Palestinians hold out for statehood as talks go to wire

The prospect of a new state in the Middle East hung in the balance last night as negotiators struggled with the most incendiary issues in an Israeli-Palestinian agreement.

The prospect of a new state in the Middle East hung in the balance last night as negotiators struggled with the most incendiary issues in an Israeli-Palestinian agreement.

At the core of the talks between Israel and the Palestinians at Camp David was the idea of statehood for Palestine, and what concessions both sides were ready to make to achieve it. Success was far from guaranteed, despite more than a week of talks at the presidential retreat in Maryland between Yasser Arafat and Ehud Barak, the Palestinian and Israeli leaders.

President Bill Clinton had put an artificial deadline on the talks, an old negotiating ploy, by saying that he wanted all discussions to be wrapped up by this morning. He was due to depart this afternoon for Japan, where leaders of the Group of Seven leading industrialised nations were gathering.

Everyone was aware that there was time to carry on at Camp David, if required; or to delay and resume negotiations at a later date. But until the last moment, there was uncertainty about the final result, and whether it would be a full deal or a framework agreement that left key issues until later.

Avraham Burg, Israel's parliament speaker, claimed that a deal on a Palestinian state was close. For him, that was a simple question. "Listen, let's not fool ourselves, OK?" he said. "If it walks like a duck, if it talks like a duck, if it sounds like a duck, it's a Palestinian state." To Palestinians familiar with the language games of the Middle East negotiations, this is far from comforting. They do not want a duck; they want a fully functioning state within borders that conform to existing international agreements, with Jerusalem as its capital. This kind of linguistic gymnastics has helped to cover what many see as the betrayal of Palestinian aspirations since the 1993 Oslo Accords.

Words were also stretched as US spokesmen discussed the possibility of a deal before Mr Clinton departed. "You'll know that we're following through on the schedule when you see the president walk to the top of the steps [of the plane] and wave and the door close," a White House spokesman told reporters.

Mr Clinton met Mr Barak, then Mr Arafat, then Mr Barak on Monday. He had already met both together twice. The longer-term deadline for a deal still stands - the Palestinians have said that even without agreement they will declare statehood on 13 September.

The Palestinians had said, before the talks began, that they thought the timing was wrong - too little had been agreed in advance. Mr Arafat nearly walked out last weekin another display of gamesmanship.

Both delegations and the United States are increasingly concerned with how much money would be needed from the US Congress and from other international donors, including the European Union.

But the main subjects of disagreement were not as easily susceptible to compromise. One key issue, the status of Jerusalem, had been the subject of rumours for a week, with some sort of remapping exercise - annexing some Jewish settlements to Israeli-held Jerusalem, while giving the Palestinians some form of control over other parts of East Jerusalem - seemed to be under discussion.

Ehud Barak is also willing to give back most of the West Bank - perhaps more than 90 per cent - but wants to annex big Jewish settlement blocks and to retain control over some border territory. The Palestinians have been prepared to negoatiate, while publicly insisting on the return of all the occupied territories - including land now housing 180,000 Jewish settlers - in line with UN Resolution 242.

On refugees, the Palestinians want Israel to recognise UN General Assembly Resolution 194, which says their refugees - some 3.5 million people spread across the West Bank, Gaza, Lebanon, Jordan and Syria - should have the right to return to their homes, now in Israel.

The Israeli Prime Minister arak has resisted any formula that involves his country accepting responsibility for the refugee problem. But he has been open to the possibility of admitting tens of thousands, under a family reunification scheme, and favours an international fund to rehabilitate refugees in the countries they occupy now.