ARABS-ISRAEL - Oct 31 - Israel And Palestinians Begin To Think Beyond Arafat.

The Israeli cabinet and the Palestinian leadership hold separate gatherings, dealing with the same question: how to respond to the absence of Yasser Arafat, who remains hospitalised in France with an unknown illness. Israel's PM, Ariel Sharon, told his cabinet ministers Arafat's ailment had not altered plans for a unilateral Israeli withdrawal of soldiers and Jewish settlers from the Gaza Strip, which is scheduled for next year. But Sharon and his aides raised the possibility that a new Palestinian leadership could open the door to the negotiations envisioned under the road map, the Middle East peace plan that collapsed shortly after its introduction last year. Sharon's spokesman Raanan Gissin said: "If and when a new leadership emerges, and fulfills its obligations, then we would be willing to return to the road map. The opportunity is there. It depends on whether the Palestinians seize it. Without Arafat, we believe the chances would be much greater". Sharon has refused to deal with Arafat, saying he encourages violence against Israel and is not a reliable partner for peace negotiations. Four years of Israeli-Palestinian fighting have extinguished virtually all political contacts between the two sides. With Arafat on the sidelines for an indefinite term, Israelis and Palestinians have raised a wide range of possible scenarios that could play out. Some said they thought that if Arafat passed from the scene, the two sides could find a way out of the current stalemate and reopen some form of dialogue. Others said they believed the Palestinians could face internal battles in choosing a new leadership, which would contribute to further lawlessness in the Palestinian areas and continued conflict with Israel. The head of Israel's military intelligence, Maj Gen Aharon Zeevi-Farkash, told the cabinet that a new Palestinian leadership might try to get the armed Palesinian factions to declare at least a temporary cease-fire with Israel, according to a report on Israel radio. But Israel is skeptical that such truces can hold. The result, the general said, would be increased pressure on Israel to coordinate its Gaza withdrawal with the Palestinians, something that Sharon has so far resisted. Israel says it will allow Arafat to return to his compound in the West Bank city of Ramallah following treatment. But Sharon told his cabinet that if Arafat died, the Palestinian leader would not be buried in Jerusalem. Arafat underwent additional tests Oct 31 at the Percy Army Teaching Hospital outside Paris, and Palestinian aides said that he was feeling better. But doctors are not expected to announce a diagnosis of his illness until Nov 2 or 3, according to Palestinian officials. Arafat has had a low blood platelet count, and doctors have conducted a series of tests to check for cancer, a viral infection and other ailments, Palestinian aides said. Salam Fayad, the Palestinian FM, told The AP that he spoke by telephone with Arafat, and that the Palestinian leader was feeling much better. "Arafat told me, 'I am O.K. I am feeling well. Please tell my brothers there that I am doing well"', said Fayad, who is in the West Bank. "This phone call is clear proof that President Arafat is fully aware of what is going on around him". Meanwhile, senior Palestinian officials have sought to strike a delicate balance since Arafat was airlifted from his West Bank compound on Oct 29 and flown to France. The Palestinians want to show their institutions are still working despite the absence of Arafat, who has played a dominant role for decades. But Palestinian officials do not want to give the impression they are usurping power while Arafat is away, and are acting on the assumption he will return to his former role.