HIGHLIGHTS: PA in Chaos over Security Chiefs||Arafat Names Former Jenin Governor, Zuhair al-Manasreh to Take Over from Rajoub||Israel Claims to Have Contained Top Rank & File of Palestinian Resistance Cadres|| STORY: The Palestinian police chief decided on Thursday to resign and run for president following a controversy over whether Yasser Arafat had tried to oust both him and a powerful security commander, security sources said. (Read photo caption)

Ghazi al-Jabali's decision to quit highlighted the turmoil in the Palestinian Authority caused by rumors that the president sought on Wednesday to oust him and Colonel Jibril Rajoub, the head of the West Bank preventive security service.

As Israel began easing curfew on West Bank cities it re-occupied 2 weeks ago, some Palestinians emerged from their homes to try to stock up on supplies before the occupation army re-imposes the curfews by nightfall.

The confusion over Rajoub and Jabali has reinforced the impression of chaos in the Palestinian Authority after 21 months of violence and done nothing to restore confidence in Arafat, whom the United States wants removed.

In the first official comment on the issue, Information Minister Yasser Abed Rabbo denied that Arafat had tried to oust Rajoub, often cited as a potential successor to the Palestinian leader. Abed Rabbo said the Palestinian Authority would announce reforms of the security forces in the next few days.

Both Rajoub and Jabali could yet be ousted under reforms demanded by the United States as part of its prescription for Middle East peace. Jabali seemed determined to preempt such a move.

"Major General Ghazi al-Jabali decided to resign from his post to prepare himself to run for the upcoming presidential election," a senior security source said. He did not say whether Jabali had already submitted his resignation.

Rajoub has said he will remain in his post unless he is presented with a decree removing him.

Arafat has not commented on the internal political turmoil. He is widely expected to seek and win re-election in the election he has called for mid-January.

ARAFAT NAMES FORMER JENIN GOVERNOR AS NEW SECURITY CHIEF

In a continuing shakeup, Arafat on Thursday ordered the former governor of Jenin, Zuhair al-Manasreh to take over from Jibril Rajoub as West Bank security chief, media reports said.

Rajoub has so far refused a request to step down, saying he would do so only once Arafat officially announced his dismissal.

"I will implement President Arafat's orders in my own way," Rajoub told The Associated Press on Thursday from his home in the West Bank city of Ramallah, before news of Manasreh's appointment was reported.

According to the report, Arafat appointed Manasreh during a meeting on Thursday.

An academic, Manasreh resigned from his post as governor of Jenin less than a month ago.

Like Rajoub, a veteran of the Tunis exile, Manasreh, fluent in English and German, is well liked by European and Americans donors and officials. He is soft-spoken and though loyal to the PA and Arafat, he has recently been both one of the most outspoken critics of PA corruption and one of most audible voices calling for reform.

A member of the Fatah Revolutionary Council, throughout his governorship Manasreh was assigned to coordinating Jenin's different security services and providing conflict resolution mechanisms for the various groups operating in the city, including Islamic Jihad and Hamas.

Yaakov Perry, former head of Israel's Shin Bet intelligence service, said the reshuffle seemed to weaken Arafat's circle of power.

ISRAEL CLAIMS TO HAVE CONTAINED TOP RESISTANCE RANK AND FILE CADRES & IS NOW MOVING TO FINISH LOW-LEVEL RESISTANCE RANKS

A senior Israeli official, meanwhile, said on condition of anonymity that Israel has arrested or killed nearly all Palestinians on its most-wanted list and is now focusing on nabbing low-level militants who are rapidly moving up in the ranks in militant cells.

Most of the militants were arrested or killed during a six-week offensive that ended in May or during Israel's latest West Bank campaign.

The occupation army said Thursday that its forces had detained several suspected militants overnight in West Bank towns.

Abdel Aziz Rantisi, a Hamas leader in the Gaza Strip, denied Israel had penetrated his group's highest ranks. "They will never succeed in halting the martyrs' operations," he said.

PHOTO CAPTION

(Top L) Palestinian police chief Ghazi al-Jabali decided July 4, 2002 to resign to prepare to run in a presidential election next January 2003, Palestinian security sources said. (Top R) Confusion has been mounting over the future of Jabali and West Bank preventive security chief Jibril Rajoub . (Bottom L) Mr. Arafat who is trying to meet demands for reforms from all parties, friend and foe, has been struggling to recover from the body blow he suffered last week at the hands of US President George W Bush who last week made a blunt call for a new Palestinian leadership. (Bottom R) Information Minister Yasser Abed Rabbo denied that Arafat had tried to oust Rajoub. Abed Rabbo said the Palestinian Authority would announce reforms of the security forces in the next few days.