Today's email from Honest Reporting clarifies Arafat's "terrorize you enemy" statement and the reporting that was done on it.
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On Saturday, May 15, while Israeli security was tackling 43 separate warnings of impending terror attacks, Yassir Arafat delivered this Koran-inspired statement to Palestinians on national TV:

Find what strength you have to terrorize your enemy and the enemy of God. And if they want peace, then let's have peace.

Arafat's executive order for more Palestinian terror (while peace talks are sidetracked) could not have been clearer. The Associated Press news report, however, used heavy-handed editorializing to soften up his words:

Arafat, whom Israel accuses of supporting militant groups, did not appear to be calling for new attacks on Israel. The passage in the Quran refers to the early Muslims' wars against pagans and is frequently invoked by Islamic leaders today to encourage strength in times of conflict.

AP would have readers believe that Arafat's call to 'terrorize' 'infidel Jews' was merely a metaphorical morale-booster, with no relevance whatsoever to the very real Palestinian terror that has claimed 1,000 Israeli lives in the past three and a half years, blocking any progress toward peaceful resolution.

The LA Times provides the actual source of AP's 'creative reading':

Palestinian Authority President Yasser Arafat, in a speech delivered at his battered West Bank headquarters and broadcast on Palestinian television, called on his compatriots to 'terrorize your enemy.' Arafat associates swiftly sought to explain the reference as a traditional Koranic verse that did not necessarily constitute a call to arms.

So let's understand the sequence of events: (1) Yassir Arafat calls for Palestinians to expand the bloody terrorism against innocent Israelis, (2) PA officials, concerned for bad press, scurry over to reporters and proffer a creative, 'alternative' understanding of Arafat's incitement, then (3) the world's largest wire agency, the Associated Press, presents the PA apologists' line as the proper way to understand Arafat, despite the fact that it defies literal meaning.

An objective report would have, at the very least, attributed the 'creative reading' to Arafat's 'associates.'

US Secretary of State Powell, for one, did not buy the Arafat apologists' line, immediately delivering this rebuke: "Mr. Arafat continues to make statements like the one he made yesterday about 'let's terrorize the region'...[this] makes it exceptionally difficult to move forward."

Arafat's speech on Saturday recalls a similar one delivered in a Johannesburg mosque in May 1994, when Arafat announced that, despite the Oslo initiative: "The jihad will continue... You have to come to fight and to start the jihad to liberate Jerusalem," and compared the accord with Israel to an ancient truce among Arabs violated shortly after it was signed. After discovering that a tape of the speech found its way into Western hands, Arafat called a press conference to explain that by jihad he had meant a peaceful crusade.