HIGHLIGHTS:So-called Quartet Group Toys with Mideast Conference Proposal||Arabs To Move Jenin Question to UN General Assembly||Palestinians Demand Reform & Washington Wants Arafat to Show Leadership||Talks to Resolve Standoff at Bethlehem Collapse||STORY: The United States, Europe, Russia and the United Nations- a "quartet" set up to co-ordinate the international peace effort, have been toying with ideas floated by Saudi Arabia aimed at inducing both Israel and the Palestinians to return to the peace table under a wide international umbrella. No venue or date has been set.

After meeting U.N. Secretary-General Kofi Annan, Russian Foreign Minister Igor Ivanov and two European Union leaders, US Secretary of State Colin Powell on Friday announced plans for a Middle East conference drawing a wary response from Israel but a favorable reaction from Yasser Arafat, the Palestinian leader Ariel Sharon rejects as a peace partner. The conference proposal, which was apparently based on recent discussions between President Bush and Saudi Crown Prince Abdullah, was agreed by the quartet on Thursday.

DEMANDS FOR TRANSPARENCY & A CABINET RESHUFLE

Two days after his release from confinement at his compound in Ramallah, Palestinian leader Yasser Arafat appeared to be under mounting pressure for reform on the domestic front and for showing what Washington and Tel Aviv call leadership.
In an apparent attempt to deflect criticism by radical Palestinian groups, the Palestinian cabinet said the cases of two of the six men moved from Arafat's compound to a Jericho prison supervised by Americans and Britons were still open.

Neither Ahmad Saadat, leader of the militant Popular Front for the Liberation of Palestine, nor Fuad Shubaki, accused by Israel of arranging an arms shipment from Iran that was intercepted in the Red Sea in January, have been put on trial.
The cabinet said the attorney general and judicial authorities would "quickly determine the case of their detention so the Palestinian leadership can take the proper decision."

The two were transferred to the jail along with four men convicted by a Palestinian military court of involvement in the October assassination of Israeli Tourism Minister Rehavam Zeevi. Israel then pulled its tanks out of Arafat's compound.
The Palestinian cabinet also said on Friday it would hold several open sessions to chart a plan for "political and administrative reform" as it begins to rebuild infrastructure devastated by Israel's assault.

Many Palestinians and international donors have called for greater transparency in the workings of the Palestinian Authority. Nabil Amr, minister of parliamentary affairs, resigned his post on Friday after demanding a cabinet reshuffle.

AMERICAN & ISRAELI PRESSURE

In Washington, and despite Arafat's favorable response to Powell's quartet-backed announcement regarding a Mideast Conference, the White House said Arafat's role in the Middle East peace process remained an open question. "The president does believe that the Palestinian people deserve better," White House spokesman Ari Fleischer told reporters.
Israel has meanwhile resisted a wider European Union or United Nations role in Middle East peacemaking, viewing both organizations as biased toward the Palestinians.

A senior Israeli political source said the main problem remained Arafat, whom he called an instigator of terror.
"The basis for any progress is your partner, and right now he has failed on all marks," the source said.

UN ARABS

Meanwhile, Arab nations frustrated that a deadlocked Security Council would not denounce Israel for blocking a U.N. investigation into its assault on the Jenin refugee camp, said they would ask the General Assembly to approve a resolution accusing the Jewish state of war crimes.

U.N. envoy Terje Roed-Larsen, who described the devastation in Jenin as "horrifying beyond belief" when he toured the camp April 18, said a fact-finding mission is "the right thing" to do.

Annan said it would have been better for everyone if the fact-finding team had been allowed to clarify the Jenin events.
"The long shadow which has been cast over Jenin will be with us for a while," he said.

The Palestinian U.N. observer, Nasser Al-Kidwa said he still wanted the 15-member council to adopt a resolution demanding that Israel cooperate with the mission. If it did not, he said Arab nations would appeal to a General Assembly special session that probably will be held Tuesday

FIRST DETAILED ACCOUNT OF CONDITIONS INSIDE CHURCH OF NATIVITY

In Bethlehem, efforts to ease a month-old standoff at the Israeli-besieged Church of the Nativity on Orthodox Christian Good Friday foundered when a deal to bring food to people inside the shrine fell through.

Foreign pro-Palestinian activists who sneaked into the besieged Church of the Nativity described a startling scene Friday: gaunt men huddling around green soup made from boiled lemon leaves, others too weak to move lying in blankets.

Providing the first detailed account of conditions inside the church compound, the visitors said several buildings have been scarred by bullets and fires, though the basilica itself sustained only minor shooting damage to a 12th century fresco.

PHOTO CAPTION

A Palestinian family watch Israeli soldiers from the window of their home during a curfew in Bethlehem May 3, 2002. A surprise U.S. announcement of preparations for a Middle East conference drew a wary response in Israel but was welcomed by Yasser Arafat, the Palestinian leader Ariel Sharon rejects as a peace partner. (Radu Sigheti/Reuters)