Israeli Prime Minister Ariel Sharon’s office warned it would not agree to Arafat heading the Palestinian government, and a senior Israeli official demanded that Arafat be sent into exile.

W. has already said, through his spokespeople Condi and Powell, that the Israelis may not touch a hair of Arashat’s head.
I don’t know why they don’t just drop a bomb on his Ramallah digs. They’d get him, plus 200 of the worst terrorists in the territories.
Sigh.