Qurie denies threat to quit over Arafat reform row

PALESTINIAN Prime Minister Ahmed Qurie denied he was thinking about resigning after a heated argument with President Yasser Arafat over his blocking of reforms.

A senior Palestinian official said earlier that Mr Qurie, who first threatened to quit late last year in a power-sharing dispute with Mr Arafat over the formation of a government, told cabinet ministers he was considering stepping down.

"Resigning? Why? I am here as the prime minister. I am not thinking about that," Mr Qurie said after a meeting with German Foreign Minister Joschka Fischer in Berlin.

Describing an encounter between Mr Arafat and Mr Qurie, one senior Palestinian official said: "A heated argument took place between (them) on Saturday following a decision taken by the cabinet to make security and financial reforms."

Another official said Mr Arafat rejected the cabinet move as an infringement on his powers and "an angry Abu Ala (Qurie) told ministers... that he wants to resign and that he's thinking of quitting because he can't go on like this anymore".

The United States, the main sponsor of a violence-stalled peace "road map", and Israel refuse to deal with Mr Arafat, accusing him of fomenting bloodshed in a Palestinian uprising.

If Mr Qurie were to resign his predecessor Mahmoud Abbas quit after accusing Arafat of obstructing him Mr Arafat could be isolated further and his Palestinian Authority plunged deeper into financial crisis.

Palestinian officials and Western diplomats said international aid to the Palestinian Authority had been halved since 2001 because of its lack of transparency in spending donor money.

With Abbas's failure at the back of his mind, Mr Qurie has been walking a tightrope between maintaining a working relationship with Mr Arafat and improving Washington ties.

Palestinian officials said Mr Arafat, besieged in his headquarters in the West Bank city of Ramallah for more than two years, has agreed to make some administrative and financial reforms, but would not hand over control of security.

"Qurie is seriously thinking of carrying out a cabinet reshuffle which could include changing the interior minister and bringing in lawmakers to strengthen his standing in the Legislative Council," one senior official said. "This could lead to rising tensions with Arafat but it is a necessary step to give Qurie a higher margin to manoeuvre to advance peace and make reforms."

Israeli Prime Minister Ariel Sharon is due to meet US officials later this week to discuss his plans for unilateral disengagement and the route of a controversial West Bank barrier.