Israel's security cabinet this morning decided that Palestinian Authority Chairman Yasser Arafat will be permitted to leave his presidential compound in Ramallah, but would not be allowed to leave the city. The army will withdraw from forward positions near Arafat's office.

Twelve of the fourteen members of the cabinet voted to allow Arafat to leave his compound, while two ministers abstained. National Infrastructure Minister Avigdor Lieberman (National Union), who had threatened to pull his party out of the coalition if Arafat was allowed to leave Ramallah, abstained in the vote but will not withdraw from the government.

The cabinet decided that Arafat's "departure from Ramallah will require a decision by a forum, the composition of which will be decided upon by Prime Minister Ariel Sharon in consultation with Defense Minister Binyamin Ben-Eliezer. Israel continues to demand the extradition of [Tourism] Minister [Rechavam] Ze'evi's assassins as per the diplomatic agreements" between Israel and the Palestinian Authority.

The cabinet discussion followed the announcement Thursday that Palestinian security forces had arrested three main suspects in the October assassination of Ze'evi. Sharon had repeatedly conditioned Arafat's movements on the arrest of Ze'evi's killers. Another condition for the lifting of Arafat's travel ban was the arrest and bringing to trial of the Palestinians involved in the Karine A weapons shipment.

According to media reports, Sharon continued to express skepticism of the arrests over the weekend. In a televised press conference following his address to the nation Thursday night, Sharon said the government was checking into the reports of the arrests, and said that if the Palestinians had fulfilled their obligations, Israel would agree to its promise to rescind the siege on Arafat.

Ben-Eliezer and Foreign Affairs Minister Shimon Peres reportedly pressed Sharon to agree to Arafat's release. According to media reports, Ben-Eliezer stated that the Palestinians had met Israel's demands, arrested the suspects in Ze'evi's murder as well as the man thought to be behind the Karine A weapons ship - Fuad Shubaki. But Sharon reportedly insisted on the arrest of another key suspect in Ze'evi's killing.

Justice Minister Meir Sheetrit (Likud) said that Israel should still insist on the extradition of the killers. "If I was convinced that Arafat would extradite them, I would be willing on the spot to release him (from Ramallah)," he told Army Radio before the cabinet session.

Palestinian senior negotiator Saeb Erekat called the cabinet decision "shameless." Erekat told Israel Radio that he was "pessimistic regarding further contacts between the two sides. This is another proof of the fact that the Israeli government has no diplomatic plan besides continuing the killing and destruction in the territories." Palestinian Intelligence Chief Amin al-Hindi said the joint Israeli-Palestinian security meeting scheduled for Sunday night was canceled due to the cabinet decision.

Security sources believe that Arafat will still be allowed to leave Ramallah and attend the Arab League summit next month in Beirut if he fulfills his commitments to fight terror, ynet reported. But some defense officials reportedly proposed to the cabinet that Arafat be granted "limited travel freedom," allowing him to travel to other cities in the West Bank and Gaza Strip but not travel abroad, Ha'aretz reported.

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