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Palestinians may not declare their statehood _ yet

With the peace process in apparent deadlock, Palestinian lawmakers began a two-day debate Saturday over whether to postpone their declaration of statehood past this week's deadline.

All signs pointed to a delay, because of intense international pressure on Palestinian leader Yasser Arafat not to disturb the delicate peace talks with a unilateral move that could provoke conflict with Israel.

Arafat arrived back in Gaza on Saturday morning to a greeting from an honor guard, after meetings at the United Nations _ including a brief one with Israeli Prime Minister Ehud Barak _ failed to produce a breakthrough. Asked whether statehood would be postponed from the declared deadline of Sept. 13, he did not answer directly.

"For your information, we have already had our state from the beginning," Arafat said. "And we will continue to do it (build the state.)"

In a speech before the PLO's Central Council, Arafat said low-level negotiations with the Israelis would shift to high gear today or Monday and would last for five weeks.

But the leader also urged the council to prepare for the declaration of a state by the end of the year if the negotiations do not prove fruitful.

Arafat said the Palestinians should prepare themselves for the worst _ a reference to possible confrontation with Israel _ if the declaration of a state is made unilaterally and Israel retaliates, according to the official. Israel has threatened to annex parts of the West Bank and Gaza Strip if Arafat declares a state outside the framework of a peace agreement.

As he spoke, some 250 demonstrators nearby held up signs saying "Yes for independence now."

Arafat has hinted in recent weeks that statehood would be delayed, and one of his top aides on Saturday gave a strong signal in that direction.

"We are not going to change our position regarding the Palestinian state as a goal, but we are going to take the proper decision for the benefit of our people. The timing might be changed," Nabil Amr said.

Regardless, the mood was grim. After his brief encounter with Arafat on Friday, Barak summed up peace efforts with the Palestinians in two words: "No good."

The negotiations are hung up mostly over Jerusalem. Arafat has not stepped back, at least publicly, from his firm demand for sovereignty over all the eastern part of the city, including the Old City and its holy sites.

The United States has proposed complex sovereignty arrangements, including placing some areas under "divine sovereignty" as a compromise. Barak has said he would contemplate such proposals _ if Arafat would do the same.

Arafat has rejected the "divine sovereignty" idea. But the London-based Al Hayat newspaper reported Saturday that he proposed "Islamic sovereignty" _ divided between the Palestinians, Egypt, Morocco and Saudi Arabia _ over Muslim holy sites. If the report is true, it would be the first time that Arafat has publicly considered anything less than full Palestinian control over east Jerusalem.

Sept. 13 is the deadline that Barak and Arafat set last year for an overall peace agreement. ButPresident Clinton is prepared to keep working past it for an accord, and the Americans have told Arafat they would not recognize a Palestinian state declared outside the framework of a peace deal.

The 128-member council was planning to consider several options at the meeting: Stick to the Sept. 13 deadline for "materializing" statehood; move the deadline to Nov. 15, the anniversary of their 1988 declaration of statehood; announce that statehood would be declared by the end of the year; or hand the decision to the 18-member PLO Executive Committee, led by Arafat, with the requirement that statehood be declared before Jan. 1.

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