On October 12, 2000, two Israeli army reservists, Vadim Norzhich and Yosef Avrahami were lynched in Ramallah. They had taken a wrong turn, and were set upon by a mob, enraged in particular by the Muhammad al-Durrah incident in Gaza. A frenzied crowd killed the two IDF reservists, mutilated their bodies, and dragged them through the streets. Later that afternoon, Israeli army carried out an air strike on Ramallah, demolishing the police station, Israel later succeeded in capturing and prosecuting some of those involved in the deaths.
In 2002, Ramallah was reoccupied by Israel in an IDF operation codenamed Operation Defensive Shield, which resulted in curfews, electricity cuts, school closures and disruptions of commercial life. Many Ramallah institutions, including government ministries, were vandalized, and equipment was destroyed or stolen. The IDF took over local Ramallah television stations, and social and economic conditions deteriorated. Many expatriates left, as did many other Palestinians who complained that the living conditions had become intolerable. The Israeli West Bank barrier has furthered Ramallah's isolation.
Yasser Arafat established his West Bank headquarters, the Mukata'a, in Ramallah. Although considered an interim solution, Ramallah has become the de facto capital of the Palestinian Authority, hosting almost all governmental headquarters. In December 2001, Arafat held meetings at the Mukata'a, but lived with his wife and daughter in Gaza City. After suicide bombings in Haifa, Arafat was confined to the Ramallah compound. In 2002, the compound was partly demolished by the Israeli Defense Forces and Arafat's building was cut off from the rest of the compound.
On November 11, 2004 Arafat died at the Percy training hospital of the Armies
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