Arafat agrees to give up day-to-day control of Palestine

Yasser Arafat agreed to appoint a prime minister to take over the day-to-day Palestinian leadership in a letter to Tony Blair, a diplomatic source said yesterday.

Mr Arafat has been under huge pressure from the United States to appoint a prime minister – and the letter, sent to Mr Blair before his talks with George Bush in Washington last month, was apparently intended to be passed on to President Bush. Both the US and Israeli governments are refusing to speak to Mr Arafat.

The idea of a Palestinian prime minister was floated as a way of getting round Israel's refusal to deal with Mr Arafat, and President Bush's call for Mr Arafat to be replaced as Palestinian leader. The idea is that Mr Arafat will be "kicked upstairs" to a symbolic role as Palestinian leader with a prime minister taking over the day-to-day running of what is left of the Palestinian Authority (PA), and negotiations with the Israelis.

The news came against the backdrop of a new round of talks between Israeli and Palestinian officials. The appointment of a prime minister is one of the provisions in the "roadmap", a peace plan drawn up by what has become known as the Middle East "quartet" – the US, Russia, the EU and the United Nations. "The letter said, for the first time, that Arafat accepts the roadmap without reservations, and he accepts all the steps outlined in the roadmap, including that he appoint a prime minister," an anonymous Palestinian official was quoted as saying yesterday.

Mr Arafat may have felt pressured into accepting a prime minister. The US and Israeli governments have been trying to marginalise him and his popularity among Palestinians is at a low ebb. Many Palestinians say the only reason they support him as Palestinian leader is because Mr Bush called for him to be replaced. They say it's up to them to choose their leader, not President Bush.

Since the Israeli elections last month, there has been renewed talk of the Israeli army forcibly expelling Mr Arafat from the Occupied Territories. His expulsion was discussed often last year – Mr Sharon was said to favour it, and Binyamin Netanyahu, the Foreign Minister, was a vocal supporter.

The "roadmap" calls for the recognition of a Palestinian state as part of a peace deal, and calls for an end to the violence and Palestinian reform as steps along the way. Both the Palestinians and Israelis have expressed reservations. Ariel Sharon was recently quoted as dismissing the plan and the Israeli government has emphasised that it is committed to President Bush's speech calling for a "two-state solution", rather than the "roadmap".

But Mr Sharon, whose personal enmity towards Mr Arafat is well known, and who has insisted there can be no new peace negotiations until Mr Arafat is replaced as Palestinian leader, did say last month that he would settle for Mr Arafat remaining in a symbolic role with a prime minister running the PA.

But this plan has its problems. Firstly, Mr Arafat still holds enormous power in the PA and a prime minister could be seen as his puppet. Secondly, there is no obvious candidate for the job. The Israeli newspaper Yedioth Ahronoth reported yesterday that the US is pushing for Salam Fayyad, the new Palestinian Finance Minister, to become prime minister.

Mr Fayyad won praise from international diplomats for his efforts to reform the Palestinian economy and rein in corruption. He is regarded as talented and honest. But it is not clear whether he would have sufficient support among Palestinians or a power base within the PA. Nor is it clear he would want the job.