RAMALLAH, West Bank -- Palestinian Prime Minister Ahmed Qureia rescinded his resignation Tuesday, kissing and embracing Yasser Arafat as the two ended a 10-day political standoff and a deep rift over power.
Qureia resigned earlier this month in frustration at Arafat's refusal to let him restructure the security forces and deal with growing unrest in the Palestinian areas. But Arafat refused to let him step down.
Arafat's almost absolute control over the Palestinian Authority has been a source of frustration for the United States and other countries hoping to promote reform among the Palestinian leadership.
Hassan Abu Libdeh, general secretary of the Cabinet, said Arafat had agreed to give up some control over security forces.
During a visit to Budapest, Hungary, Secretary of State Colin Powell urged Arafat to make good on his word.
"We need action, not propositions, not proposals, not commitments," Powell said. "Action. Real action that transfers power to a prime minister of the Palestinian people, and Palestinian Authority, and consolidation of security services with those consolidated services being under the direction of the prime minister."
Under the agreement, Qureia's power would be limited to the internal security forces, while Arafat would retain control over the Palestinian intelligence service and armed forces, Palestinian officials said, speaking on condition of anonymity.
Still, the officials said Arafat gave ground on the key issue of corruption, agreeing to order the attorney-general to open investigations against tainted officials.
Condemnations of corrupt practices has been one of the major themes of demonstrations in the Gaza Strip over the past two weeks.
Qureia told reporters at a news conference that the two leaders had agreed to enforce power structures already in place.
"I'm not going to bargain with the president about authority over the security branches," Qureia told a news conference in the West Bank City of Ramallah. "We have enough powers over them as it stands."
The two men emerged from a closed-door meeting, kissing each other on the cheeks and clasping and holding up their hands together.
"The president refused my resignation, and I will comply," Qureia said. "This is a new step toward reform and imposing the rule of law. There will be actions on the ground."
Qureia's resignation two weeks ago coincided with a wave of kidnappings, riots and calls for reform that put Arafat in one of his most difficult positions since returning to the Palestinian territories from exile a decade ago.
Fatah rebels had called for an overhaul of the Palestinian security forces, including the replacement of Arafat's disliked cousin, Moussa Arafat, as head of security in the Gaza Strip.
Moussa Arafat's appointment two weeks ago set off demonstrations in Gaza by members of the president's own Fatah movement -- an unprecedented display of public discord.
The protesters demanded that Moussa Arafat be removed as head of security in Gaza, charging that he was tainted with corruption, including weapons and drug smuggling.
Also Tuesday, two Palestinians were killed when Israeli troops backed by helicopter gunships traded fire with Palestinians in an eastern neighborhood of Gaza City, Palestinian security officials said. They added that one of the dead was wearing the uniform of the Hamas militant group but said the second man was a noncombatant.
The officials said five local residents were wounded by the gunfire, among them a 12-year-old bystander.