Israeli - Exile of PLO chief could spur end to violence

WASHINGTON -- Israel's finance minister proposed on Tuesday that Yasser Arafat be exiled, saying the Palestinian leader had taken "a strategic decision to hurt us as much as he can."

Silvan Shalom, who also is deputy prime minister, was in Washington for talks with Treasury Secretary Paul O'Neill and Alan Greenspan, chairman of the Federal Reserve Board.

He told reporters over lunch that Israel was experiencing the worst recession in its history and that terrorism, which discourages tourists and investors, was one of the main causes.

On the bright side, Shalom said technology giant Hewlett-Packard had decided to build a research and development factory in Israel and that France was committed to a major water treatment project there.

And, he said, O'Neill had agreed to move quickly to determine if Israeli banks meet U.S. anti-money laundering standards.

Positive step

Shalom is in the process of trying to sell the last two Israeli state-run banks, Leumi and the Israel Discount bank, to private investors.

However, Shalom said the terror attacks were taking an unacceptable civilian and financial toll on Israel. "If other countries were in the same situation they would not take this so long," he said.

State Department spokesman Richard Boucher repeated a call by the Bush administration that Arafat curb attacks on Israel. Boucher said if reports that Saudi Arabia wanted to reach out to Israel panned out "it would be a significant and positive step."

But the first, crucial step, Boucher said, would be for Arafat to arrest terrorists and dismantle their organizations.

Shalom said Arafat was responsible for more terror attacks than Hamas and the Islamic Jihad, two organizations branded as terror groups by the State Department.