Prime Minster Ariel Sharon and Palestinian Prime Minister Mahmoud Abbas met last night and two key U.S. envoys were making their way to the region to begin preparing for the summit the two premiers will hold with U.S. President George W. Bush next Wednesday.

The three-hour meeting ended at midnight with a plan to establish professional-level committees, not only on security issues, but to continue the dialogue between the sides. In a statement issued by the Prime Minister's Office, according to a Channel Two report immediately after the meeting, Sharon reiterated his demand that the Palestinians take steps against armed groups, but also informed Abbas that various measures would be taken to alleviate the conditions of the Palestinians, including possible prisoner releases, more authorizations for Palestinian workers and businessmen to enter Israel, the freeing up of Palestinian funds confiscated by Israel, and other steps.

Palestinian sources said after the meeting that Abbas demanded that Sharon transfer to the Palestinians security control over all of Gaza - and not only the northern part - as well as over Ramallah. The sources also said that Abbas demanded a solution to the siege on Yasser Arafat in Ramallah, before next week's summit with President Bush.

Envoys Elliot Abrams, who holds the Middle East portfolio in the U.S. National Security Council, and William Burns, assistant secretary of state for Near East Affairs, were due here this morning to begin hammering out statements to be issued at the summit next week in Aqaba, after their briefing on last night's developments.

Sharon and Abbas went into the meeting hoping for an agreement on issues that they could present to Bush as an accomplishment to bring to the summit. Sharon planned to reiterate his insistence on the Abbas government taking steps against terrorist organizations, while Abbas was to present a report on his latest dialogue with the Hamas, which has indicated its willingness to accept a hudna, a temporary cease-fire, if Israel ceases assassinations and military operations that harm Palestinian civilians. The two sides were at odds over a declaration recognizing the right of a Palestinians to a state, and the means to be used by the Palestinians for stopping terror groups from attacking Israelis.

Meanwhile in Washington, Bush's spokesman, Ari Fleischer, said that the president was going to "look the leaders of the Israelis in the eye and look the leaders of the Palestinians in the eye and say to them: `You must make progress, you must implement the road map, you must carry out your concrete obligations.'" The Palestinians must improve security and Israel must provide humane treatment to the Palestinians, he said. "This is serious work."

Fleischer went on to explain that the Palestinians must disarm those organizations "that oppose a two-state solution and use terror." He said the U.S. would not be satisfied with a hudna-type solution, and would demand full dismantling of the armed groups.

Fatah's Al-Aqsa Martyrs Brigade said last night that it refuses to give up its arms.

Government sources in Jerusalem said Israel wants the statement at Aqaba to be "disconnected" from the road map and not to be based on the first article of the international plan, which calls for a joint statement by the Israeli and Palestinian leaders about a cessation of violence and incitement, and recognition of a two-state solution to the conflict. Israel is demanding that the Palestinians recognize Israel as "the Jewish state" and thereby indicate relinquishment of the right of return of Palestinian refugees. Israel has proposed to the Americans instead that the U.S. forgo the opening statements and get straight to taking action on the ground. According to senior Israeli sources, the Americans have agreed to that.

Sources in Washington were also saying yesterday that instead of a single statement, three separate statements might be prepared at the upcoming summit, each to be announced by the respective leaders in their native languages.

The Americans are reportedly seeking a series of confidence-building measures on Israel's part that would be implemented concurrently with Palestinian actions both to halt violence and incitement and to continue with governmental reforms.