by Herb Keinon

A day that began with Israel offering self-declared "far-reaching" gestures to the Palestinian Authority, ended with a Palestinian delegation angrily rejecting the offer and walking out of a meeting with Dov Weisglass.

A Senior Israeli official said that the PA delegation, which included Minister Saeb Erekat and Mohammed Dahlan, stormed out of the four-hour meeting in Tel Aviv with Weisglass because earlier in the day Israel decided to release "only" 900 security prisoners.

The Palestinians are demanding that Israel release thousands of Palestinian prisoners, including those with "blood on their hands" whom Israel refuses to release at this stage.

PA Cabinet Secretary Hasan Abu Libdeh attacked Israel's gestures as "insufficient" and complained that the Palestinians were not consulted about the number or identities of the prisoners slated for release.

He warned that next week's summit in Sharm el-Sheikh would fail if Israel continued to ignore demands to release thousands of prisoners. He said the PA leadership decided to put the case of the prisoners atop its agenda because of its sensitivity and significance.

Dahlan, who said the numbers were too small, lashed out at Israel for not coordinating the move in advance with the PA.

"The meeting we had today with Weisglass wasn't good," he said. "The Israelis don't realize that the issue of the prisoners is very important for us. It's even more important than the withdrawal from some cities in the West Bank."

The meeting with Weisglass was expected to prepare the agenda for the four-way summit to be held in Sharm el-Sheikh on Tuesday between Prime Minister Ariel Sharon, PA Chairman Mahmoud Abbas, Egyptian President Hosni Mubarak and Jordan's King Abdullah.

Weisglass presented the Palestinians with the decisions made earlier in the day by the seven-man mini cabinet regarding the gestures Sharon planned to announce at Sharm.

One senior Israel official said he was unfazed by the sudden crisis that seemed to place a crimp in the optimism of recent days, saying it fits the pattern of Palestinian negotiating brinkmanship.

"Over the last 15 years, whenever the two sides came close to reaching some kind of agreement, the Palestinians would create a crisis," he said.

Although the meeting was not immediately re-scheduled, the official said it would surely take place before Tuesday's summit, and that the crisis was an attempt to wring more concessions from Israel before the summit.

"But this time it is preposterous, because of the unprecedented gestures we made," he said.

Israel's decision to release 900 prisoners -- 500 shortly after the Sharm summit, and an additional 400 over the next three month conditional on what happens on the ground -- was a source of debate in the meeting of the mini-cabinet, with Vice Prime Minister Shimon Peres and Minister Haim Ramon saying that Israel should not rule out releasing those with "blood on their hands."

Sharon said he was not opposed to releasing those with blood on their hands who have already served more than 20 years, and Peres said in the meeting that Israel should not rule out anything, and judge each case individually.

Both Foreign Minister Silvan Shalom and Finance Minister Binyamin Netanyahu, however, argued against releasing those who were personally responsible for the killing of Israelis.

The debate was not only among ministers, however, as Shin Bet head Avi Dichter was squarely opposed to releasing those with blood on their hand, while Chief of General Staff Lt.-Gen. Moshe Ya'alon was not. The forum did agree, according to government officials, that the first 500 would only be Fatah prisoners, not Hamas members.

The ministers in the so-called mini-cabinet include Sharon, Peres, Shalom, Mofaz, Netanyahu, Ramon and Vice Prime Minister Ehud Olmert.

Mofaz, who presented the forum with a menu of recommendations for their approval, said "This period presents Israel with a strategic opportunity. We have to be careful and calculated, but also give the PA the chance to get into a process that can change the reality."

At the same time, however, Mofaz said that Israel should not be lulled into a false sense of security, and that there have been 55 terror actions -- including mortar firing, shootings and attempts to plan roadside explosives -- since the beginning of what has been widely termed a "quiet" week.

Mofaz said the gestures he recommended were "reversible," and could be carried out without harming the nation's security.

In addition to the prisoner release, the mini cabinet decided to begin the transfer of five West Bank cities to Palestinian security control; set up a committee with the Palestinians to discuss Israel's most-wanted list, and the possibility of removing some names from that list; and a series of steps, such as lifting roadblocks and closures, to ease the Palestinian humanitarian situation.

It was also decided that Israel would restrain from initiating military action in the territories, except in the case of ticking bombs, defined as those either on their way to carrying out an attack, or helping others carry out an imminent attack.

Regarding the transfer of security control, Mofaz said that it was important that this be done gradually, and not "give the Palestinians more than they can chew."

The transfer of the five cities -- Jericho, Bethlehem, Tulkarem, Kalkilya and Ramallah -- will begin with what is considered the easiest city to control, Jericho, and finish with the most difficult: Ramallah. The order of the others has not yet been determined, and the transfer will be staggered to judge how the PA is dealing with one city, before moving on to another.

The forum agreed to a proposal put forward by Shalom that it meet to approve each transfer individually.

As far as Israel's most-wanted list is concerned, government sources said that contrary to press reports, Israel has not decided to give up pursuing Mohammed Deff, Israel's most wanted terrorist, and that the issue did not come up at the meeting.

The mini-cabinet decided, with regards to humanitarian measures, to increase the number of work permits for Palestinians in Israel, remove numerous blockades and roadblocks, open the Karni crossing and increase the hours both there and at the Rafah crossing, and authorize the building of a sea port in Gaza.

Khaled Abu Toameh contributed to this report

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