Despite Violence, Israelis, Palestinians Working on Peace Agreement Behind the Scenes

Israeli and Palestinian moderates are close to a draft peace treaty, both sides said Monday, but at least one potential deal-breaker remains unresolved: the fate of Palestinian refugees.

Even if completed, the 40-page document would have largely symbolic value since those negotiating it are not in positions of real power. However, it could serve as a guideline in future formal negotiations.

In Gaza, Israeli forces engaged in a fierce firefight with Palestinian gunmen early Tuesday as they rolled into the Gaza town of Deir el Balah to demolish the house of a suspected militant, the army and Palestinian hospital officials said.

The forces blew up a home belonging to the brother of Hamas militant Mahmoud Abu Huli, wanted by Israel for allegedly carrying out shooting and mortar attacks on soldiers and Jewish settlements, the army and Palestinian sources said.

Seventeen people were left homeless after the army demolished the Abu Huli house, and Abu Huli himself remained at large, the sources said. In a search in the house, the army said it found mortar bomb parts.

Israel often demolishes the homes of suspected militants and homicide bombers as part of a policy it says is meant to deter Palestinians from attacking Israelis.

At least four Palestinians, including an ambulance driver, were wounded in the gun battle that erupted at the start of the four-hour Israeli raid, Palestinian hospital officials said. No Israelis were injured in the operation, the army said.

In the meantime, soldiers arrested some 25 suspected militants in sweeps throughout the West Bank, the army said. Since June, Israel has reoccupied every major West Bank town and city, except for Jericho, in retaliation for homicide bombings and other attacks on Israelis.

In the West Bank, Israeli troops shot and killed an 8-year-old boy on Monday as Palestinian youths pelted tanks with rocks and bottles, defying an Israeli curfew order. Seven Palestinians were wounded.

The emerging Israeli-Palestinian document is a result of behind-the-scenes meetings during much of the 26 months of violence.

The key figure on the Israeli side is former Justice Minister Yossi Beilin, one of the architects of interim peace accords and a member of the moderate Labor Party. Beilin, who did not represent Labor in the talks, told Israel TV on Monday that difficult issues were for the first time being discussed in detail.

On the Palestinian side, the team was led by Information Minister Yasser Abed Rabbo, who said he was initially only representing himself, but on Sunday was given a more formal role by the Palestinian Authority.

Abed Rabbo said the draft is based on previous negotiations. "We are trying now to reach a detailed agreement on all the issues," he said.

But at least one sticking point remains -- the fate of refugees. "If the Palestinians demand that there be a Palestinian right of return to Israel, there will be no agreement," Beilin said.

Beilin said the draft could be presented to both peoples to show that there is still hope for peace. However, neither side believes the draft will be completed before Israel's elections on Jan. 28.

Israeli Prime Minister Ariel Sharon, who is running for re-election, has rejected the previous negotiations as a starting point, charging that Israel gave away too much. He would offer the Palestinians a truncated state after a long interim stage, an approach the Palestinians reject.

In talks that broke off in January 2001, Israel offered the Palestinians a state in the Gaza Strip, most of the West Bank and a foothold in Jerusalem.

The Nablus incident came as Israeli soldiers enforced a curfew on the city, the largest in the West Bank with a population of about 200,000, including refugee camps on its periphery.

Israeli forces have been in control of Nablus and other West Bank cities since a June invasion triggered by Palestinian homicide bombings. Curfews are frequently enforced in the towns, but more often in Nablus than elsewhere, as Israel charges that militant groups responsible for bombing and shooting attacks are centered there.

Nablus residents are defying the curfew regularly, especially now, during the Muslim holy month of Ramadan. People go to shops to buy food for the traditional nighttime meal, disregarding the Israeli restrictions.

Also Monday, a Palestinian official said that representatives of Yasser Arafat's Fatah movement and the Islamic militant Hamas group are to resume talks this week on stopping homicide attacks.

Preparatory talks will be held in the Gaza Strip, followed by more formal negotiations in Cairo, said the official, Zakariah al-Agha. Previous negotiations ended inconclusively.