Prime Minister Keizo Obuchi and visiting Palestinian leader Yasser Arafat reaffirmed Thursday that they will cooperate to ensure peace in the Middle East.

During talks Thursday evening at the Prime Minister’s Official Residence, Obuchi praised Arafat’s recent efforts to push the peace process forward, which led to a major agreement with Israel last month, a Foreign Ministry official said.

Under the agreement, Israel and Palestinian representatives are set to resume talks over the status of Jerusalem and implementation of the provisions of the Wye River accord, a breakthrough land-for-peace deal on the West Bank reached in October 1998.

Progress on these issues was stalled during the tenure of former Israeli Prime Minister Benjamin Netanyahu, who took a hardline stance, but Ehud Barak has worked to restart the peace process since he took over in July.

Obuchi said Japan is ready to make further efforts for peace in the Middle East, and expressed hope that Arafat and Barak will work together to resolve the issue of whether Palestinian independence should be achieved in 2000, the official said.

Arafat, head of the Palestinian controlled territories in Israel and chairman of the Palestine Liberation Organization, expressed gratitude for Japanese economic assistance to Palestinians so far, saying he wants to further strengthen bilateral ties, the official said.

Arafat expressed concern about what he termed an “increasing number of Israeli settlers in the West Bank,” saying the recent surge may pose a serious threat to the peace process.

Obuchi said Japan must first examine whether the number of settlers is actually on the rise. If that is the case, Tokyo will try to resolve the issue through dialogue with Israel, the official said.

Arafat said his government is planning to set up a Palestinian representative headquarters in Japan, to which Obuchi replied that details of such a plan will be discussed at the working level, the official said.

Following talks with Obuchi, Arafat had a meeting with Foreign Minister Yohei Kono, during which Japan pledged up to 1.77 billion yen in grants-in-aid to the Palestinians to finance a project to build schools for basic education in the West Bank, according to the ministry official.

The agreement was signed by Kono and Nabil Sha’ath, minister of planning and international cooperation of the Palestinian Autonomous Government, the official said.

Arafat arrived in Japan Thursday to attend a two-day meeting of aid donors to the Palestinians that opened the same day in Tokyo.

The meeting, co-chaired by Kono and Norwegian Foreign Minister Knut Vollebaek, is aimed at adding momentum to the Mideast peace process following the peace agreement reached last month between Israel and the Palestinians.

Participants are expected to review the disbursement of Palestinian aid pledged so far, monitor the condition of the Palestinian economy and discuss measures to ensure the efficacy of their aid, the official said.

At a ministerial-level meeting of Palestinian aid donors held in November 1998 in Washington, participants pledged a total of $3.3 billion in aid over five years. Japan promised to contribute about $200 million in 1999 and 2000.

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