Arab plan calls for recognition of Palestinian state, then negotiating borders, source says

<br>JERUSALEM (AP) _ In a bid to revive Mideast peacemaking, three leading Arab countries will propose establishing a Palestinian state within the next year, and then leaving two years to establish the

Sunday, July 14th 2002, 12:00 am

By: News On 6

JERUSALEM (AP) _ In a bid to revive Mideast peacemaking, three leading Arab countries will propose establishing a Palestinian state within the next year, and then leaving two years to establish the final borders and other contentious issues, an Arab diplomatic source said Monday.

The plan appears to incorporate the central principle of the ``provisional'' Palestinian state proposed last month by President Bush, and will be introduced at a diplomatic gathering beginning Tuesday in New York that includes diplomats from the United States, the United Nations, Europe and Russia.

With Israel's army occupying most Palestinian cities and Palestinian militants attempting attacks daily, prospects for major breakthroughs appear dim. Also, the United States and Israel are insisting that Palestinian leader Yasser Arafat be replaced before full-scale peace efforts resume, a demand Arafat and the Palestinians reject.

Still, the three Arab nations _ Egypt, Jordan and Saudi Arabia _ are attempting resuscitate the collapsed peace talks with a plan to which the source said the Palestinians have agreed.

In the first stage, the Palestinians will hold January elections for a leader and a new parliament as part of a broader reform effort, the source said. Soon after, they would seek United Nations recognition for a state based on the borders that existed before the 1967 Mideast war, he said. The term ``based on'' leaves an opening for border adjustments, flexibility the Arabs have resisted up to now.

If the U.N. recognized such a Palestinian state, Israelis and Palestinians could then negotiate the precise borders and other tough issues. A one-year deadline would be set for negotiating an agreement, and the deal would be implemented in a second year, the source added.

The source also said the Palestinian Authority was planning to launch a new dialogue with militant groups to persuade them to agree to a unilateral cease-fire _ first inside Israel and then in the West Bank and Gaza as well.

No reaction was available from Israel. Raanan Gissin, a spokesman for Israeli Prime Minister Ariel Sharon, said Israel would examine it after it is formally presented.

Israeli Foreign Minister Shimon Peres and Palestinian negotiator Ahmed Qureia held secret talks last year that also included the idea of quickly establishing a Palestinian state, and setting aside the thorniest issues. However, the plan was never formally introduced amid the fighting.

In a major Mideast speech on June 24, Bush said the Palestinians would first have to introduce sweeping reforms, including the dismissal of the current leadership. After that, he held out the prospect of a provisional Palestinian state that could be followed by a full-fledged one, possibly within three years.

Palestinians want a state as soon as possible, and have sought a deal that would create one along the 1967 borders, which include all of the West Bank and the Gaza Strip, with a capital in east Jerusalem. Privately, Palestinian officials have said they would be willing to discuss minor modifications to the 1967 borders.

In the past, Palestinians expressed skepticism about the vague idea of a provisional state and have been wary of any interim agreements that leave the borders and other questions unanswered.

The Palestinians rejected an offer by the previous, more moderate Israeli government that would have established a Palestinian state in all of Gaza and more than 90 percent of the West Bank, with a foothold in east Jerusalem. A major stumbling block then was the future of Palestinian refugees.

Sharon has said that Israel will never pull back to the 1967 borders, which he and other Israeli leaders say would leave the country too vulnerable at its narrowest point.

The Israeli leader also says he does not believe a final agreement is possible at present, and the most to be achieved is a long-term interim arrangement that would be in place for years, perhaps even a decade or more, before a final peace agreement is reached.

Meanwhile, Israeli leaders reiterated their opposition to dealing with Arafat.

``According to what we believe, Yasser Arafat doesn't work for the interest of his people. He was and still is the main problem,'' Israeli Defense Minister Binyamin Ben-Eliezer said in Alexandria, Egypt, after a meeting with President Hosni Mubarak.

Mubarak, who has criticized Israeli and U.S. attempts to sideline Arafat, said he has been meeting with Ben-Eliezer and other leaders of Israel's moderate Labor Party so that ``Egypt will not be excluded from efforts to achieve peace.''

Mubarak complained that Sharon was unresponsive to suggestions he sent last week through a personal envoy and described him as ``very rigid.''

In renewed violence Monday, Israeli soldiers threw two stun grenades into a factory while pursuing Palestinians who were breaking the curfew in the West Bank town of Qalqiliya, the army said.

The stun grenades sparked a fire, driving about 20 people out of the building, Palestinian witnesses said. After the fire was extinguished, the burnt body of one man was found inside, the army and Palestinian witnesses said.