Mr Arafat chose his deputy Mr Abbas to be prime minister
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The Palestinian parliament has rejected amendments proposed by their leader Yasser Arafat to a bill establishing the post of prime minister.
Legislators approved the position last week and Mr Arafat suggested amendments that would give him a firmer grip on the cabinet.
The legislators rejected an amendment - by 49 to 22 - that said the prime minister would have to present any cabinet he formed to the president.
The move may delay the installation of a new prime minister, a condition set by the United States for movement on an internationally-backed peace plan.
The Palestinian president has made some changes... that do not guarantee that the prime minister will be independent in taking his decisions
Hassan Khreishe, legislator
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Parliament speaker Ahmed Qorei said the debate over the legislation would resume on
Tuesday.
Mr Arafat now has the choice of accepting his parliament's decision and signing the bill into law or returning it to the council.
The BBC's Jerusalem correspondent Barbara Plett says it was not clear from the wording whether Mr Arafat was trying to weaken the prime minister or just seeking minor procedural changes, but enough legislators were convinced that he wanted veto power.
Minor blip?
Politicians loyal to Mr Arafat have played down the failure to implement the Palestinian leader's amendments.
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NEW PALESTINIAN POWER-SHARING ARRANGEMENT
Mr Arafat controls security and foreign policy - including peace talks
Mr Arafat has right to appoint and dismiss premier
Prime minister will be in charge of internal affairs and forming a government
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Nabil Shaath, the International Co-operation minister, considered a close Arafat ally said:
"The deputies approved everything except one point which poses a problem, the right of Arafat to appoint or fire ministers. It is not a big issue compared to the power that Arafat already has to name or fire the prime minister."
Several other changes deemed minor by parliament were approved.
The parliament is also facing domestic demands for better government and reformers have long argued that will not happen without a genuine separation of powers, our correspondent says.
Road map for peace
President George W Bush said last week the US would unveil the long-delayed road map for peace as soon as the Palestinian Authority appointed a prime minister "with real authority".
Earlier this month, Mr Arafat nominated his long-time deputy Mahmoud Abbas - also known as Abu Mazen - to be prime minister.
Palestinian bodies moved swiftly to approve the position and Mr Abbas' nomination.
But Mr Abbas has said he will not accept it until it is clear what his powers will be.
So far it is known the new prime minister will have the authority to form and convene the cabinet, and dismiss ministers.
Mr Arafat is to be left in command
of security forces and have the final say on peace talks with Israel.