JERUSALEM — The distance between the public stances of Prime Minister Benjamin Netanyahu and Palestinian leader Yasser Arafat appears to be growing daily.

Netanyahu, in an interview that appeared Sunday in the largest Palestinian daily, Al-Quds, said he foresees no agreement with the Palestinians over the future of Jerusalem.

"There exists no possibility we will agree with the Palestinian Authority on the final status of Jerusalem, and it appears this is one of the issues which cannot be resolved," he said.

Meanwhile Arafat, in an interview with Israel Television's Channel 1, said he would turn to international arbitration if Israel failed to meet its obligations under the self-rule accords.

"We have the United Nations. We have The Hague. We have the co-sponsors of the peace process," he said. "We have the U.N. Security Council and the Europeans. We will go to arbitration."

And Arafat, in language as blunt as Netanyahu's, added that eastern Jerusalem "will be the capital of a Palestinian state."

Their decisions to address the Israeli and Palestinian public directly through the media appears to set the stage for an attempt to influence Israeli and Palestinian public opinion over the heads of their respective leadership.

The interviews also revealed what appears to be a widening public gap between Arafat and Netanyahu over several key issues.

For instance, Arafat, in his interview, said that a meeting between him and Netanyahu was inevitable.

"He can't ignore me," Arafat said.

Netanyahu has said he would only consider meeting Arafat if it was "deemed necessary for the nation's security." Since his election in May, he dispatched Foreign Minister David Levy to meet Arafat face to face but has not committed to such an encounter.

"At present, I have hotter issues," Netanyahu said.

One hot-button issue is the direction of the Oslo Accords.

Al-Quds managing editor Maher el-Sheikh, who conducted the interview in Netanyahu's office, said the premier expressed support "for a Palestinian entity next to Israel and open relations."

The editor quoted Netanyahu as saying the Palestinian entity would not be a state, but would have "very generous self-rule."

Arafat said he was sure a Palestinian state would emerge.

"In the final stage there will be an independent state, no doubt, or you are insisting on occupying us," Arafat said.

Another crucial issue Netanyahu faces is Jewish settlement in the West Bank, which this week got a boost when Interior Minister Eli Suissa pledged $5 million for new settlement building.

Netanyahu said he envisioned "natural expansion of settlements," which the government, not the settlers, would decide.

Arafat said the settlements, along with the closures of the territories since March, are angering Palestinians more.

"What do you expect from those who are facing confiscation of land every day," Arafat said.

Netanyahu, meanwhile, said he was close to concluding consultations on the delayed redeployment of the Israeli army from Hebron, which was supposed to take place in March. But he said the move would be planned carefully.

"If we act precipitously…it could bounce back and forth like a hot bullet of TNT that could explode our communities,"he said.