Rabin Faces Test as Troops Surround University : Mideast: Soldiers try to force group of armed men from campus. Palestinian students barricade themselves in protest.

In a confrontation that pits the new Rabin government against the Palestinian leaders it hopes to draw into accelerated peace talks, Israeli troops kept a major Palestinian university and at least 1,000 students under siege Wednesday to force a group of armed men inside to surrender.

Troops surrounded the walled compound of An Najah University overnight after soldiers outside the campus arrested two fugitives and said there were gunmen inside the university who reportedly sought to influence a student election. Students barricaded themselves on the campus and refused to come out until the troops both withdrew and promised to let everyone leave freely.

A Palestinian hospital said two bystanders were wounded during the arrests; Israeli officials said there were no injuries.

Israeli authorities prohibited U.N. deliveries of food to An Najah, barred journalists and put the university city of Nablus, with its population of 120,000, under curfew to suppress protests that briefly erupted in support of the campus rebellion.

Both sides issued positions that appeared to preclude compromise. The army, through Lt. Gen. Danny Rothschild, commander of the West Bank and Gaza Strip, said that anyone leaving the campus must submit to an identity check. He asserted that the armed group was responsible for attacks on Israelis and on Palestinians suspected of collaborating with Israel. Palestinians say there are 16 gunmen on the campus.

“Those people who are armed inside the university have already proved willing to kill,” Rothschild said. “We reserve the right to stop suspects.”

Palestinian leaders insisted that the army give in to the students’ wishes and withdraw a short distance from the modern hillside campus. Top West Bank leader Faisal Husseini traveled to Nablus to mediate the standoff. The Palestinians raised the issue to a political level, tying it to efforts to push the Mideast peace talks forward.

Secretary of State James A. Baker III is scheduled to arrive in Israel on Sunday and press both the Israelis and the Palestinians to make concrete compromises.

“The peace process is at stake. I hope that the Israelis and Americans recognize this,” Palestinian leader Sari Nusseibeh said at a Jerusalem press conference. Nusseibeh added that if it were true that armed Palestinians were holed up at An Najah, the army could pursue them later but that the campus siege should be lifted.

In the early evening, Palestinian spokeswoman Hanan Ashrawi led a convoy of European consuls from Jerusalem to Nablus, but they were turned back at the outskirts of the city by troops manning a roadblock.

Palestinians in Nablus say armed members of a group called the Black Panthers entered the campus Tuesday to lobby on behalf of student council candidates who favor the Palestine Liberation Organization. Curiously, although many Black Panthers oppose Middle East peace talks, the list of candidates supported by this group was pro-negotiation.

Rothschild said the army has “information” about the armed men and accused them of intimidating student voters and, essentially, holding the entire campus hostage. “I am sure a lot of students want to go home and study, but they are afraid,” the general said.

The Black Panthers, a name used by small cells throughout the West Bank and Gaza Strip, are composed of fugitives who believe they are on army “hit lists.” They have taken responsibility for executing Palestinians they suspect of informing or cooperating with the Israeli secret police and military government.

For the past year, the army has been pursuing Black Panthers relentlessly, using undercover squads that on several occasions have shot and killed fleeing suspects.

Rothschild has been communicating with the student body through members of the Nablus Chamber of Commerce and Sami Kilani, a Nablus-based member of the Palestinian delegation to the peace talks. He was careful to add that the army had no intention of storming the campus and implied that hunger could end the confrontation. “If anyone is hungry, they can go to a restaurant in town,” he said.

The need for a curfew appeared to undermine the claim that the armed groups have no support among the population at large. The Black Panthers have been criticized by Palestinians for executing fellow Arabs and splitting Palestinian society. Yet they are heroes to many young people, some of whom can be seen lacing the cuffs of their pants tightly around the ankle in imitation of the Panthers--who bind their pants legs to ensure they don’t trip when fleeing.

Nablus looked like a ghost town Wednesday, with stores closed and traffic virtually nonexistent. “I think the soldiers mean it,” said an official of a Marxist PLO faction who lives across a valley from the campus. “They are not going to give in.”

His wife, a professor at An Najah, added, “We will see if (Prime Minister Yitzhak) Rabin makes a big deal of this or if it ends with good will.”

The incident is a test not only for Rabin, who was in his second day in office, but also for moderate Palestinian leaders who intervened.

Rabin has pledged to use force against armed Palestinians, especially to ensure the safety of settlers who live in the West Bank and Gaza. To allow Palestinians identified as “terrorists” to avoid arrest would be a difficult political step to take and would open him to fierce right-wing criticism.

Palestinian leaders like Husseini, the head of the negotiating team, have been criticized for promoting peace talks even while the previous Israeli government rapidly expanded settlements. There have been no appreciable gains for the Palestinians in the talks.

Bloodshed or arrests will undoubtedly undermine Husseini’s efforts to show he is a leader who can deliver. He phoned Rabin early in the crisis to try to get an army withdrawal, but Rabin referred him to a local commander.