By Gideon Alon, Ha'aretz Correspondent

The Director of Military Intelligence told a meeting of the Knesset Foreign Affairs and Defense Committee on Tuesday that Palestinian Authority Chairman Yasser Arafat was working to prevent reforms in the PA.

As part of this policy, said Major General Aharon Ze'evi, Arafat had demoted his envoy at cease-fire talks with Hamas officials in Cairo, when it became clear that the two sides were on the verge of reaching an agreement.

Ahead of the meetings between the two groups, Israel reportedly prevented two members of the Fatah negotiating team from traveling to Cairo.

The two were identified as Samir Masharawi, a senior Fatah official in Gaza and deputy head of security in the Strip, and a senior Fatah official from Ramallah, who has very close ties to Tanzim chief Marwan Barghouti, himself currently awaiting trial in an Israeli jail.

Ze'evi said that Arafat is continuing to fund Tanzim and Fatah activities, and hypothesized that the Palestinian leader still believes it is possible to establish a Palestinian state along the 1967 borders as well as keep the Palestinian right of return to their original homes inside Israel.

The intelligence chief acknowledged that the "road map" for peace drawn up by the Quartet (the U.S., the European Union, the United Nations and Russia) was the basis for an agreement with the Palestinians, but only after the American administration had waged war on Iraq.

He indicated that the "road map" was based on the emergence of an alternative Palestinian leadership as well as the election of a new prime minister with executive powers. According to Ze'evi, the United States proposed the "road map" based on the understanding that the 1993 Oslo accords would not result in a Palestinian state created in partnership with Israel.

Ze'evi dismissed the Iraqi threat to Israel as a limited one, saying that the Israel Air Force could stand up to any threat posed by Baghdad. He added that Iraq posed a threat to Israel in terms of an air strike or an attack using surface-to-surface missiles.

-- Anonymous, November 12, 2002