HIGHLIGHTS:Quartet to Meet in New York Next week||Arafat to Appoint Dahlan National Security Adviser||Palestinian Mortars Hit an Internationally Illegal Israeli Settlement in Gaza||Israeli Occupation Army Officers Press Superiors for Partial Withdrawal from West Bank||White House Criticizes Israel Over Closure of Jerusalem University||STORY: Representatives from the diplomatic quartet on the Middle East -- the United States, the European Union, the United Nations and Russia -- and international lenders gathered in London to discuss aid to the Palestinians, the US State Department said.

Deputy spokesman Philip Reeker said US, EU, UN and Russian officials met in the British capital with officials from Japan, Norway, the World Bank and the International Monetary Fund to move ahead with ideas discussed at a higher-level meeting of the quartet there July 2.

They were "continuing the discussions ... on how to advance Palestinian institutional reform," he told reporters.

Wednesday's meeting precedes planned talks next week in New York between the quartet's principle members -- US Secretary of State Colin Powell, UN Chief Kofi Annan, Russian Foreign Minister Igor Ivanov and top EU diplomat Javier Solana.

The United States was represented at Wednesday's meeting by Liz Cheney, the deputy assistant secretary of state for Near Eastern affairs and a daughter of US vice president Dick Cheney, Reeker said.

ARAFAT NAMES DAHLAN NATIONAL SECURITY ADVISER

Meanwhile, Palestinian Authority Chairman Yasser Arafat is set to appoint Muhammed Dahlan, who recently quit his position as head of the Preventive Security Service in Gaza, as his national security advisor, Israel radio reported Wednesday, quoting a previous update on Qatar-based Al-Jazeera Television.

Dahlan will return to the West Bank on Thursday after a long sojourn abroad, the report said. It is as yet unclear exactly what authority his new post will have, it added.

MORTARS HIT ISRAELI SETTLEMENT IN GAZA

Palestinians fired three mortar shells at an internationally illegal Israeli settlement in the southern Gaza Strip overnight.
There were no injuries or damage in the attack.

Elsewhere, occupation forces arrested 10 Palestinians in the Nablus vicinity overnight.

Eight Jihad Resistance members were taken from the village of Atzira Shamalia, and two others were detained in Talusa.

ISRAELI OCCUPATION ARMY OFFICERS WANT OUT OF WEST BANK POWDER KEG

Senior Israeli occupation army officers meanwhile have pressed top brass for a partial withdrawal from West Bank towns, saying the three-week-old reoccupation has turned them into a powder keg, Israeli public television said. (Read photo caption)

Weeks of round-the-clock curfews have left the seven reoccupied self-rule towns on the "verge of a volcanic eruption," the officers warned new chief of staff General Moshe Yahalon in a meeting at central command headquarters, the television said.

The hawkish new army boss, himself a former head of the central command which includes the West Bank, took office Tuesday replacing General Shaul Mofaz.

Mofaz said earlier this month that the reoccupation would continue for "a long period ... at least several months," echoing comments by hardline Prime Minister Ariel Sharon.

The governor of Bethlehem warned Wednesday that the Israeli reoccupation was hurtling the Biblic birthplace of Jesus Christ towards a humanitarian crisis.

"Thousands of residents have lost their jobs, hundreds of others have been arrested, and about 1,500 are without shelter after the destruction of their homes," governor Mohammed Madani told the official WAFA news agency.

WHITE HOUSE CRITICIZES ISRAEL

In a rare jab at Israel, the White House said Wednesday it was troubled by the closing of the Jerusalem university offices of a prominent Palestine Liberation Organization official.

"This action does not contribute to the fight against terror" nor promote the reform President Bush is seeking in the Palestinian Authority, White House press secretary Ari Fleischer said in a statement.

Israeli police closed the Al Quds University offices of its president, Sari Nusseibeh, on Tuesday. Nusseibeh is the PLO's senior official in Jerusalem.

Fleischer's statement called the closure "a troubling event" and said Bush had called for "opening the political landscape to moderate voices."

The United States was discussing the closure with the Israeli government, the statement said, indicating it would press Israel to reverse the decision.

PHOTO CAPTION

Israeli armored personnel carriers and a tank enter a Palestinian ruled part of the West Bank city of Hebron on July 10, 2002. Palestinian gunmen shot and seriously wounded an Israeli along Israel's border with the Gaza Strip, fueling tensions despite the resumption of talks between Israel and the Palestinians. (Nayef Hashlamoun/Reuters)
- Jul 10 3:20 PM