31.  Arafat expects the West Bank to become a Palestinian state, while Israel strongly opposes the move.

32.  Arafat has said that if such an agreement is not reached, he will unilaterally declare a Palestinian state.

33.  Arafat rejected the compromise, however, insisting instead on full Arab control of the enclave, which he wants as the capital of a new Palestinian state.

34.  Arafat said he would continue pursuing a Palestinian state with its capital in Jerusalem even if it cost him his life.

35.  As a base line, the talks that are under way have the emergence of a Palestinian state as their main working assumption, a senior administration official said.

36.  As long as settlements are built, he said, a Palestinian state will not be established.

37.  Asked why Arafat had not acted sooner, he said frustration over the lack of progress toward a Palestinian state had made such measures impossible.

38.  Back in Israel, his Likud compatriots have voted against acceptance of a Palestinian state.

39.  Barak made news on Thursday when he referred explicitly, for the first time in public, to the establishment of a Palestinian state.

40.  Barak supports what sounds like a Palestinian state, with its own currency and its own trade relationships with other countries.