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Powell seeks to quell Arab leaders' anger

Says Bush did not OK settlements

WASHINGTON -- Secretary of State Colin L. Powell led a diplomatic offensive yesterday to placate Arab leaders outraged by President Bush's support for Jewish settlements on the West Bank and opposition to Palestinian refugees returning to Israel.

Powell insisted in interviews and telephone calls that Bush's meeting with Israeli Prime Minister Ariel Sharon produced positive results for the Palestinians and their statehood aspirations.

For the first time in 37 years, Powell said, Israeli settlements are being removed and the property used to benefit the Palestinian people.

''The president did not endorse any particular outcome," Powell said at a State Department news conference. ''He did not endorse any settlements yesterday."

Nor, Powell said, did Bush take positions different from those of previous administrations that ''modifications, adjustments, changes will be required" in the borders Israel held before capturing the West Bank and Gaza in the 1967 Mideast war.

''Everybody knows that," Powell said, although he acknowledged that ''we know this is a very emotional issue for all people in the region, on both sides."

In an interview with the Canadian Broadcasting Corp., Powell said the settlements Israel was giving up in Gaza ''will benefit the Palestinian people who live in Gaza."

Israel also is giving up four settlements on the West Bank, and ''this is the beginning of a process," Powell said.

But the Palestinian prime minister, Ahmed Qurei, said after meeting with Yasser Arafat that he was considering resigning. He said Bush had undermined the negotiating process.

What outraged the Arabs were statements Wednesday by Bush after a White House meeting with Sharon.

The president, citing ''new realities," endorsed Israel's retention of some population centers and settlements on the West Bank as part of a final agreement with the Palestinians.

He repeated his promise to try to help establish a Palestinian state by next year but said Palestinians who claim their families were exiled during Israel's founding 56 years ago should be resettled in the Palestinian state, not Israel.

That statement supported Israel's contention that the country's Jewish identity could be erased if tens of thousands of Palestinians were added to the 1 million Israeli Arabs already there.

''Frankly," Powell told CBC, ''those refugees should return to the new state of Palestine, which is what it was created for, not Israel."

However, Powell said, ''ultimately it is for the two parties to work this out among themselves, not for the United States to dictate."

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