Arafat extends the olive branch to Israel

Palestinian leader Yasser Arafat called yesterday for "reconciliation" with Israel and renewed his condemnation of attacks on civilians in a special session of parliament.

"I extend my hand in reconciliation to the Israelis to resume the peace process launched in Madrid in 1991," said Arafat, who has frequently called for a resumption of talks.

He likewise called for Israel and the Palestinians to be "good neighbours".

"We want to live as neighbours. Let us find a common ground for the security we desire, which you desire, for our common security," the Palestinian leader said.

The veteran leader, looking serious as he read out his speech before MPs in the West Bank town of Ramallah, also condemned attacks on civilians "anywhere in the world".


"I condemn terrorist operations against civilians anywhere in the world," he said.

Israel and the Palestinians have been locked in a cycle of bloodshed since a Palestinian uprising for independence began in September 2000.

Mr Arafat made his remarks in a speech announcing a new cabinet.

His previous cabinet quit last month after sensing it would lose a confidence vote in the reform-minded Palestinian Legislative Council which has criticised Arafat's government amid the uprising.

The new cabinet, if approved by parliament next week, will serve until presidential and legislative elections on January 20, 2003.

Meanwhile the Israeli Prime Minister, Ariel Sharon, faced a deepening rift with his main co-alition partner over funding for Jewish settlements on Monday, raising the prospect he will be forced to call early elections.

The impasse with the Labour Party was Mr Sharon's most serious political challenge since he came to power 19 months ago in the early stages of a Palestinian up-rising that he has failed to quell de-spite campaign pledges to restore security.

The Labour leader and De-fence Minister, Binyamin Ben-Eliezer, said this week his centre-left party was certain to vote against Israel's 2003 budget un-less Mr Sharon shifted some money earmarked for settle-ments to social programs.