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Palestinian Authority Chairman Yasser Arafat is building a new security force that will be made up of loyalists that will be assigned to protect his regime's stability. According to Palestinian sources in contact with IDF officers, Arafat plans to model the new force on the central Egyptian security service that protects Egyptian President Hosni Mubarak.

The new framework is Arafat's response to Muhamad Dahlan's resignation as head of the Preventive Security Service in Gaza. According to the sources, until Arafat completes the creation of the new force, he will rely on the "Central Emergency Forces" of the Palestinian Police to guarantee domestic security in Gaza. That gives those forces, whose presence is now evident in Gaza's streets, the authority to arrest activists from Islamic extremist organizations.

Arafat's moves are being interpreted as a personal signal to Dahlan that he is not vital to the Palestinian leader and could be sidelined. In Gaza, Arafat's moves are being seen as an expression of his displeasure with the lax approach the various security forces have taken toward the Hamas and Islamic Jihad.

Yesterday's report comes as the IDF plans to convene senior officers for a five-hour session headed by Chief of Staff Shaul Mofaz to discuss the lessons learned since the intifada broke out last fall, and the IDF's assessment of the coming period. The "operational forum," scheduled to take place the beginning of next week, will include brigade commanders, corps commanders and other senior officers. Meanwhile, the IDF is awaiting instructions from the government, including new expenditures for policies Prime Minister Ariel Sharon wants to implement, including widening the corridor between Ma'ale Adumim and Jerusalem and building new bypass roads in the territories at an estimated cost of some NIS 250 million.

The defense establishment has lately been focusing on reaching agreements with local Palestinian commanders, rather than dealing with the top echelons of the PA, because of the authority's apparent inability to impose its will. As a result, the "Supreme Security Committee," which included top Shin Bet and IDF officers who met with Palestinian counterparts, has lost some of its standing.

IDF sources now say that senior PA officials are focused on efforts to shore up their positions inside the PA as a result of the intensifying domestic dispute some of them have with Arafat and criticism by Fatah and Islamic organizations against the PA leadership. For example, Abu Mazen has met twice in the last two weeks with Fatah leaders in Gaza, praising Fatah's role in leading the military and political struggle and telling them that "this is the beginning of a new period that requires the Palestinian people to wake up, learn from the mistakes of the past and work for the establishment of a Palestinian state with Jerusalem as its capital."

Along with the power struggles in the PA leadership and between that leadership and local leaders, Palestinian sources are reporting a further deterioration in the rule of law and order and new forms of corruption in the PA. In Bethlehem, armed Fatah activists have been extorting local businessmen. One not only lost land for the sake of constructing a new mosque ordered built by Arafat, but also was forced to help finance the building. After the IDF departure from Bethlehem, local youths looted stores and other commercial enterprises.

Economic activity is flourishing in areas outside direct PA security control, such as Abu Dis and Azzariyeh. PA officials are encountering hostility in those areas, including stone-throwing at the vehicles of the Jerusalem district Palestinian police commander, Abdel Razek Faroun.

There are also reports of power struggles in Bethlehem over a new Fatah leader to replace Ataf Abiyat, assassinated by Israel earlier this fall. In the refugee camps, which are under-represented in the city's local government, there is opposition to the Ta'amra tribe choosing the next leader of Fatah from among the tribe. Fatah operatives in the camps are threatening to quit the "Al Aksa Martyrs Regiments," the military wing of Fatah, and to create a new faction, dubbed "Return Martyrs Regiments."

In Jericho, meanwhile, the IDF is attributing the relative quiet to anticipation of the reopening of the local casino, and the hope it will bring business back into the city. But there are also complaints about corruption there, with local security forces refusing to collect more than NIS 500,000 in money owed to local gas stations. Residents are also complaining about the high tariffs the PA slapped onto gasoline supplied by the Israeli petroleum company Dor, which has the contract to sell fuel to the PA. Some are complaining that the tariffs are going "to Arafat's pockets."

Security sources say that despite the economic crisis and the breakdown of confidence in the PA, there has been a slowdown in emigration out of the territories because of fear of hostility toward Arabs and Muslims in the West following the September 11 terror attacks on the U.S.