GAZA (Reuters) - The Palestinian Authority demanded on Wednesday the United States free Palestinian guerrilla leader Abu Abbas, saying his detention by U.S. forces in Iraq violated a Middle East peace deal signed by Washington.

Abbas, also known as Mohammed Abbas, masterminded the 1985 hijacking of the Italian cruise ship Achille Lauro in the Mediterranean in which a disabled elderly American Jewish passenger, Leon Klinghoffer, was shot and thrown overboard.

"We demand the United States release Abu Abbas. It has no right to imprison him," Palestinian cabinet minister Saeb Erekat told Reuters.

Abbas was sentenced in absentia in Italy to life in prison for planning the hijacking. Although he was the target of a manhunt after the incident, Washington dropped a warrant for his arrest several years ago.

"The Palestinian-Israeli interim agreement signed on September 28, 1995 stated that members of the Palestine Liberation Organization must not be detained or tried for matters they committed before the Oslo peace accord of September 13, 1993," Erekat said.

"This interim agreement was signed on the U.S. side by President Clinton and his secretary of state, Warren Christopher," Erekat added.

Dore Gold, an Israeli government spokesman, welcomed Abbas's arrest on Monday by U.S. special forces.

"It's been 18 years since Abu Abbas and his organization hijacked the Achille Lauro, and now after 18 years, justice has been done at last," Gold said.

In 1998, the Israeli Supreme Court, citing the interim peace deals with the Palestinians, declared Abbas immune from prosecution in Israel over the ship's hijacking.

"The late Leon Klinghoffer was murdered by despicable people and his blood cries out, but (Abbas) cannot be brought to trial -- in any event, not in Israel," the court said at the time.

Abbas was allowed to return to the Gaza Strip by an Israeli Security Committee which concluded he had renounced violence.

BAGHDAD RAID

In Qatar, U.S. Central Command said his capture "removes a portion of the terror network supported by Iraq and represents yet another victory in the global war on terrorism."

Asked what would happen to Abbas, Central Command spokesman Major Brad Bartelt said: "Justice will be served." He gave no further details.

But Bassam Darweesh, a spokesman for Abbas's Palestinian Liberation Front (PLF) in Gaza, told Reuters: "It seems that the United States has rushed to answer Israeli demands to pursue the leaders of Palestinian political factions outside Palestine."

Darweesh called his detention in a raid in southern Baghdad "an attempt to harm the Palestinian struggle and to put on trial an important chapter in the history of our people."

In a Reuters interview in Gaza in 1998, Abbas called Klinghoffer's killing a mistake and said PLF guerrillas had never planned to hijack the ship.

Their mission, Abbas said, had been to disembark as tourists in the Israeli port of Ashdod, link up with two guerrillas from the West Bank and attack a naval base.


PHOTO CAPTION

File picture taken 26 September 1991 in Algiers of Abu Abbas, a Palestinian who led the hijacking of the Achille Lauro cruise ship in 1985. Abbas has been captured by US-led forces in Baghdad(AFP/File)