Palestinian mediators sought on Monday to resolve a dispute over security powers between prime minister-designate Mahmoud Abbas and President Yasser Arafat that could delay a new Middle East peace plan. Failure to form a cabinet dedicated to democratic reforms would hold up U.S. presentation of a long-awaited "road map" toward peace between Palestinians and Israel. A self-imposed deadline for installing the cabinet expires on Wednesday.

In Washington, State Department spokesman Richard Boucher said a "strong, empowered cabinet headed by (Abbas)...is deeply in the interests of the Palestinian people."

A senior U.S. official, who asked not to be named, called on Arafat to "stop blocking" such a transition. U.S. officials made clear they thought Abbas should be free to choose his team.

Abbas, also known as Abu Mazen, wants former Gaza security chief Mohammed Dahlan to become interior minister in charge of Palestinian security forces who would be called on under the peace plan to crack down on resistance groups fighting Israel.

But Arafat, who reluctantly bowed to pressure from U.S. and other international mediators to name a prime minister, has resisted Dahlan's appointment and the international bid to loosen the presidential grip on security and peace diplomacy.

Mediators, such as cabinet minister Nabil Shaath, Arafat aide Tayyeb Abdel-Rahim and two other senior officials of his Fatah faction, have been shuttling between Arafat's office and Abbas carrying a bridging proposal.

Dahlan at the Centre of Standoff

Palestinian officials said it called for naming Dahlan to the cabinet, but as a minister without portfolio.

"It would include the option of Abu Mazen appointing him to the Interior Ministry post later," an official close to Arafat said. "Mediation efforts are still under way. We expect brother Abu Mazen to present the cabinet in the coming 48 hours."

There was no word from Abbas, a former peace negotiator seen as a moderate who has avoided the media since accepting the premiership on condition it came with real powers. Ordinary Palestinians strongly support a reform drive.

The official close to Arafat ruled out extending the deadline for forming the cabinet. "(Abbas) either expresses his regrets (and quits) or presents the cabinet on Wednesday," he told Reuters. Abbas threatened to quit on Saturday over Arafat's objection to Dahlan.

The United States says it will release the "road map" envisaging a Palestinian state by 2005 after the installation of a new Palestinian government committed to security and financial reforms and purging corruption in Arafat's administration.

Israeli Prime Minister Ariel Sharon has said he would meet Abbas to try to push peacemaking forward once a new Palestinian cabinet was in place.

But Palestinian officials close to Abbas said the incoming prime minister was doomed to failure on any peace track unless Israel ceased incursions into Palestinian areas, lifted curfews and withdrew from West Bank cities.

PHOTO CAPTION

Palestinian Prime Minister-designate Mahmoud Abbas (L); Palestinian President, Yasser Arafat.