HIGHLIGHTS: Powell Gave Arafat No Guarantees That Israel Would Not Try to Snatch Fugitives in His Custody.
Powell Wants Israel To Ease Restrictions on Arafat, Israel Wants To Remove Him.
Sharon May Discuss Future of Isolated Settlements in At Least 3 Years Time.

STORYAmerica's on-going involvement with Palestinian President Yasser Arafat seems to be steering a collision course with Sharon's future plans for the Palestinian leader. (Read photo caption within).

On one hand, U.S. envoy William Burns met Monday with Yasser Arafat to try to resolve the key dispute holding up the start of cease-fire talks - standoffs between Israeli troops and wanted men in the Palestinian leader's West Bank headquarters and Bethlehem's Church of the Nativity; on the other, in Arafat's headquarters, speculation was running high that Israeli forces would try to break in and snatch the wanted men. Palestinian officials, speaking on condition of anonymity, said Secretary of State Colin Powell last week refused to give Arafat a guarantee that Israeli troops would not seize the fugitives.

ISRAEL MAY BREAK IN ARAFAT'S COMPOUND, REMOVE ARAFAT & SNATCH FUGITIVES HOLED UP WITH HIM

Israeli military commentator Alex Fishman on Monday appeared to confirm the Palestinian apprehensions, writing that "as of last week, various government spokesmen have begun to scatter hints about an upcoming infiltration of the compound, the removal of Arafat, sending him away and capturing wanted men."

Israeli officials close to Sharon said, however, the government was carefully weighing the regional implications if army commandos were to storm Arafat's refuge.

Contrary to the reports from Jerusalem, in Washington, Powell advised the Israelis to ease up on Arafat, to allow the Palestinian leader to move against militants.

Meanwhile, Palestinian and US officials said key issues in the Burns-Arafat talks were to be the standoffs in Ramallah and Bethlehem, truce prospects and humanitarian assistance to the Palestinians.

SHARON REJECTS ARMY OFFICERS' PROPOSAL TO DISMATLE ISOLATED SETTLEMENTS

Prime Minister Ariel Sharon, meanwhile, told his Cabinet that he will not discuss the dismantling of isolated Jewish settlements before October 2003 elections.

Sharon's comment came in response to a proposal by senior occupation army officers to dismantle some settlements to ease the burden on Israeli occupation troops guarding such outposts in the West Bank and Gaza Strip.

Sharon's position further dampened already very low expectations of a peace deal with the Palestinians in the coming years; a dismantling of at least some settlements is seen as a requirement for Palestinian statehood, even in a very limited area of the West Bank, as proposed by Sharon.

Sharon told Cabinet ministers Sunday that after the election, "it will take him two or three months to assemble a new government and even after that he doesn't intend to deal with this issue of dismantling settlements," said Communications Minister Raanan Cohen of the moderate Labor Party who was present.

PHOTO CAPTION:

Israeli army APC's pull out of the West Bank town of Ramallah Sunday, April 21, 2002. Israel withdrew from most of Ramallah overnight but said it would continue to besiege Yasser Arafat's compound until suspected assassins holed up inside were handed over. (AP Photo/Nasser Nasser)
- Apr 21 3:14 AM ET