Palestinian President Yasser Arafat swore in a long-awaited cabinet Wednesday in a step toward a resumption of U.S.-backed peace talks with Israel and Prime Minister Ahmed Qurie vowed to seek a cease-fire.

Speaking in parliament, Arafat, often cited by the United States as an obstacle to peace, adopted a conciliatory tone rarely heard by his people in a three-year-old uprising.

"We do not deny the right of the Israeli people to live in security side by side with the Palestinian people also living in their own independent state," he said.

But Israeli Defense Minister Shaul Mofaz speaking later in Washington said it would take years to reach a permanent agreement with the Palestinians.

He proposed working toward an interim arrangement after intractable violence stalled a U.S.-led "road map" peace plan for a Palestinian state in Israeli-occupied territory by 2005.

Deputies voted 48-13 to confirm Qurie's 24-member cabinet after two months of paralyzing power struggles. Arafat swore in the new ministers, mostly his loyalists.

U.S.-led mediators believe only a reform-minded leadership will curb violence and disarray. Washington believes Arafat's retention of dominant powers will impede peace diplomacy.

The 74-year-old former guerrilla leader accused Israel of "a criminal war" of incursions and blockades to crush his people's aspirations, then switched gear and extended an olive branch.

"The time has come for us to get out of this spiral, this destructive war, that will not bring security to you or us."

The interim proposal of Mofaz, which Israeli Prime Minister Ariel Sharon adopted on winning power in 2001, appears to run counter to the spirit of the more recent "road map" which proposes a Palestinian state by 2005.

Mofaz, at the Washington Institute, a Middle East policy think tank, said: "It will be very difficult from the situation that we are facing today to reach in a month or a few years a permanent agreement."

INTERIM AGREEMENT

He added: "I believe that we have to go through some interim agreement that will rebuild the trust between the two sides, will give us a proper sense of security for the people of Israel and give hope to the Palestinian people."

Arafat, who denies Israeli charges of inciting violence to destroy the Jewish state, said he embraced co-existence in 1990s interim deals and did not reverse course even after statehood talks collapsed in 2000, unleashing a Palestinian uprising.

Israel rejected the gesture of Arafat who it has threatened to "remove."

"It will make it very difficult to move forward if he will be the man that will give the orders and directions," Mofaz said.

"You cannot hold an olive branch in one hand and a ticking bomb in the other," said Dore Gold, an adviser to Sharon, referring to more than 100 suicide attacks.

Qurie said he wanted to end "chaos" wrought both by militant factions opposed to the road map and Israeli army thrusts into Palestinian cities. Suicide attacks and Israeli retaliation eroded a short-lived truce by militants during the summer.

"What is critically important to Israel is to see the Palestinian Authority actually begin to dismantle the infrastructure of terrorism," Gold said.

In the latest violence, an Islamic Jihad militant was killed by Israeli forces in the Gaza Strip.

Among confidence-building steps mandated by the road map is an evacuation of Israeli settler outposts on occupied land. But a secret Foreign Ministry memorandum said the country had failed to honor that obligation.

"International criticism is growing because of our lack of creative ideas for getting out of the conflict," it said.

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