On Monday, Clinton initially sounded an optimistic note. Flanked by Netanyahu and Arafat, he told reporters gathered in the Oval Office that there has been a “significant narrowing of the gaps” while acknowledging that a “substantial amount of work” remains to be done to break the 18-month deadlock in the peace process.

But less than two hours later, Secretary of State Madeleine Albright emerged from a meeting between Clinton and Netanyahu and sought to downplay the amount of progress obtained earlier during 90 minutes of talks involving Clinton, Netanyahu and Arafat — and a second hourlong session between Clinton and Netanyahu.

“The term `breakthrough’ I think gets overused,” Albright told reporters.

However, later in New York, Arafat did stop short of announcing plans to declare an independent Palestinian state in his speech before the U.N. General Assembly. Instead, he called for an international conference to save the peace process.

Netanyahu returned to Israel late Monday in time for Yom Kippur.

Arafat returned to the White House for more talks with Clinton and other top officials on Tuesday to discuss the Palestinian side of the elusive agreement. Clinton reportedly urged Arafat to clamp down on terrorism.

Albright is slated to travel to the Mideast next week to meet with Arafat and Netanyahu to prepare for a Washington summit set for mid-October.

The two Middle Eastern leaders were both in the United States to address the General Assembly. Before coming to the White House on Monday, the two leaders met with Albright over the weekend in New York in an effort to close the gaps that have blocked any progress in the peace process.

The two sides have been unable to agree to an American plan under which Israel would redeploy from 13 percent of the West Bank in stages as the Palestinians took specific steps against terrorist groups in territories they control.

“We are very close on a number of subjects,” Albright said, including the proposed 13 percent. But U.S. and Israeli officials say there is no general agreement on the security package.

Before leaving for Israel on Monday afternoon, Netanyahu told reporters, “We agreed on quite a few things, and so that, at least, is a good start.”

But, looking ahead to the another round of meetings in Washington next month, Netanyahu added: “We’ll see if the Palestinians are prepared to shoulder their responsibilities and to agree to implement them, to carry out their obligations in a concrete way, in a specific time schedule.”

Arafat, addressing the General Assembly after the White House meeting, charged that “the Israeli side still rejects” the American initiative.

Unlike the president, Albright did not claim significant progress.

Instead, she pointed to the meeting of the two Mideast leaders with Clinton as “important” because Netanyahu and Arafat “were here together and they agreed on the importance of the urgency of” coming to a conclusion.

Albright had hoped to “lock in” partial agreement on a U.S. plan that includes the redeployment, security arrangements, safe-passage routes between the West Bank and Gaza Strip, and the opening of a Palestinian airport and seaport.

Meeting with Jewish newspaper editors in New York on Sunday, Netanyahu said the aim of the current talks is “to finish all the interim steps that lead to the launching of the final-status negotiations.”

Netanyahu came into the White House meeting refusing to sign off on a partial settlement as had Albright wanted, fearing that he would lose leverage in security talks if he publicly committed to a redeployment plan.

At least for now, Clinton is going along with Netanyahu’s game plan.

“We have an operating agreement that we will all say that nothing has been agreed to until everything has been agreed to,” Clinton told reporters.

Both Netanyahu and Arafat accepted Clinton’s invitation to return to Washington around Oct. 15 with their negotiators for another push for an agreement.

According to officials, Netanyahu told Clinton that he would agree to a 13 percent redeployment — with 3 percent of the land designated as a nature reserve — if a security agreement can be worked out.

With this commitment, Israeli officials say that the tide has turned in the peacemaking equation. Before Israel agreed to the 13 percent, Netanyahu was blamed for holding up progress. Now that Israel has agreed to the figure, the Israeli officials say the ball is in Arafat’s court.

In addition to the security agreement, another major stumbling block is Arafat’s promise to declare Palestinian statehood next May, when the interim period under the Oslo Accords is scheduled to end.

The question of statehood “has to be resolved in the final status negotiations, as provided for in the Oslo Accords,” Clinton said.

The issue is so sensitive that Arafat deleted references to a statehood declaration in a speech delivered Sunday in New York at an event sponsored by the Center for Middle East Peace and Economic Cooperation.

Arafat pleaded with a mid-morning assembly of about 200 Jewish and Palestinian representatives, as well as a host of U.N. ambassadors from European and Arab states, to “exert every possible effort to ensure the implementation of the agreements signed before May 4, 1999.”

Speaking from the dais — where Palestinian officials sat next to Israeli legislators from both the Likud and Labor parties, and Israeli and Palestinian flags stood side by side — Arafat stopped short of reiterating his intended proclamation to declare a Palestinian state.

But he did say that the May date had “international legitimacy. It just cannot come and go like any other day.

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