HIGHLIGHTS: PA Reforms, an Internal Palestinian Affair, Emir of Qatar||Rajoub Says Would only Step Down if Served with a Presidential Decree||Whatever Arafat Does, He's Unlikely to Mollify U.S. & Israeli Critics, Political Observers||Powell to Meet 'Quartet' & Arabs||EU Calls for a Joint International Mideast Peace Initiative||21 Injured in Inter-Palestinian Clashes in Gaza|| STORY: A flurry of regional and international diplomatic activity dominated the political scene in the Middle East as mystery continued to surround the fate of Arafat's Security Chief amid on-going intifadha clashes with Israeli occupation forces now in command of all Palestinian West Bank cities but one. (Read photo captions)

HH the Emir of Qatar Sheikh Hamad Ben Khalifa Al-Thani, also current chairman of the Organization of the Islamic Conference (OIC), who met with President Hosni Mubarak of Egypt in Cairo and with French President, Jacques Chirac in Paris respectively on Wednesday, stressed deep regional and international concern bordering on distress over the on-going bloodshed in the Middle East. Commenting on calls in Washington for the removal of President Arafat as a pre-condition for taking steps toward creating a Palestinian State that would live in peace side by side with Israel, HH said that was a decision that only the Palestinians themselves could take.

President Bush said last month that no move would be made toward creating a Palestinian state unless Palestinians elected new leaders "uncompromised by terror" and implemented sweeping democratic reforms.

Arafat responded last week by calling elections for January and announcing an overhaul of Palestinian institutions, including the multiple security services Israel has blamed for failing to stop attacks that have killed scores of Israelis.

MYSTERY SURROUNDS RAJOUB'S FATE

In the territories, Yasser Arafat's effort to overhaul his security forces under pressure from Washington was mired in confusion Thursday as mystery surrounded the fate of his powerful West Bank security chief.

Observers say, a high-level bid to remove Colonel Jibril Rajoub, considered one of the Palestinian president's potential successors, appeared to be in the works, although Rajoub denied such reports as "lies and baseless stories."

Rajoub, who commands the loyalty of thousands of security men but recently has had rocky relations with Arafat, said he would step aside if the Palestinian leader ordered him to do so. He cannot be removed without a presidential decree.

"It's clear that Arafat would prefer not to get involved," said one source that declined to predict what would happen next.

WHATEVER ARAFAT DOES, HE'S UNLIKELY TO MOLLIFY U.S. & ISRAELI CRITICS

Observers meanwhile concluded that whatever the outcome of the Palestinian power struggle, it was unlikely to be enough to mollify Arafat's U.S. critics.

In an interview with Reuters Wednesday, Secretary of State Colin Powell reasserted Washington's position it would no longer deal with Arafat and said U.S. officials had embarked on a diplomatic effort to bring reluctant Europeans on board.

POWELL TO MEET 'QUARTET' & ARABS

In Washington, Powell told Reuters he would soon meet fellow members of a "quartet" of Middle East peacemakers, and Arab leaders, for fresh talks aimed at ending 21 months of Israeli-Palestinian violence.

The envoys are expected to address differences between the United States and its European and Arab allies over Arafat's future.

Powell maintained the United States was not trying to dictate to other countries involved in peacemaking but said if they wanted to talk to Arafat they should deliver the same message as Bush did.

"This requires some change in the way that we're doing business and until we see that, we don't think we can work with the current leadership of Chairman Arafat," Powell said.

EU CALLS FOR A JOINT INTERNATIONAL MIDEAST PEACE INITIATIVE

In Washington, a top European official urged the United States on Wednesday to work with the European Union to start a "new, concrete and realistic peace process" for the Middle East.

Danish Foreign Minister Per Stig Moeller, whose country took over the presidency of the EU on Monday, called for step-by-step confidence building measures, "starting from the bottom instead of working down from the top" by holding an international peace conference.

In a speech at the American Enterprise Institute, a Washington think tank, Moeller said the Palestinians must keep their promise to hold elections soon, but "Israel should withdraw its forces from Palestinian self-rule areas if elections are to take place."

Moeller said the EU would continue to back Yasser Arafat as long as he remained the democratically elected leader of the Palestinian Authority

GAZA HEATING UP AGAINST COLLABORATORS.

While U.S. and Israeli officials have voiced skepticism about Arafat's plans, ordinary Palestinians -- even those who complain of corruption and mismanagement in the Palestinian Authority -- have rallied to support him.

In Gaza City, thousands of Palestinians chanted slogans, carried banners and fired guns in the air at a rally organized to protest Bush's call to replace him.

But Gaza was also the scene of fresh unrest. Palestinian security forces fired at protesters who attacked a police station with rocks and pipe bombs, demanding the execution of a suspected collaborator with Israel.

Hospital officials said 21 people, including seven policemen, were wounded in the violence in Rafah refugee camp.

Rafah has been seething since Hamas originally kidnapped and interrogated the alleged collaborator several days ago.

The Islamic militant group says there is a video of his confession, and there were plans for a public execution.

But the Palestinian Authority then intervened.

Along with local faction leaders, it convinced Hamas to hand the man over to Palestinian police to prevent a breakdown of law and order.

Local clan leaders managed to restore calm after the violence.

But Hamas supporters are insisting that the Palestinian Authority carry out the death penalty.

Palestinians have turned on alleged collaborators with fury over the past few months.

PHOTO CAPTIONS

(Top) Emir of Qatar, SH Hamad Ben Khalifa Al-Thani met in Paris Wednesday with French President Jacques Chirac. HH arrived in Paris from Cairo where he had similar talks with Egyptian President Hosni Mubarak. Discussions in France and Egypt centered on the Mideast crisis and bilateral relations.
(Bottom) The body of top Hamas militant Muhanad al-Taher is carried by masked colleagues, one making the religious Moslem sign "One God", during the funeral procession on July 3, 2002 in the West Bank town of Nablus. The militant Islamic group Hamas has vowed to avenge Israel's killing of al-Taher, described by Palestinians as "the Engineer-4", the head of Hamas's military wing in Nablus and a bomb-maker at the top of Israel's most-wanted list, threatening a new spasm of violence in a 21-month-old Palestinian uprising against Israeli occupation. REUTERS/Radu Sighe