ISRAEL all but wrote off the prospect of reviving the Middle East peace process yesterday as Yassir Arafat stood on the brink of winning a power struggle with the new Palestinian Prime Minister.

Senior Palestinians said that Mahmoud Abbas had no chance of forming a government after his row with Mr Arafat, the Palestinian leader, over Cabinet appointments.

Mr Abbas, the Palestinian Prime Minister-designate, has until today to submit his Cabinet list to the Palestinian Legislative Council for approval. Without Mr Arafat’s endorsement, it is unlikely that the majority of Fatah members in the parliament will support the administration.

Mr Abbas, who has been courted as a partner for future negotiations by the United States and Israel, has threatened to resign unless his Cabinet is approved. He said yesterday that he would step down unless Mohammad Dahlan, 41, was put in charge of the security services, a role that would involve confronting militants who attack Israel.

Palestinian sources said that the issue was deadlocked and that time was running out for Mr Abbas, also known as Abu Mazen. Standing firm over Mr Dahlan was a key test of Mr Abbas’s credibility, they said.

Nabil Shaath, a Palestinian Cabinet minister and an Arafat loyalist, said: “Mahmoud Abbas has no chance of presenting a government due to the large gaps and deep crisis between him and Yassir Arafat.”

Mr Arafat is understood to have approached other candidates for Prime Minister, including Mr Shaath and Salem Fayed, the Finance Minister.

Sources close to Ariel Sharon, the Israeli Prime Minister, said that replacing Mr Abbas with one of Mr Arafat’s allies would wreck the chances of negotiations along the lines of the peace “road map”, an international plan that envisages a Palestinian state by 2005.

Raanan Gissin, Mr Sharon’s spokesman, said: “Contrary to Arafat, Abu Mazen is against terrorist activity and against what is euphemistically called the armed intifada. If Arafat is going to put in another leader, it’s going to be a non-starter. And what’s going to be the main victim? The road map. If it’s someone who is going to continue the present Palestinian policy, that gives us no option but to continue with our present policy.

“This whole process could have been much shorter and the Palestinian people would have been stronger in pressuring Arafat if it wasn’t for the Europeans, who keep giving Arafat legitimacy by coming to see him and giving him light at the end of the tunnel.”

Washington is committed to publishing the road map after Mr Abbas and his Cabinet are confirmed. President Bush has floated the idea of a meeting between Mr Abbas and Mr Sharon being hosted at the White House. Israel is ready to ease security measures should Mr Abbas take office.

Mr Dahlan left the Palestinian Cabinet last year after a disagreement with Mr Arafat, who sees him as dangerously ambitious. However, his effectiveness in dealing with militants as head of preventive security in the Gaza Strip has won Israel’s support. Mr Arafat has insisted that Hani al-Hasan, the present Interior Minister, remain in charge of security.

Mr al-Hasan was a vocal critic of the 1993 Oslo peace accords with Israel, which Mr Abbas helped to negotiate.

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