Israel kills militant and rejects Arafat ceasefire proposal

ISRAELI troops killed an Islamic militant who tried to infiltrate a Jewish settlement in the Gaza Strip yesterday after it rejected a conditional ceasefire proposal by Palestinian President Yasser Arafat.

Islamic Jihad, one of several militant groups Washington has sought to curb with a road map to Palestinian statehood, claimed the gunman shot dead at Dugit settlement as its own.

Raising prospects for relieving the diplomatic impasse, a Palestinian paper said Israel could free 215 Palestinian security detainees next week as part of a prisoner-swap deal with Lebanese guerrilla group Hizbollah. Senior Israeli sources declined comment on the report in Al-Quds daily but confirmed the release of Palestinian detainees was part of accelerating negotiations underway for the return of four Israelis held by Hizbollah since 2000.

Israel said on Tuesday it was readmitting 20,500 Palestinian workers after an extended blanket ban.

On Monday, Mr Arafat called for a truce with Israel but asked international mediators to dispatch peacekeepers to the region.

"We are ready and we are now starting to go back again to the truce, although the Israelis or some of their leaders are refusing the truce," Mr Arafat told reporters on Tuesday.

Israel dismissed the call as a ruse by Mr Arafat to dodge an Israeli decision in principle this month to "remove" him. Israel accuses Mr Arafat of fomenting violence in the revolt that erupted in September 2000 after statehood talks stalled. He denies this.

Meanwhile, with German mediation, Israel is negotiating the release of a businessman held by Hizbollah and the bodies of three soldiers believed to have died after the guerrilla group captured them on the Lebanese frontier. It also wants information at least on the fate of an Israeli airman downed over Lebanon in 1986.

Hizbollah seeks the release of 15 Lebanese including two guerrilla leaders Israel seized as bargaining chips, as well as Palestinians, Syrians and Jordanians held in the Jewish state.

Al-Quds said a swap would likely be in place early next week after the Jewish new year, with Israel freeing 215 Palestinians and 185 Lebanese, Syrian and Jordanians from its jails.

Envoys for Israeli Prime Minister Ariel Sharon have also been in Washington to calm US concerns over a security barrier that is being erected around Jewish settlements in the West Bank and has drawn land-grab charges from Palestinians.

Secretary of State Colin Powell said on Monday he did not expect the Sharon government to respond to US pressure on the settlements until the Palestinians rein in militants as required by the road map to statehood in the West Bank and Gaza.