JERUSALEM -- The Palestinian parliament created the post of prime minister Tuesday, taking a major step toward U.S.-sought reforms and rebuffing Yasser Arafat's attempts to retain a say in forming the next Cabinet.
In the West Bank, Israeli forces killed two top Hamas fugitives accused in a string of shootings and bombings that killed dozens of Israelis. In a separate incident, an 11-year-old boy attending a Gaza funeral was shot and critically injured.
The gunbattles came as Palestinian legislators cast their ballots in a watershed vote that signaled more weakening of Arafat's influence -- a process that began about a year ago amid growing dissatisfaction among Palestinians with his leadership.
'A turning point'
"It's the beginning of a transition -- it is certainly a turning point and a qualitative shift in the political culture," said legislator Hanan Ashrawi. "Now we have power-sharing that is clearly spelled out."
Arafat has been wrangling with the increasingly assertive parliament over giving some of his sweeping powers to a prime minister but reluctantly agreed to create the new position under international pressure. Even with the reforms, however, Arafat will retain control over security forces and peace talks with Israel.
President Bush said last week that installing a credible Palestinian prime minister with real powers is a prerequisite for unveiling a U.S.-backed "road map" to Palestinian statehood.
Before Tuesday's session, Arafat dropped a demand to retain a say over appointing Cabinet ministers. Arafat now has to sign the legislation and will likely offer the job to the No. 2 leader in the PLO, Mahmoud Abbas.
Abbas, a moderate who has spoken out against the armed uprising against Israel, also is the prime minister favored by the United States and Israel.
Last week, the 88-member parliament gave preliminary approval to legislation defining the new post. The prime minister was given the right to appoint, supervise and fire Cabinet ministers -- tasks once the sole preserve of Arafat.
Arafat had sought three amendments to the Palestinian basic law, including a demand that would have given him final say in approving a Cabinet.
The wording was vague, but legislators suspicious of his intentions feared the loophole was another way to weaken the prime minister's powers significantly.
On Monday, parliament rejected Arafat's demand by a preliminary vote of 49-22. Later, Arafat convened legislators from his Fatah movement, who have a majority in parliament, in hopes of persuading them to support his request.
The legislators refused, however, and Arafat was forced to drop his demand, Ibrahim Abu Naja, a Fatah legislator who participated in the meeting, said Tuesday.
"He (Arafat) decided to give up his demand to participate in the forming of the government," said Abu Naja.
Arafat is free to offer advice to the prime minister, but will not be able to impose his wishes, Abu Naja said.
Secretary of State Colin Powell said he was impressed by the Palestinian parliament's decision, which countered Arafat's desire to make the post "something of a creature of him rather than the legislative body."
"I think it is starting to become clear that they wish the prime minister to have authority," Powell said.
But, Powell said, "it seems that President Arafat will still retain authority over security and other matters, and we will have to see now whether the prime minister has the kind of authority that we can view as authority to start moving the Palestinian people into a more positive direction."
Divisions in Arafat's own government and party have been developing for some time.
One of his most outspoken critics, Palestinian legislator Husam Khader, was detained by Israeli troops near the West Bank town of Nablus on Sunday, the army said. Khader, a critic of Palestinian corruption, was expected to vote against Arafat's proposed amendments.
Last year, he called Palestinian Cabinet ministers a "bunch of thieves." It was unclear why the army detained Khader.
In the West Bank village of Baka al-Hatab, meanwhile, Israeli soldiers hunting for militants shot and killed Nasser Asida, 27, a top commander of Hamas' Qassam Brigade, the army said. Asida was hiding in a cave when a gun battle broke out, witnesses said. He was on Israel's most-wanted list for allegedly masterminding attacks on Jewish settlements, the army said.
In a separate incident Tuesday, Israeli troops killed Hamas leader Ali Alian, 27, in a village near Bethlehem. One soldier was also killed and another injured in the gun battle.
Alian was accused of planning at least three attacks on Israelis in the last four months, including one in Haifa on March 5 that killed 16 Israelis and one American, the army said. He was held in Israeli jails between 1994 and 1999.
In Gaza, an 11-year-old boy was critically injured at a funeral when mourners began shooting into the air, as is customary, and Israeli troops opened fire. The shooting occurred near the Israeli settlement of Neve Dekalim in Khan Yunis.
Also in Gaza, Israeli troops fired tear gas at about 300 activists from the Palestinian-backed International Solidarity Movement and Palestinian non-governmental organizations who were honoring an American woman killed Sunday by an Israeli bulldozer.
Rachel Corrie, 23, from Olympia, Wash., was trying to block the bulldozer from demolishing a building in a refugee camp when she was killed.