Yasser Arafat and his Fatah party have started putting together a new Cabinet and are dictating terms to the incoming premier in a reflection of Arafat's improved standing among his people following Israel's threat to expel him.

Supporters gather on horse-back near the entrance of the compound of Palestinian leader Yasser Arafat, seen on poster, in the West Bank town of Ramallah Sept. 18, 2003. Israel has rebuffed Arafat's recent cease-fire offers, saying it will press ahead with its campaign against terror suspect until Palestinian forces begin dismantling the Hamas and Islamic Jihad groups.  [AP]

The Fatah Central Committee met for six hours late Thursday, discussing a working plan for the new government to be headed by Ahmed Qureia. Participants said the makeup of the Cabinet was discussed in general, but a list of ministers was not drawn up.

Arafat's central role in forging the new governing team flew in the face of criticism from Israel and the United States, who charge that he is tainted by terrorism. Both nations are boycotting him and want him sidelined from involvement in diplomacy.

But Israel's decision last week to "remove" Arafat — expelling, killing or isolating him — backfired, drawing thousands of Palestinians from all factions into the streets to support him, bolstering his standing just as the Cabinet-forming process was underway.

Arafat appointed Qureia, the speaker of the parliament, after his first premier, Mahmoud Abbas, resigned on Sept. 6. Abbas clashed with Arafat over his powers and also scuffled with Israel over implementing the U.S.-backed "road map" peace plan. He quit after a cease-fire he negotiated collapsed in renewed violence last month.

President Bush heaped fresh criticism on Arafat on Thursday.

Speaking at the presidential retreat in Camp David, Bush said Arafat "has failed as a leader" and accused him of forcing out Abbas. "Hopefully, at some point in time, a ... Palestinian leadership will emerge which will then commit itself 100 percent to fighting off terror," he said.

Bush said he still supports the establishment of a Palestinian state as foreseen in the stalled "road map" plan. "But first things first: defeat those who want to stop this from happening," he said. "The terrorists who are bombing and killing aren't interested in a peaceful Palestinian state."

Arafat's Fatah is to choose 15 of Qureia's 23 Cabinet ministers. Qureia is known to prefer new faces instead of some of the Fatah stalwarts who have held Cabinet seats up to now.

Among the other eight are expected to be some indirectly linked to militant groups opposed to joining a government based on interim peace accords with Israel.

Moussa Zabout, a Gaza physician with ties to Hamas and Islamic Jihad, said he has accepted an offer by Qureia to join the Cabinet, and that Hamas officials did not object to him taking the job. No Hamas comment was available Thursday.

At the Thursday meeting at Arafat's office in the West Bank town of Ramallah, the Fatah leaders outlined the platform for the new government, aiming for wide support. Discussion of who is to serve in the Cabinet is to continue next week, they said.

Palestinian negotiator Saeb Erekat said a main point would be implementation of the "road map" peace plan, which leads to Palestinian statehood by 2005.

Also, the issue of elections to the Palestinian legislature was discussed, though many Israeli roadblocks in the West Bank are still in place and the Palestinians already postponed elections once because of travel difficulties.

Meanwhile, in Gaza, Palestinian police clashed Thursday with Hamas supporters after Palestinian security arrested seven Hamas members in connection with the kidnapping of a police officer a day earlier. Fifteen protesters were wounded, one seriously, and two Palestinian police were hurt by rocks, witnesses and hospital officials said.

Israel and the United States have been demanding that the Palestinians crack down on Hamas, which has claimed responsibility for most of the 102 suicide bombings over the past three years. However, Thursday's clash in Gaza appeared to be an internal conflict, not the beginning of such a campaign.

Arafat, meanwhile, called for a truce in interviews this week. But Israeli officials swiftly rebuffed the demand that they suspend attacks on militant groups as well as the very notion of dealing again with Arafat, whom they accuse of fomenting terrorism and protecting the militants.

"For 10 years this man has toyed with us and always gives, at the time he thinks is right, some empty peace gesture," said Israeli Foreign Minister Silvan Shalom. The minister said the summer's cease-fire experiment was a failure that proved "there is a need to dismantle the infrastructure of terror."

In the West Bank town of Jenin, Israeli soldiers imposed a curfew Thursday and arrested three Islamic Jihad militants. Soldiers blew up a truck that was to be used in a terror attack, the military said.

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