HIGHLIGHTS: Occupation Troops Take up Positions Round the City Keeping it Encircled||Powell Appears at Odds with Bush Over Mideast Conference & Palestinian Statehood||Al-Faisal Meets Bush Thursday||First UN Security Council Mideast Public Debate Thursday||Reshuffled Palestinian Cabinet Meets for First Time Thursday|| STORY: Israeli tanks and occupation troops pulled back from around Palestinian President Yasser Arafat's headquarters after a siege lasting nearly three days and withdrew from the West Bank city of Ramallah. (Read photo caption)

Tanks and armored vehicles retreated from positions across Ramallah and left, taking up positions outside the city and keeping it encircled, occupation army sources said.

The occupation army said it had arrested about 75 Palestinians and confiscated many weapons in Ramallah since Monday. Defense Minister Binyamin Ben-Eliezer said the results were "quite impressive."

ARAFAT MORATINOS TALKS

"The situation in Ramallah seems to be returning to normality," European Union Middle East envoy Miguel Angel Moratinos told reporters as he went into talks with Arafat after the tanks pulled back.

Peace remains a distant prospect after the deaths of at least 1,394 Palestinians and 509 Israelis since the Palestinian intifadha, uprising against occupation, began in September 2000 after peace talks stalled.

POWELL APPEARS AT ODDS WITH BUSH OVER MIDEAST

In the latest diplomatic moves, Secretary of State Colin Powell said he believed a Middle East peace conference would go ahead this summer and that Washington might back a transitional Palestinian state before any peace deal is reached.

In an interview published by the London-based Arabic daily al-Hayat, some of Powell's comments were at odds with President Bush who said after talks with Sharon on Monday that the time was not ripe for a peace conference.

Saeb Erekat, a senior Palestinian negotiator, responded coolly to Powell's suggestion of a provisional or interim state. "I don't know what he means by that," Erekat said. "The main thing here is to end the Israeli occupation and to have Israel withdraw" to its old borders, he said.

Nasser al-Kidwa, the Palestinians' observer at the United Nations, said there must be a "clear definition of the final outcome" for any interim measure to work. In fact, he said, "it might take us to a worse situation."

And Amr Moussa, the secretary general of the Arab League, said Powell's statement was important but vague. He asked: "What does provisional mean? Does this mean that we take some of the land now and keep it temporarily or provisionally?"

AL-FAISAL MEETS BUSH THURSDAY

President Bush is to meet on Thursday at the White House with Prince Saud al-Faisal, the foreign minister of Saudi Arabia. An announcement by Bush on his strategy for carrying out his promise to the Palestinians of a state of their own could come as early as next week.

A senior administration official said Bush was seriously considering provisional statehood but had not reached a final decision.

Other administration officials played down the policy significance of Powell's remarks and also noted he was speaking to a newspaper with Arab readers.

UN SECURITY COUNCIL MIDEAST PUBLIC DEBATE THURSDAY

At the request of Arab nations, the U.N. Security Council scheduled its first public debate in six weeks on the Middle East crisis for Thursday, council diplomats said.

The council's 15 member-nations agreed to a debate during closed-door talks on Wednesday, the envoys said, adding the United States had vowed to oppose any move at this time to cap the discussions with a resolution or other council action.

After staging almost daily public debates on the Middle East earlier this year after Israeli troops smashed into West Bank cities following a wave of Palestinian suicide bombings, the council last held a public meeting on the crisis on May 3.

RESHUFFLED PALESTINIAN CABINET TO MEET THURSDAY

A senior Palestinian official said the Palestinian cabinet hoped to meet in Ramallah on Thursday for the first time since Arafat announced a reshuffle on Sunday as part of the reforms demanded by the United States and Israel.

The Israeli raid prevented the cabinet meeting on Monday.

PHOTO CAPTION

Palestinian security officers celebrate the Israeli army withdrawal at the entrance of Palestinian leader Yasser Arafat's offices in the West Bank town of Ramallah, Wednesday, June 12, 2002. The Israeli forces had moved into position early Monday, cutting off the entrances to the compound but not entering. (AP Photo/Nasser Nasser)
- Jun 12 5:54 PM ET