Hopes fade for Mid-East peace

Millions of Palestinians have spent decades in camps

Prospects for an imminent peace agreement between the Palestinians and the Israelis are fading, as positions harden over a key sticking point.

A top Israeli envoy, Gilead Sher, said he did not expect significant progress to be made before 20 January, when President Clinton leaves office.

He is due to meet Mr Clinton on Friday, but the president will find it difficult to persuade either side to compromise over the "right of return" for Palestinian refugees.

Mr Barak is slipping in the polls

The Israeli leader Ehud Barak is under increasing pressure at home, where polls published on Friday showed him falling further behind right-wing opposition leader Ariel Sharon in the election contest.

The Palestinian leader Yasser Arafat also has little room for manoeuvre, after the Arab League on Thursday said that the Palestinian right to return to former homes in what is now Israel was "sacred".

And on the streets, a relative lull in the violence was broken on Friday morning, when Israeli soldiers shot dead a Palestinian man at the Erez crossing between Israel and Gaza.

It was the first killing in the conflict in nearly three days.

Sharon surge

The latest incident could benefit Mr Barak's rival. Mr Sharon's key election promise to stop the violence seems to be resonating with Israeli voters.

Rumours say Mr Peres might do better against Mr Sharon

Two polls published in Israeli newspapers on Friday showed Mr Sharon with 50% support. One had Mr Barak on 22%, while another gave him 28% support.

The polls suggest that former Prime Minister Shimon Peres, also of Mr Barak's Labour party, would stand a better chance against Mr Sharon.

The polls placed them neck and neck, and there are rumours that senior Labour figures have asked Mr Barak to stand aside for Mr Peres.

However, the Nobel Prize laureate told Israel Army radio on Thursday that he had rejected appeals to run.

No movement

Mr Barak said on Thursday that his country would never agree to the return of millions of displaced Palestinians.

Reported American proposals

Israel to concede sovereignty over much of east Jerusalem and the Al-Aqsa mosque

Palestinians give up the right of return for Palestinian refugees

Palestinian state on 95% of the West Bank and 100% of the Gaza Strip

However, he also said the alternative to peace was an infinite cycle of violence between Israel and the Arab nations.

Mr Barak said that, without a deal, Israel would have to disengage itself from the Palestinian territories - setting up a security zone along the River Jordan and taking steps to protect its settlements.

"I cannot penetrate the soul of Arafat," he told the BBC's Newsnight programme.

"I cannot know in advance whether behind all the masks he's the kind of leader that can reach an agreement."

Arafat hopes

His comments came after Mr Arafat had said he still hoped for a US-mediated deal before 20 January.

On Thursday, Arab foreign ministers meeting in Cairo said there could be no concessions on the refugee issue.

Mr Arafat had been seeking their views on an American suggestion that the Palestinians give up the right of return in exchange for control of parts of Israeli-occupied east Jerusalem.

The Palestinian leader gave his conditional acceptance to the US plan when he met President Clinton on Tuesday.

Syria, Lebanon and Jordan, which together house the majority of Palestinian refugees beyond the borders of pre-1948 Palestine, insist their views must be taken into account before any Israeli-Palestinian agreement is reached.

More than 350 people, mostly Palestinians, have been killed since the Palestinians launched their uprising in September.