Sharon reportedly told Peres in their two-hour meeting yesterday that diplomatic efforts to achieve a cease-fire could only take place once the Palestinians took "some identifiable steps" to fight terror and Israel sees a noticeable reduction in Palestinian attacks, according to media sources. Despite yesterday's suicide bombing attack in Kiryat Motzkin, Peres immediately began attempts to arrange meetings with Palestinian negotiators Abu Ala and Saeb Erekat, according to Yediot Aharonot.

Maariv noted that Peres's discussions with the

"I suggest we talk in order to stop the fire." - Foreign Affairs Minister Shimon Peres on Thursday

Palestinians had continued secretly for some time, and had already been approved by Sharon after Peres met Arafat in Lisbon at the end of June. Yesterday's agreement was intended to ensure that Peres's talks were restricted to efforts to achieve a cease-fire. In his meetings with Palestinian leaders, Peres will be accompanied by the chief of the Israel Defense Forces Planning Branch, Major General Giora Eiland.

Maariv suggested that despite the agreement, Peres was preparing a diplomatic effort to create the conditions that would enable Arafat to enforce a cease-fire and resume negotiations. Sources in the Prime Minister's office denied that Sharon had agreed to retract from Israel's condition of "seven days of quiet" before entering the "cooling-off" period, but Maariv said it was clear that Peres would present to Arafat "new ideas."

One of the ideas which Peres has unsuccessfully tried to sell to Sharon, Maariv reported, was a "Gaza first" proposal. Peres reportedly believes that Israel should unilaterally withdraw from the Gaza Strip, dismantle Jewish settlements and enable Arafat to declare Palestinian independence there. The move, according to Maariv, would be conditional on a general cease-fire, renewal of security cooperation, the arrest of "wanted" terrorists and other confidence-building moves.

Peres and Sharon have been at odds over the government's refusal to negotiate with the Palestinians until all violence stops. "If we say we won't talk under fire, it means that every gunman can decide there will be no dialogue," Peres said. "I don't advise we negotiate under fire. I suggest we talk in order to stop the fire,'' he told Israel Radio on Thursday.

It is not clear if the Palestinians will accept the extended Israeli offer for negotiations over a cease-fire. Yesterday Palestinian Legislative Council Speaker Ahmed Qurei (Abu Ala) said that it would be possible to return to the cease-fire and the Mitchell recommendations once Israel withdrew from the Orient House and other Palestinian institutions. Qurei said he would only talk about Jerusalem, not the Mitchell Report, the cease-fire or international monitors, in his meeting today with US envoy David Satterfield.

Peres-Sharon agreement defuses threat to coalition
Yesterday's agreement between Peres and Sharon reportedly defused a political crisis within the coalition government. According to media reports, Peres had threatened to resign if he didn't receive permission to open negotiation channels with the Palestinians. His call for immediate talks with the Palestinians had been supported by Defense Minister Binyamin Ben-Eliezer.

The growing split between Labor and Likud ministers in the government was apparent in the cabinet's decision to close and occupy the Orient House in East Jerusalem, a move opposed by Peres and Labor ministers Matan Vilnai and Ephraim Sneh. Peres warned that Israel's occupation of the building would lead to "international isolation." Yesterday's cabinet session was reported as "stormy" with ministers arguing for and against the Orient House decision. Last Thursday, following the Jerusalem bombing, a majority of 9-3 approved the implementation of the closure of the Palestinian offices in Jerusalem, a step already accepted in principle following the Tel Aviv discotheque bombing at the beginning of June.

In an apparent move to pressure the Labor Party, Sharon recently extended offers to the National Religious Party and the Center Party to join the government. NRP leader Yitzhak Levy said that he would not be joining the government at this time, since he objected to Peres's freedom to negotiate with the Palestinians and he felt that his party's influence would be limited. The Center Party faction was split on whether to join the coalition, with party leader Dan Meridor reportedly objecting to the low-level cabinet positions that he has been offered.

A few hours after his meeting with Sharon, Peres blasted the Prime Minister's policies towards the Palestinians. Speaking at a meeting of the Labor Party Central Committee, Peres called for an easing of the closure on the Palestinians. "It is inconceivable that three million people should be kept under closure for three months, with unemployment growing, with distress and poverty rising steadily," Peres said.

Though he did not speak up in defense of the national unity government yesterday, Peres did defend the decision to resume negotiations with the Palestinians. He told Labor Party members that taking over the Orient House only increased the need for dialogue between the two sides, without which there would be no chance to reduce the violence.

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