ARABS-ISRAEL - June 28 - Powell Backs Int'l Monitors But Aide Qualifies Offer.

After meeting Arafat in Ramallah, Powell tells reporters: "I think as we get into the confidence-building plan, there will be a need for monitors and observers to see what's happening on the ground, to serve as interlocutors, to go to points of friction and make an independent observations of what has happened". At a joint press conference afterwards, Powell said: "What the nature of what that monitoring observers regime might look like - who might be members - we haven't come to a conclusion yet". A senior State Department official later stressed that any type of monitoring group would need the support of both Israelis and Palestinians, and that Powell was not endorsing any specific proposal. (At the UN, the US has twice vetoed, in December and March, PA proposals for an international protection force).

He adds: "We have not changed one iota on the idea that what's done has to work for both sides". For his part, Arafat says he is "completely committed" to the peace process, the Mitchell report and the June 13 ceasefire. The settlement issue came up both in Powell's meeting with Arafat and one he held earlier with Peres. Arafat demanded that Israel withhold government money for settlements, add no new houses to them, build no new settlements and erect fences no more than 50 metres from the boundaries of existing settlements. The Israeli government has said it would refrain from building new settlements, but would let existing ones expand to meet their natural population growth. The PA accuses Israel of using that formula to disguise continued settlement growth. Earlier this week, Peres said certain small isolated settlements should be dismantled, a position renounced by Sharon. Asked about settlements in his joint press conference with Powell, Peres said halting new settlements was a condition in the agreement that led to the formation of Sharon's coalition government. He added: "This coalition was formed on the basic agreement by all parties that there will be no new settlements". Peres and Arafat are to meet this weekend in Portugal at a meeting of the Socialist International. Peres is honourary chairman of the group and Arafat has been invited to attend.