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Menachem Begin, the fiery former prime minister who was wanted as a terrorist during Israel's fight for independence but later won a Nobel Prize for making peace with Egypt, died Monday. He was 78.

A giant in the Jewish nation's history, the emotional Polish Jew brought his country its only peace treaty with an Arab country.Thousands marched Monday afternoon as Begin's body was carried through Jerusalem and buried next to his wife, Aliza, at the Jewish cemetery on the Mount of Olives in east Jerusalem, the sector Israel annexed after capturing it in the 1967 Middle East War.

Begin's body, wrapped in a black-striped prayer shawl, was carried to the grave on a stretcher by aging comrades who fought with him for Israeli independence in the 1940s. There was no coffin.

His two daughters and son came with several of Begin's grandchildren. Daughter Hasia's face was twisted with grief, her sobs occasionally breaking the silence.

The solemn crowd ranged from Prime Minister Yitzhak Shamir and President Chaim Herzog to ordinary Israelis.Benjamin Begin, a member of Parliament who is considered a possible future prime minister, recited the Jewish Kaddish prayer over his father's body. The 48-year-old Begin wore an open-necked shirt, its collar ripped in the traditional Jewish gesture of mourning.

At the request of the family, the burial was simple, without eulogies.

Mourners dumped sacks of dirt into the grave, then converged on the grave and placed pebbles on it. A simple white sign with Begin's name in Hebrew was stuck in the earth.

With news of Begin's death, a crowd gathered outside the Tel Aviv home of his daughter, Leah, where Begin lived. Flags were lowered to half-staff.

Began had received his harshest criticism for keeping up the attack on Arab enemies, ordering the bombing of Iraq's nuclear reactor in 1981 and sending the army into Lebanon the following year to drive out the PLO.

In 1983, six years after leading the right-wing Likud bloc to power and one year after his wife's death, Begin resigned. He never explained his reasons to the public, and went into virtual seclusion.

An old friend, Yaakov Meridor, said Monday that Begin told him he resigned because "he couldn't stand the pace of losses" from Israel's daily casualties in Lebanon.

Begin died of heart failure at 3:30 a.m. at Tel Aviv's Ichilov Hospital. Begin's children were at his bedside, Israel army radio said. Begin, who had a history of heart trouble, had suffered a heart attack Tuesday.

The Cabinet convened a special session broadcast live on television: ministers stood with their heads bowed as Shamir praised Begin for "widening the circle of peace."

"We salute a great man of our people, a leader, a teacher, a guide, a prophet and dreamer, this great Jew, the sixth prime minister. He will remain an inspiration to us," Shamir said.

For making peace with Egypt, Begin shared the 1978 Nobel Peace Prize with that nation's former President Anwar Sadat, who was assassinated three years later by Islamic radicals.

President Bush said Monday that Begin's "historic role in the peace process will never be forgotten," nor will his "very courageous, farsighted role at Camp David."

Former President Jimmy Carter, who brokered the peace negotiations with Egypt, last week called Begin "the only Israeli leader who has been successful in bringing about major steps toward peace for his people."

"His great contribution would be that it took a Menachem Begin to bring the Arabs to the peace table," said Rabbi Marvin Hier, dean and founder of the The Simon Wiesenthal Center and a longtime associate of Begin.

"Anwar Sadat started it all, but only Begin had the power in Israel to make peace," Hier said.

In making peace, Begin sacrificed the Sinai Desert, the largest territory seized in the 1967 Middle East War. But he held onto other captured territories, annexing Syria's Golan Heights and populating the West Bank with Jewish settlers.

Begin was born Aug. 16, 1913, in the then-Polish city of Brest-Litovsk. He studied law and joined the right-wing Zionist Betar movement.

In 1939, he married Aliza Arnold, daughter of a wealthy Jewish family. A few months later, the Nazis invaded, and they separated. Begin fled to Lithuania and was sent by the Soviets to prison in Siberia for his Zionist activities. He made it to Palestine in 1942, where his wife was waiting.

There, Begin became a fugitive. He was wanted by the British for the bombing in 1946 of the King David Hotel, which killed nearly 100 Jews, Arabs and Britons.

After Israel became a state in 1948, Begin was voted into Israel's first parliament. But it wasn't until 1977 that the Likud bloc was swept into office.