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SLUG: 2-306011 Israel / Palestinians DATE: NOTE NUMBER:









INTRO: Israeli and Palestinian negotiators have failed to reach agreement on which West Bank towns are the next to be returned to Palestinian control. From Jerusalem, Larry James reports on the impasse, which developed after a four-hour meeting Wednesday night.

TEXT: Israel says Jericho and Qalqilya should be next on the list of towns returned to Palestinian control. The Palestinians want Hebron and Ramallah.

The disagreement emerged following the meeting which took place at a location outside Jerusalem.

Israel is believed to have reservations over handing over Ramallah, because of its symbolism as the residence of Yasser Arafat and the seat of the Palestinian Authority government.

The Palestinians believe the transfer of control of Jericho would be of little consequence, because there is no significant Israeli presence in the town.

A further exchange of control of West Bank cities and towns has been expected ever since Israel withdrew from most of the Gaza Strip and the West Bank town, Bethlehem, a month ago. But the step has been delayed because of Israel's belief that the Palestinians are not acting aggressively enough against security threats. Israel Radio reported Thursday that Palestinian militant groups are taking advantage of the temporary ceasefire they agreed to last month to re-arm -- specifically by stockpiling missiles that could be used to fire on Israeli cities and towns.

Before the Wednesday night meeting, Palestinian security chief Mohammed Dahlan rejected Israeli and American demands to dismantle terrorist organizations. He says "the terror infrastructure is an Israeli concept" that is unacceptable to the Palestinians. He says Palestinian security forces will not arrest activists and will not confront them, as long as the cease-fire is intact.

Meanwhile, President Bush says he believes that the "road map" peace plan is making good progress. Speaking at a White House news conference, Wednesday, Mr. Bush said the goal of the creation of a Palestinian state by 2005 is still "realistic."

He also expressed confidence in Palestinian Prime Minister Mahmoud Abbas, saying he is committed to seeing the establishment of a peaceful Palestinian state.

Mr. Bush added that Israeli Prime Minister Ariel Sharon is also committed to the existence of a Palestinian state. Mr. Bush says Mr. Sharon knows the United States will not compromise the security of Israel, to achieve that goal. (signed).


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