Sharon against Arafat exile, firm on fencing

But in remarks to an Israeli newspaper Sharon stood firm on erecting a vast barrier in the West Bank, saying he was ready to defy US opposition despite Washington's warnings that it might cut loan guarantees to the Jewish state.

"Our calculations for years have been that expelling him would not be good for Israel," Sharon told the conservative Jerusalem Post when asked about last month's decision in principle by his security cabinet to "remove" Arafat.

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Some hawkish members of Sharon's cabinet had even proposed killing Arafat, an idea the prime minister dismissed at the time and which Foreign Minister Silvan Shalom then ruled out. Israel has not said how or when it might take action against Arafat.

Responding to Sharon's comments, Palestinian chief negotiator Saeb Erekat said: "This is not a retraction of the Israeli position to kill or deport Arafat. There's an Israeli government decision to do so which wasn't canceled."

With US backing, Israel accused Arafat -- largely confined to his West Bank headquarters for nearly two years -- of fomenting violence, charges he denies. But Washington opposes harming him or exiling him from Palestinian areas.

Asked if there could be a diplomatic breakthrough before Arafat is dead, Sharon replied: "I didn't say dead, but in my opinion, as long as he is in control, the chance for progress (toward peace) is non-existent."

Similarly controversial has been Israel's construction of a barrier in the West Bank with plans to loop it around Jewish settlements inside occupied territory. Palestinians condemn it as a land grab that prejudges borders that should be negotiated.

Israel defends the barrier as necessary to keep out suicide bombers who have killed hundreds of its citizens in a three-year-old Palestinian uprising for independence.

While backing Israel's right to self-defense, Washington has said it may deduct the cost of some of the project from $9 billion in US loan guarantees to Israel. Sharon was unfazed.

"I myself might tell the Americans that although we won't be happy about it, if you decide to remove money, then do it. We need to build a fence in places where we know it is integral for Israel's security," he told the Jerusalem Post.

Erekat said Israel's continued construction of the barrier and expansion of settlements "kills the chance for peace."

AFP adds: European Union leaders warned yesterday that Israel's construction of a "security" wall in the West Bank risked making it impossible to reach a peace deal with two states living side by side.

But they also urged the Palestinian Authority to crack down on anti-Israeli attacks, according to the draft conclusions of their two-day summit here.

The EU said it was particularly concerned about the route of the Israeli barrier through the occupied West Bank, which the Palestinians regard as a land grab by the Jewish state.

"The envisaged departure of the route from the 'green line' could prejudge future negotiations and make the two-state solution physically impossible to implement," the EU draft said, referring to the current border between Israeli and Palestinian territory.

The UN General Assembly is to hold a special session on the barrier Monday after the United States this week vetoed a resolution condemning it at the UN Security Council.