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Palestinian leader Yasser Arafat is considering the appointment of a prime minister to share the running of day-to-day government affairs once a Palestinian state is declared after a planned January election, a senior Palestinian official said Wednesday.

"He says in an independent state there needs to be a prime minister," Palestinian Planning Minister Nabil Shaath told The Associated Press. "The prime minister solves a lot of daily problems that the president should not address."

Shaath said the beleaguered Palestinian leader, who for months has been largely confined by Israel to his battered compound in the West Bank city of Ramallah, signed a decree asking him to convene a team of legal experts to come up with proposals on the idea of a prime minister and other constitutional issues.

Shaath, a former top peace negotiator who is in effect the Palestinian foreign minister, is himself being considered as a candidate for the prime minister post, according to Palestinian officials. Shaath is considered a political moderate.

Shifting at least some executive powers to a prime minister could provide a way out of the impasse created by the refusal of Israel and the United States to deal with Arafat directly. Last month President Bush said Palestinians should choose new leaders "not compromised by terror."

Although Arafat has not yet formally announced his candidacy, he is widely expected to run in the January vote, and no serious challenger has yet emerged. Arafat said this week he would be a candidate if it were approved by his Fatah movement and the PLO leadership.

Ranaan Gissin, spokesman for Israeli Prime Minister Ariel Sharon, said the idea of Arafat remaining as president was "acceptable" to Israel "as long as Arafat does not stand in the way of a significant change."

"The question is how to make it so his influence is not harmful," Gissin said. "As long as Arafat controls the security apparatus and the money, there will be no change."

A senior Bush administration official said the administration was aware of Arafat's idea. "It's out there," said the official, speaking on condition of anonymity. "It's one of the scenarios we've heard about."

On Monday, Secretary of State Colin Powell said a solution that would create the post of president for Arafat and prime minister for another Palestinian leader "is a formula I'd be more than willing to consider."

A senior Palestinian source, speaking on condition of anonymity, said Arafat had decided on the idea but was waiting for the right moment when he might be able to present it as a concession worthy of a political reward from the United States -- such as an end to the personal boycott.

The idea still faces considerable hurdles -- and Shaath emphasized that it was conditional on the establishment of a state. Shaath said the Palestinians hoped to declare a Palestinian state around the time of presidential and parliamentary elections, tentatively scheduled for January.

U.S. officials have proposed a "provisional" Palestinian state on the lands that were transferred to the Palestinian Authority as part of the 1990s interim accords -- covering some two-thirds of Gaza and 42 percent of the West Bank. Final borders and other contentious issues would be negotiated thereafter.

The Palestinians have in the past rejected the notion of more interim accords, but Shaath's statements suggested they were now considering it.

Saeb Erekat, a Palestinian Cabinet minister in charge of organizing the January vote, said it was premature to discuss a future Palestinian government while Israeli troops remained in control of most of the cities and towns of the West Bank, which they invaded last month in response to suicide bombings.

He also said he did not believe Israel would be satisfied with any Palestinian reforms. "The Israelis don't care whether it's Attila the Hun or the Boy Scouts running the Palestinian government. And the Americans -- if they want to show seriousness, they have to get the Israelis to withdraw and stop the siege."