Spat with US over: Sharon

JERUSALEM - An aide to Ariel Sharon has voiced confidence that a dispute with the United States was over after the Israeli Prime Minister retreated from suggestions that Washington was appeasing the Arabs at Israel's expense.

"I think this whole thing is behind us," the aide, Zalman Shoval, told CNN yesterday.

In the West Bank city of Hebron, Israeli forces killed two Palestinians after pushing about 1 km deeper into a Palestinian-controlled area seized in an incursion on Saturday, Palestinian officials said.

An Israeli Army spokeswoman said soldiers "shot and hit two armed terrorists who were spotted firing at a military position".

Last night an explosion rocked a rural area in northern Israel wounding at least two people, apparently Palestinian suicide bombers.

After a rare rebuke from the White House on Saturday, Sharon praised President George W. Bush's anti-terrorism drive, which includes efforts to rally Arab states behind a coalition to respond to last month's attacks in the US.

"The Prime Minister requested to forward to Mr Bush his appreciation of the bold and courageous decision of the President to fight terrorism. Israel fully supports this position and cooperates with it," Sharon's office said.

It was a retreat from Sharon's blunt comment on Friday vowing not to accept the fate of Czechoslovakia - sacrificed by Western powers for a brief peace with Nazi Germany - and telling Washington not to "appease the Arabs at our expense".

Bush left it to his spokesman to call those remarks "unacceptable" and assure Israel of US loyalty.

Trying to heal the rift, Sharon expressed his "appreciation of the deep friendship and special relations between the US and Israel, and especially President Bush".

Israeli Foreign Minister Shimon Peres said it was time the allies put the dispute behind them. "We must rise above the words that were spoken and return to basics. We are in one camp, we are fighting the same war and we are moving in the same direction."

Israel is the top recipient of US aid, estimated at $US3 billion ($7.2 billion) a year. But it has watched warily as Bush recruits Arab and Muslim support for his global campaign against terrorism.

Sharon's words also came after Bush said last week that part of his long-term vision for the Middle East peace was a Palestinian state. Bush said it had "always" been his policy.

Nabil Abu Rdainah, an adviser to Palestinian President Yasser Arafat, said the Palestinian Authority remained committed to a ceasefire that has been battered by violence. The authority "would not allow anyone from the Palestinian side to violate this position".

Palestinian police said they arrested Abbas al-Sayed, a spokesman for the militant Hamas organisation in the West Bank city of Tulkarm. They did not say why they took him into custody. Hamas, which has killed dozens of Israelis in suicide attacks, confirmed the arrest.

Israel has said Arafat has been ignoring its calls, echoed by the United States, to arrest Muslim radicals threatening the truce. "Arafat needs to decide whether he is the prisoner of Hamas and Islamic Jihad or whether Hamas or Islamic Jihad will sit in his prisons. There is no middle road," Peres said.

* In an interview with Germany's Bild am Sonntag, Peres said he believed a Palestinian state would be created thanks to a compromise which the two sides must make. "We must arrive at a historic compromise with the Palestinians. A Palestinian state will be created."

While recognising Arafat as the leader of the Palestinian people, Peres exhorted him to put an end to the violence.

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