Palestinian leader Yasser Arafat expressed reservations Monday about a U.S.-backed Mideast peace plan, while a visiting U.S. Senator and key backer of Israel spoke out in favor of a Palestinian state. Sen. Joseph Lieberman, D-Conn., said a solution to the Mideast conflict must include a "strong and peaceful" Palestinian state. Lieberman also said Monday he "probably will" run for the 2004 Democratic presidential nomination. He met with Palestinian officials Monday but shunned Arafat.

Also Monday, a top Hamas fugitive, Shaman Sobih, and an accomplice were shot by Israeli troops in what Palestinian security officials said was a targeted killing. The two were riding a tractor when they were ambushed near the West Bank town of Jenin, the officials said.

In a separate incident, Israeli security agents arrested two Israeli Arabs about the Palestinian terror attack that killed five people in Kibbutz Metzer, northern Israel. A government statement said the Israeli Arabs had hidden the Palestinian attacker's rifle after the Nov. 10 attack.

Meanwhile, the Israeli government announced it has approved plans to build 232 more homes in the West Bank Jewish settlement of Emmanuel, and that it will invest DLRS. 2.6 million in tourism projects in the West Bank and Gaza Strip.

The projects were approved even as the so-called Quartet of Mideast mediators - the United States, the United Nations, the European Union and Russia - pressed ahead with winning Israeli and Palestinian support for a three-phase plan that would culminate with Palestinian statehood by 2005. Among other things, the plan calls for a freeze in Jewish construction in the West Bank and Gaza.

The plan has been circulating for weeks, and over the weekend, Israel and the Palestinians were given a revised version incorporating some of their initial comments. A final plan will be adopted after Israel's Jan. 28 general election.

Arafat, speaking to reporters Monday at his Ramallah headquarters, said he was studying the new proposals. "What we have received is not a final draft, and we still have a lot of reservations," he said. "Israel itself did not accept it yet."

Arafat did not explain what he didn't like in the revised version. The Palestinians have said they accept the plan in principle.

The "road map" to peace calls for internal Palestinian reform, a cease-fire and an Israeli withdrawal from Palestinian towns in the first phase. In 2003, a Palestinian state with provisional borders is to be formed, followed by negotiations on a final peace deal that should lead to full Palestinian statehood by 2005.

ARAFAT SLAMS ISRAEL GRIP ON BETHLEHEM AT CHRISTMAS

President Yasser Arafat meanwhile lashed out against Israel's military grip on Bethlehem ahead of what was expected to be a muted Christmas holiday in the city of Jesus's birth.

Festivities in the West Bank city on Tuesday were expected to be short on cheer as the city remains under Israeli occupation since a resistance bombing in nearby Jerusalem one month ago.

"Is it fair that the whole world celebrates Christmas in freedom while our people in Palestine and Bethlehem are banned from celebrating Christmas festivities?"

Arafat, a Muslim, said at a meeting with Palestinian Christian leaders in the West Bank city of Ramallah on Monday. An Israeli army spokesman could not say whether a curfew in Bethlehem, lifted in recent days, would be imposed on Tuesday.

Israel has said it would ease military measures for the holiday as long as there was quiet, but occupation troops remain on its outskirts even when no curfew has been imposed. Israel barred Arafat from Christmas events in Bethlehem for the second year running since the start of a Palestinian uprising against Israeli occupation in September 2000, blaming him for not stopping more than two years of bloodshed.

The Palestinian leader, who had annually attended Christmas Eve mass in the city after it was handed to Palestinian control in 1995, is now largely confined to his headquarters in Ramallah by an Israeli military siege.

NETANYAHU AGAIN EQUATES ARAFAT WITH OSAMA BIN LADEN

While visiting Moscow on Monday, Israeli Foreign Minister Benjamin Netanyahu said Arafat resembled Islamic militant Osama bin Laden "with very good PR."

Interviewed by Russia's First Television channel after a day of talks, Netanyahu said: "What we need is a change in the regime. I am talking about Yasser Arafat's terrorist regime. It is very much like the Taliban regime," referring to the fundamentalist authorities ousted from Afghanistan.

"The only difference is that he has very good PR people. Arafat can be compared to bin Laden, with the only difference that his image makers are very good. Nevertheless he is still a bin Laden."

PHOTO CAPTION

Palestinian leader Yasser Arafat holds a candle during a Christmas celebration at his headquarters in the West Bank town of Ramallah, Monday, Dec. 23, 2002. In the background is a painting depicting Jerusalem's Dome of the Rock. (AP Photo/Muhammed Muheisen)