STATE OF DENIAL

Israel: Palestinian State Shelved with U.S. Blessing
JERUSALEM (Reuters) - Israel's plan to withdraw from some occupied territory aims to rule out a Palestinian state indefinitely, with full U.S. approval, Prime Minister Ariel Sharon's chief of staff said on Wednesday. Dov Weisglass's remarks on the move to give up the Gaza Strip next year while keeping large chunks of the West Bank surprised U.S. diplomats, who said Washington remained dedicated to a "road map" peace plan for a Palestinian state.

Sharon, wary of alienating Israel's key ally, said later he still backed the "road map" which was effectively dismissed by Weisglass in an interview published in Haaretz newspaper. Palestinians, whose calls for road map talks have been spurned by Israel's ruling right, condemned Weisglass's message.

"I believe he has revealed the true intentions of Sharon. We told the quartet (of U.S.-led peace mediators) eight months ago that the Gaza plan was designed to undermine their road map," said Negotiations Minister Saeb Erekat said.

Secretary of State Colin Powell said Washington thought Sharon was still committed to the peace plan: "There was never any doubt in our minds that that represents the prime minister's position and the position of the government of Israel," he said.

Weisglass's message, coinciding with a big Israeli offensive in Gaza, could help Sharon win over far-right foes who oppose abandoning the territory and may challenge his grip on power. "The significance of our disengagement plan is the freezing of the peace process. It supplies the formaldehyde necessary so there is no political process with Palestinians," Weisglass said. When you freeze the process, you prevent the establishment of a Palestinian state ... Effectively, this whole package called a Palestinian state, with all it entails, has been removed indefinitely from our agenda."

BUSH STANCE

In April, President Bush endorsed Sharon's plan to pull 8,000 settlers from Gaza in 2005 while keeping most of the 230,000 settlers in place in the West Bank. Bush declared that Palestinians could not expect to obtain statehood unless they stamp out militant attacks on Israel. Weisglass said: "What I effectively agreed to with the Americans was that part of the settlements would not be dealt with at all, and the rest will not be dealt with until the Palestinians turn into Finns."

Weisglass said Palestinian leaders' failure to stop militant attacks was to blame for a diplomatic vacuum. Palestinians blame Israeli offensives and continuing settlement in the West Bank. Weisglass ruled out talks on critical issues such as Palestinian refugees, borders and the status of Jerusalem in the foreseeable future: "And all this with authority and permission, all with a presidential blessing."

U.S. diplomats reiterated Washington's position that "disengagement," as in Gaza, could help kickstart the road map. "We feel disengagement, if it is done with international support, has the potential to move both parties closer to realizing the president's vision of two states living side by side in peace and security," said a U.S. embassy spokeswoman.

Weisglass told Israel Radio later he did not mean Israel would never negotiate with Palestinians, only that it would not do so until they "wipe out terror." Otherwise, he said, a Palestinian state would only endanger Israel.