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Palestinian Authority Chairman Yasser Arafat's mental functioning has deteriorated greatly of late and his behavior is marked by faulty judgment, the head of the Shin Bet security service, Avi Dichter, told French Interior Minister Nicolas Sarkozy. During a visit to Paris last week, Dichter told Sarkozy that the Shin Bet remains firm in its recommendation that Arafat should not be deported from the territories.

Dichter came to Paris after visiting Rome, to brief the heads of the French and Italian security services and to ask them to beef up security - both covert and overt - around Israeli and Jewish institutions. Israel believes the danger of an attack overseas has increased because of the security forces' success in preventing attacks from the territories and attempts by Hezbollah and Iranian-backed Palestinian groups to heat up the Lebanese border.

Sarkozy, who is considered to be the senior minister after the prime minister in President Jacques Chirac's new government - a measure of the importance Chirac attaches to Sarkozy's field of operation - has been authorized to lead an aggressive law and order campaign, including prevention of anti-Semitic activity. Sarkozy is seen as a strong figure in the mold of previous interior ministers such as Charles Pasqua and Michel Poniatowski and reflects the concern of European governments with regard to the increase in asylum seekers and the rising numbers of immigrants.

Sarkozy is supportive of Israel and is an old friend of Israel's ambassador to Paris, Eli Bar-Navi, who participated in the interior minister's meeting with Dichter.

In his conversations with his Italian and French counterparts, Dichter focused on intelligence evaluations of Israel's battle against Palestinian terrorism and of the chances of the evolution of a new Palestinian leadership that would choose to negotiate with Israel without recourse to violence. The Shin Bet chief reported a sharp fall in the number of Israeli casualties in suicide bombings during the Defensive Shield and Determined Path operations.

Dichter said that Arafat is becoming more and more detached from the reality of the situation around him. His entourage is subject to the chairman's increasingly frequent bouts of anger and he is severely mistaken in his understanding of key processes on the international stage, in particular President George W. Bush's Middle East policy speech and the joint European-American effort to reform the PA's economic and security operations.

Dichter's interlocutors, who agreed with him on the importance of Bush's speech and the need to introduce substantial changes in the structure of the PA, received the impression that Arafat has yet to internalize the significance of this trend - he still believes that he can leave the head intact and attach a new body underneath it, rather than the other way around.

Dichter received a warm welcome in Paris, two weeks after Moshe Ya'alon visited there ahead of taking up his position as Chief of Staff, and a slightly less enthusiastic reception in Rome. In both capitals he was promised that security arrangements would be tightened, but implementation of these promises hasn't started.

Dichter and Ya'alon's hosts expressed satisfaction at the willingness of leading Israeli defense establishment figures to listen to suggestions and to present practical, rather than ideological, explanations of Israel's military moves.

Dichter's short trip to Western Europe awakened the dispute between the Shin Bet and the Mossad, which wishes to retain exclusive control over the foreign contacts of the intelligence services falling under the auspices of the Prime Minister's Office, as opposed to Military Intelligence.

Mossad head Ephraim Halevy, a former director of Tevel, the spy agency's foreign liaisons department, opposes Dichter's initiative to engage in independent connections with foreign security services in their capitals. Dichter, who claims that the Shin Bet has no need to be chaperoned by the Mossad in its contacts with its counterparts, has appointed a foreign liaisons coordinator and plans to post Shin Bet representatives in important capitals. Meanwhile, Mossad representatives accompanied Dichter on his trip.