Palestinian cabinet deal sets stage for peace plan

2.45pm

RAMALLAH, West Bank - Palestinian President Yasser Arafat and his prime minister-designate Mahmoud Abbas agreed on a new reform cabinet on Wednesday, defusing a power struggle and setting the stage for a new Middle East peace drive.

The United States and European leaders hailed the agreement and signalled Washington would unveil a long-awaited peace plan, designed to create an independent Palestinian state and lasting security for Israel, as soon as the cabinet deal was enacted.

"Arafat and (Abbas) have sorted out their differences," Tayeb Abdul-Rahim, a senior aide to Arafat, said after last-minute mediation by an Egyptian envoy finally broke a five-week impasse before a self-imposed midnight deadline.

Under the deal, Abbas would also serve as interior minister, while former Gaza security chief Mohammed Dahlan would be in charge of internal security, Palestinian officials said.

Arafat had rejected any role for Dahlan, whom he sacked last year, but apparently yielded to pressure from the peacemaking "Quartet" led by the United States which deemed Dahlan a key to curbing militants opposed to negotiating peace with Israel.

The United States welcomed the deal. It has said it will unveil the "road map" peace plan when Palestinians install a government committed to democratic reforms, purging corruption and ending attacks by militants waging a 30-month-old uprising against Israeli occupation.

Washington and the European Union view Abbas, a former peace negotiator and perceived moderate, as critical to the reforms they hope will encourage Israel to withdraw tanks and troops from Palestinian cities and curb Jewish settlement construction.

The "road map" prescribes a series of such steps leading by 2005 to a Palestinian state in the West Bank and Gaza Strip, territories Israel occupied in the 1967 Middle East war.

The Palestinian parliament will meet "probably Sunday or Monday" to ratify the new cabinet of up to 24 ministers, said Nabil Shaath, planning minister in Arafat's outgoing cabinet. He said he would be foreign minister in the new one.

Abbas shook hands with Arafat in the president's office to seal the pact. A grinning Arafat emerged arm-in-arm with Abbas and Egyptian mediator Omar Suleiman but none spoke to reporters.

Shaath said Dahlan, answering to Abbas, would run policing and internal security while Arafat would retain ultimate authority on intelligence and "general", or national, security.

Palestinian sources said the yet-to-be-finalised list kept reformist Salam Fayyad as finance minister and added two Arafat critics to the cabinet, one replacing a presidential loyalist as justice minister.

Arafat, a 74-year-old former guerrilla leader, has wielded unchallenged power in Palestinian politics since the 1960s and it was unclear how much leeway Abbas would have to reform murky security services and financial practices.

"This is a win-win game. Nobody won, nobody lost. This agreement will pave the way for the new cabinet to start its hard work and come back to the peace process," said Shaath.

But Mahmoud Zahar, a senior leader of Islamic militant group Hamas, denounced the deal as "submission to diktat by outsiders". Another Hamas official, Abdel Aziz al-Rantisi, said resistance to Israel would continue.

Israeli Prime Minister Ariel Sharon did not react directly to the agreement but said his government would make every effort to reach peace with the Palestinians.

"Of course, it is important that on the other side there will be a person who wants to stop terrorism and seeks peace," Sharon said in remarks carried by Israel Radio.

Israel and the United States have demanded Palestinians sideline Arafat, whom they blame for much of the violence in the uprising for independence, before peace talks can resume. Arafat has denied the accusations.

In Washington, State Department spokesman Richard Boucher said the United States "looks forward to working with (Abbas) and with the Israelis as they begin the hard work of ending the violence and returning to a political process".

British Prime Minister Tony Blair, who has pressed US President George W Bush to make a firm commitment to Middle East peacemaking, was among European leaders to praise the deal.

"There is now every chance we can make progress," Blair told reporters after meeting Spanish Prime Minister Jose Maria Aznar.

Both leaders, who held phone talks with Bush during their meeting, predicted Washington would soon produce the peace plan, on behalf of the Quartet mediation group that also includes the European Union, Russia and the United Nations.

- REUTERS