Israeli Prime Minister Ehud Barak rolls up his sleeves on Monday to focus on a re-election campaign for a February 6 showdown against hawk Ariel Sharon, after sidelining peace negotiations with the Palestinians.
Barak quashed speculation that he would hold a summit with Palestinian President Yasser Arafat in Sweden later in the week, by calling off all contacts between Israeli and Palestinian officials related to peace talks until after the election.
But Arafat, after talks in Davos with United Nations Secretary General Kofi Annan, said he was still committed to the peace process despite a hardline speech he gave earlier.
"We don't want a breakdown in the peace process. We will continue with the peace process despite the difficulties we are facing," Arafat said, adding that he would be prepared to meet Barak before February 6 Israeli elections.
His spokesman said Arafat would meet Egyptian President Hosni Mubarak in the Egyptian Red Sea resort of Sharm El-Sheikh on Monday.
Barak told reporters his decision to temporarily halt peacemaking contacts was taken to "clear the way to go now towards the election".
Political analysts believe Barak will need a small miracle to fend off Sharon, who opinion polls estimate holds a nearly unbeatable 16 to 18 percent lead over the Israeli leader who won in a landslide only 21 months ago.
Barak's hopes for a campaign-boosting breakthrough in peace talks were crushed when Israeli and Palestinian official ended negotiations in Taba, Egypt, on Saturday with a joint statement saying they were closer then ever to a deal.
But a leading pollster said the Taba negotiations, which took place amid some controversy in Israel over the decision by Barak's minority, caretaker government to conduct eleventh-hour talks, had not helped Barak's chances at the polls.
"NO SERIOUS MOMENTUM"
"There is no serious momentum of closing the gap," Yaacov Levy of Gallup Israel told Army radio.
Barak found himself under attack on two fronts on Sunday as Sharon accused him of endangering Israel with his peace policies, while Arafat unleashed a blistering attack before political and corporate leaders at the Davos business summit.
Arafat accused the Barak government of waging "a savage and barbaric war" against the Palestinian people over the past four months since a Palestinian Intifada (uprising) erupted in the vacuum of deadlocked peace negotiations.
Despite Arafat's hard words, U.N. chief Annan said he had spoken several times by phone to Barak on Sunday and that the Israeli leader was encouraged by the outcome of the Taba talks.
"Like all of us he is encouraged by what happened in Taba. He also felt some of the things said in Davos were not conducive to the peace process. But I indicated that if one listens to the entire tape of what Chairman Arafat said perhaps it wasn't all that negative," Annan said.
Barak halted peacemaking contacts after Arafat's blistering attack on Israel at the Davos meeting.
At least 312 Palestinians have been killed since the uprising flared in late September. Forty-eight Israelis and 13 Israeli Arabs have also been killed in the violence.
Israeli soldiers and Palestinian gunmen exchanged fire in the West Bank and several parts of the Gaza Strip, where Palestinian hospital officials reported that eight people, including two 12-year-old boys, were wounded.
PERES URGES ARAFAT TO FIGHT FOR PEACE
Arafat and Israeli elder statesmen Shimon Peres met privately at the sidelines of the Davos summit after Arafat's stinging speech and Peres's own comments in which he publicly beseeched the Palestinian leader to put aside years of bitterness and "walk the last piece of the road for peace".
Peres said a historic peace treaty to end 52 years of conflict was within reach and could be concluded within weeks.
Foreign Minister Shlomo Ben-Ami described the five-day round of negotiations with the Palestinians in Taba as one of the most "serious, deep and detailed" ever.
The sides said they hoped the remaining gaps would be bridged after the election. But frontrunner Sharon, expected to hold the reins of peacemaking after the election, dismissed the joint statement as dangerous.
An outspoken foe of territorial compromises backed by Barak, Sharon accused the embattled 58-year-old Israeli leader of trying to boost his election chances with a piece of paper.
"What we see today to my regret are steps that pose a danger to the state of Israel," Sharon, 72, told a Saturday night campaign event in working-class Bat Yam near Tel Aviv.
The negotiators discussed four main issues in Taba - the fate of Palestinian refugees, borders, security and the future of Jerusalem. The four were the main obstacles to a deal after a U.S.-brokered summit last July that ended in disagreement.
The Palestinians want to create a state in the West Bank and Gaza Strip, which Israel captured in the 1967 Middle East war.
Palestinian negotiator Ahmed Korei reported progress after the Taba talks, but said "gaps on all issues remain" and they would not be easy to bridge.
A lawmaker from Sharon's right-wing Likud party, Limor Livnat, suggested the talks could make life more difficult for a Sharon-led government. "They've created a sort of very complicated international situation for the next government," she said.
HIZBOLLAH GETS IN ON ELECTION ACT
Sheikh Hassan Nasralla, leader of the Islamist Hizbollah guerrillas, indicated in Beirut that his group, which is holding four Israelis captive, was ready to get into the Israeli election act with a prisoner exchange before the ballot.
"I believe this issue (the prisoners) will gain special attention in the few days before the Israeli poll and I say this so no one will be surprised," Nasrallah said. "There are attempts to do something," he said but gave no further details.
Nasrallah told a cheering audience attending an Islamic summit in Beirut that if Barak did not give in to the guerrilla group's conditions for swapping four captive Israelis for Arab prisoners then it would take more Israeli hostages.
Hizbollah guerrillas captured three Israeli soldiers in a cross-border raid in October, several months after Israel ended 22-years of occupation in south Lebanon and withdrew its troops to the U.N.-demarcated international border.
The group also seized an Israeli civilian, who is an officer in the army reserves, in disputed circumstances. Israel says he was on a business trip in Switzerland when he was seized, while Hizbollah says it lured him to Lebanon.