Palestinian President Yasser Arafat and his premier-designate have narrowed differences over cabinet posts and powers, which are blocking a Middle East peace plan, a senior Palestinian official said on Tuesday. The United States and the European Union have weighed in behind Mahmoud Abbas in his leadership tussle with Arafat.

Hanging in the balance are Arafat's decades-old domination of Palestinian politics and a U.S.-backed peace "road map" that envisages an end to two-and-a-half years of Palestinian-Israeli conflict and the creation of a Palestinian state by 2005.

Washington has said it will not present the peace package until after the installation of a new Palestinian government that it hopes will pursue democratic reforms.

But Arafat has objected to Abbas's cabinet roster and to attempts to end his control of Palestinian security forces, which, under the peace plan, are to rein in resistance groups who have been attacking Israelis in the uprising for independence.

A senior Palestinian official said after a meeting of the Central Committee of Arafat's Fatah faction on Tuesday night that "the differences have been narrowed down.

"The situation is better than before and we hope that the cabinet will be presented in the coming 24 hours," the official said, without elaboration.

A source close to Abbas said earlier that he had written a resignation letter but had not handed it to Arafat in order to give time for further local and international mediation.

Arafat, 73, angered by mounting pressure to cede key powers, shouted at Miguel Moratinos, the EU's Middle East peace envoy, and slammed down the phone when he called on Sunday to hammer home an uncompromising message, Palestinian officials said.

With a deadline for agreement on a cabinet expiring on Wednesday night, the officials said Moratinos told Arafat the EU would accept no one but Abbas, also known as Abu Mazen, as prime minister. The EU envoy telephoned again on Monday, they said.

ARAFAT UNDER PRESSURE

British Prime Minister Tony Blair, a leading campaigner for the road map and backer of Abbas, phoned Arafat on Tuesday for "an exchange of views" on forming the cabinet, Blair's office said. Japan's foreign minister also called, Abbas aides said.

Russian envoy Andrei Vdovin, whose country is in the international "Quartet" of peacemakers promoting the road map, told Arafat in a meeting on Saturday that Palestinians could afford no more delay.

There was no public word from Abbas.

A senior U.S. official, who asked not to be identified, called on Arafat to "stop blocking" Abbas from taking the post.

Abbas wants ex-Gaza security chief Mohammed Dahlan to become interior minister in charge of Palestinian security forces.
Arafat, who reluctantly bowed to pressure from U.S. and other international mediators to name a prime minister, has resisted Dahlan's appointment and the international bid to loosen his grip on security and peace diplomacy.

PHOTO CAPTION

Yasser Arafat (L) and Mahmud Abbas (R) are locked into a power struggle which threatens to derail the Palestinian reform process (AFP/File)