All refugees cannot return, says Arafat

Yasser Arafat, the Palestinian leader, hinted for the first time yesterday that not all four million Palestinian refugees had the right to return to their former homes in Israel.

The issue of right of return sank the peace negotiations between Mr Arafat and Ehud Barak in July 2000 when he was Israel's Prime Minister, and precipitated the violence that followed. Israel argued that an open-ended option could undermine its Jewish majority.

In an article published in The New York Times, Mr Arafat wrote: "We understand Israel's demographic concerns and understand that the right of return must be implemented in a way that takes into account such concerns." He still insisted on "a fair and just solution" to the refugees' plight.

Ariel Sharon, the Israeli Prime Minister, said he was not impressed by Mr Arafat's comments. Mr Arafat also condemned attacks by "terrorist groups" against Israel.

As diplomatic activity quickened, Mr Sharon told his Cabinet he would "not rule out" more meetings with senior Palestinians. Last Wednesday, at his Jerusalem home, Mr Sharon met Mahmoud Abbas, Mr Arafat's deputy; Ahmed Qurei, the legislative council speaker; and Mohammed Rashid, a financial adviser..

On an optimistic interpretation, the moves by Mr Arafat and Mr Sharon signal that they are seeking a way back to diplomacy. A more sceptical view is that the pair are simply trying to impress Washington