Leaders dismiss talk of proposal for peace

JERUSALEM -- Israeli newspapers reported Sunday that Israel and the Palestinians had drafted a potential peace plan that would recognize a Palestinian state within two months and work out the final details later.

Israeli and Palestinian leaders promptly dismissed the reports.

But officials, privately, confirmed that Israeli Foreign Minister Shimon Peres and Palestinian Parliament speaker Ahmed Qureia -- a duo whose secret talks led to the first Israel-PLO accords in 1993 -- were discussing the ideas.

Yediot Ahronot and Maariv reported that the two, with the knowledge of Palestinian leader Yasser Arafat and Prime Minister Ariel Sharon, tentatively agreed a Palestinian state would be established in two months in areas already under Palestinian Authority control -- 42 percent of the West Bank and most of the Gaza Strip.

The states would then negotiate other issues -- expanded borders, Jewish settlements, Jerusalem and Palestinian refugees -- over the next year. Any agreement would be implemented within two years.

Peres did not deny the existence of such a proposal but denied any done deal.

"There is no agreement," he told Israeli television.

Sharon's office said the reports, as they appeared in the papers, were "unfounded fantasy," while the Palestinians said they referred to a unilateral Israeli proposal that fell far short of their oft-stated demands.