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Prime Minister Ariel Sharon and Secretary of State Colin Powell's press conference on Friday was full of smiles and friendship. But beyond the grins and jokes, the two were at a loss to explain the different approaches which were evident from the first sentence. "Israel is conducting a war on Palestinian terror infrastructures," said Sharon. "I've come on a mission of peace," replied Powell.

Israeli officials don't have great expectations from the Powell visit. Security cabinet ministers who met with the secretary of state came away feeling that the Bush administration "hasn't ironed out" its policy toward the region. Security officials do not believe the visit will yield results; they do not think Palestinian Authority Chairman Yasser Arafat will take a step significant enough to persuade Israel to call off Operation Defensive Shield.

Naturally, the Palestinian view on the visit is a kind of mirror image. They refuse to take any steps forward until Israel Defense Forces troops leave the West Bank.

Powell has pressured Israel to finish the operation and pull out the troops. Sharon made clear to him that the final objective of the operation involves IDF deployments in security areas in the Jordan Valley, and in western Samaria. Sharon has had a consistent plan: a military victory which will persuade the Palestinians and the international community to allow Israel to maintain security zones ("long-term interim arrangements") for years. Sharon showed Powell his well-known map, and marked out the two security strips.

Meetings held by Powell and U.S. mediator Anthony Zinni with Palestinians and Israelis over the weekend left two outstanding problems. The first is the Arafat problem. Various tactical issues can be handled first - such as an Israeli demand for the extradition of suspects and the issue of what must come first, a cease-fire or IDF withdrawal - but after these specific matters are settled, the issue of Arafat's future will remain. Sharon has made no secret of his position: Arafat's removal, says the prime minister, is the key to the success of the diplomatic process. Sharon tried to persuade Powell that Arafat is a partner to Saddam Hussein and to Iranian leaders - together, this Arafat-Iraq-Iran axis wants to undermine regional stability, and scuttle the American action against Iraq, Sharon claimed.

Powell insisted that diplomatic contacts must be accelerated, along with security steps taken on behalf of a cease-fire. He hasn't broached the idea of an accelerated final status agreement. Powell wants a series of preparatory discussions which will provide diplomatic cover needed by the Palestinians to enforce a cease-fire. Sharon has responded to Powell's efforts by offering a concession: if the attacks and violence end ("the implementation of Tenet"), and the sides take up the diplomatic process (according to the "Mitchell" plan), then a regional peace conference can be started, with "state leaders" (meaning, without Arafat).

The Americans have some qualms with Sharon's approach. Powell will visit Arafat's besieged office compound in Ramallah and thereby give him renewed legitimacy. Yesterday, Powell made haste to embrace the terror denunciation statement released by Arafat, 24 hours after the attack in Jerusalem. Israeli officials dubbed the denunciation as "meaningless," and said that nothing is to be expected from Arafat, because he is basically a terror leader. "You say that Arafat is an elected leader," Minister David Levy told Powell, "but Saddam too was chosen by a vast majority of Iraqi citizens, and Bin Laden also had support of most Muslim extremists."

The Bush administration is trying to put together an international aid package to rebuild the PA, including its security apparatus. "Somebody has to wage war against terror," U.S. officials say. The money will come mainly from Europe, which has, in recent days, accelerated a policy of isolating and boycotting Israel. Sharon will be hard-pressed to oppose the PA reconstruction funds at a time when he is demanding the Palestinians use what's left of their security forces to prevent terror.

The second major challenge confronting Powell is the humanitarian distress in the territories - the subject will intensify in importance as disclosures are made regarding what happened in the Jenin refugee camp. Zinni tried to persuade the IDF leadership to display sensitivity toward the possible implications Jenin will have on Israel's international standing.

The crucial meeting between Sharon and Powell will be held today, after the secretary of state returns from the Ramallah compound. Powell will try to capitalize on any concession or slight show of progress made by the Palestinian side in his bid to extract something out of Sharon. Tomorrow apparently he is to travel to Damascus in an attempt to contain escalation on the northern border. Powell is in no hurry to end his trip, though he apparently will leave Israel on Monday or Tuesday. In light of the "situation," he doesn't want to be seen in Algeria photographed standing in silence during the siren on Israel's Memorial Day, or taking part in its Independence Day celebrations. His friends in the Arab world would be less than thrilled by such a display of American support for Israel.