The Bush administration is preparing a strategy for resumed Mideast peacemaking that rests heavily on an emerging core of Palestinian leaders taking charge of keeping order and nurturing an embryonic government.

In his first postelection news conference Thursday, President Bush reaffirmed his intention of working for a free Palestinian state living side by side with Israel.

He initially promised to try to get that state established in 2005, but no one believes that goal is attainable in the absence of Israeli-Palestinian negotiations.

There is an opening, though — the projected Israeli withdrawal from all of Gaza and a handful of West Bank settlements next year, and the passing of the gravely ill Yasser Arafat (search) could provide impetus for genuine peacemaking, provided renewed violence does not sabotage the process.

The Palestinian leader was shunned by Bush from the outset as incompetent and probably corrupt. And the two prime ministers he named later, Mahmoud Abbas (search) and Ahmed Qureia (search), found they did not have the authority to tighten security and thereby give Israeli Prime Minister Ariel Sharon the curtailment of terror attacks he set as a precondition for negotiations.

During Arafat's illness there has been relative calm while the Palestinians set up a sort of cooperative structure keyed to Abbas, known popularly as Abu Mazen, and Qureia, familiarly known as Abu Ala. And the two of them were able to run a Palestinian quasi-government.

The Bush administration hopes that would continue, a senior U.S. official said. And, speaking on condition of anonymity, he said the administration also hoped that government institutions would emerge.

But on the Israeli side, officials say the relative calm is due to the interception by Israeli forces of would-be attackers.

Iran is believed to be assuming a larger role in infiltrating terror groups and fueling their zeal to attack Israel.

In light of Sharon's refusal to negotiate under threats, that could keep negotiations sidetracked.

Martin Indyk, assistant secretary of state in the Clinton administration, said Bush had not helped the Palestinians develop new leadership as alternatives or successors to Arafat.

Indyk, speaking Thursday at the Brookings Institution, where he directs the Saban Center for Middle East Policy, recommended the Bush administration resume direct financial assistance to the Palestinian Authority.

"We cannot appear to be choosing Palestinian leaders, but still we have to find a way to help them demonstrate to the Palestinian people they can deliver in a way that neither Arafat nor the terrorists could," Indyk said later in an interview.

"That means working with Israel and Egypt to coordinate the handover of power in Gaza as Israel disengages, and it means as Israel dismantles settlements on the West Bank, that the new Palestinian leadership takes control and responsibility," he said.,

Steven Spiegel, a political science professor at the University of California, Los Angeles, said he expects a two or three-week period of quiet following Arafat's death. After that, Spiegel said in an interview, what the United States does will be critical.

"On the one hand, you can't go in and embrace Abu Mazen so that he appears to be our guy. On the other hand, you have to be sure he succeeds, meaning the Palestinian people see themselves as better off," Spiegel said.

"So there have to be some economic benefits, a letup on barricades and limits on travel and the like," the professor said.

However, Hamas and other groups want to oust Abu Mazen (search), so they will encourage an upsurge in suicide bombings, knowing Israel will reverse its easing of restrictions and Mazen will look like he is incapable of improving the Palestinians' lives, Spiegel said.

Patrick Clawson, deputy director of the Washington Institute for Near East Policy, said Arafat's passage would provide an opportunity for the Palestinians to choose a new leader through elections. "It would set a wonderful example for the Arab world," Clawson said in an interview.

And, he said, "since the U.S. government has said that Mr. Arafat is an obstacle to progress in the Middle East peace process, if he passes from the scene that should be an opportunity for reinvigorating the peace process and seeing what can be done to make sure the disengagement from Gaza fully benefits Israelis and Palestinians."

James Phillips, Mideast specialist at the Heritage Foundation, said Arafat has "really poisoned the atmosphere for prospective peace talks, promising so many things and failing to deliver so often, he eroded Israeli trust in a Palestinian negotiating partner."

But "hopefully after he passes from the scene the Palestinians can develop a more constructive approach than Arafat's disastrous strategy," Phillips said in an interview.

The onus for reviving the stalled peace process should be on the Palestinians and not on the United States, the analyst said.