Israel’s Barak, Sharon fail to agree on unity terms

"If he (Barak) wants us in the government, we must be able to have a real influence on the diplomatic process," said Silvan Shalom, a leader of Sharon’s right-wing Likud party.

"The paper (Barak presented) was unacceptable but we are going to hold another meeting in 30 hours," Shalom said.

Barak met Sharon a day after announcing a pause in peace talks with the Palestinians in the wake of an Arab summit that condemned Israeli "barbarism" in a deadly wave of violence sweeping the West Bank and Gaza Strip.

In the latest violence on Monday, Israeli soldiers killed a Palestinian during a shootout with Palestinian gunmen in the West Bank and a roadside bomb exploded in Gaza.

Palestinians and left-wing Israelis say a Barak-Sharon partnership could eliminate any chance of returning to peace negotiations after bloodshed in which at least 128 people, all but eight of them Arabs, have been killed.

"He is meeting Sharon’s condition. The man is exiting from the peace process," Palestinian negotiator Saeb Erekat told CNN television.

"If you want to join a National unity government…please, the price does not have to be Palestinians and Palestinian blood," Erekat said.

Palestinians say Sharon’s visit on September 28 to a Jerusalem shrine that is holy to both Muslims and Jews was the spark that set off the wave of clashes.

Sharon, reviled by Arabs as the Israeli defence Minister who led the 1982 invasion of Lebanon, denies the allegation. He was forced to resign in 1983 when an Israeli inquiry found him indirectly responsible for a massacre of Palestinians by Israel’s Christian allies at two refugee camps outside Beirut.

Meanwhilea Palestinian man was killed during a prolonged shootout between Israeli soldiers guarding a Jewish settlement in the heart of the divided town of Hebron and Palestinian gunmen on a nearby hill. Both sides used machineguns, witnesses said.

His funeral, together with Palestinian plans to march towards Israeli checkpoints could spark more clashes on Tuesday.

Palestinian gunmen opened fire on the Gilo Jewish settlement on the outskirts of Jerusalem on Monday night, despite Israel’s shelling of the West Bank town of Beit Jala, in retaliation for earlier shooting from the town.

An Israeli tank shelled buildings used by the gunmen in the Beit Jala, across the valley from Gilo. Machineguns mounted on Israeli tanks also returned fire. Three Palestinians and two Israelis were lightly wounded, witnesses said.

Attacks on Gilo, regarded by Israel as a neighbourhood of Jerusalem, have unsettled Israelis’ sense of security after television pictures showed apartments hit by bullets.

Before the latest shooting, the Israeli army warned that if the attacks continued it would surround the town.

The army said no one was wounded when a roadside bomb exploded in Gaza, but security forces have warned that Islamic militants were planning attacks against Israelis in the West Bank and Gaza Strip and in Israeli cities.

Palestinian officials said Gaza International Airport would reopen on Tuesday, after a late-night meeting between Israeli and Palestinian officials.

An Israeli security source said Israel initially decided to shut down the airport and cut off the Palestinians’ air links to the outside world after Israeli security guards felt threatened when armed Palestinians entered the airport.

A Foreign Ministry spokesman said Israel received with "sadness" news that Morocco was severing diplomatic relations with the Jewish State.

Morocco said on Monday it had cut diplomatic ties with Israel in protest at Israeli violence against Palestinians.

Since the 1970s, Morocco has been a discreet broker of rapprochement between Israel and Arab countries and established low-level diplomatic relations with the Jewish state in 1994.

In another devolopment the right-wing Likud wanted assurances from Barak that "two,three months from now" he would not resume peace talks based on what they regard as dangerous concessions the Prime Minister made at last July’s inconclusive Camp David summit, Shalom said.

Barak lost his parliamentary majority on the eve of the Camp David meeting. A partnership with Sharon could save a weakened Barak from an early election which the Knesset could call when it convenes at the end of this month after a summer recess.

It would also delay a possible showdown for the Likud leadership between Sharon and former Prime Minister Benjamin Netanyahu, who opinion polls have shown stands a better chance of beating Barak if new elections are held.

Barak has spoken of a separation from the Palestinians, widely expected to include a unilateral setting of borders and severing of economic links, should peace fail.

Israel’s battered peace camp said Barak had no right to setup "a non-peace-oriented coalition" with its arch-nemesis Sharon.