The United States and Yasser Arafat criticized Israel's plans to erect a security fence along a porous West Bank border through which Palestinian suicide bombers slip into Israeli cities.
The Palestinian leader also rejected on Monday scathing comments by U.S. national security adviser Condoleezza Rice that his Palestinian Authority was corrupt, supported terror and was no model for a future state.
While the U.S. State Department and Mr. Arafat took aim at the project launched on Sunday to erect a 110-kilometre barrier straddling the border with the West Bank, Israel let its guns do the talking in its battle against Palestinian militants.
In an attack Palestinians called an assassination, Israeli soldiers in a position overlooking the West Bank village of El Khader shot dead a militant from the al-Aqsa Martyrs Brigades, a group behind suicide bombings that have killed dozens in Israel.
At a daily briefing in Washington, State Department spokesman Richard Boucher said the United States was worried that the Israeli fence, to be built over the next year, would make life harder for ordinary Palestinians, when Israel should be removing the barriers restricting their movements.
"The issue of borders between Israel living side-by-side with a future Palestinian state is one that needs to be resolved through negotiation," Mr. Boucher said.
The United States, he added, "always opposed unilateral attempts to try to decide these issues."
Mr. Arafat called the construction project "an act of racism."
Palestinians fear Israel will seize West Bank land as it marks out the barrier and that it will stop Palestinians from entering Israel, where thousands work illegally after eluding Israeli roadblocks.
Israeli right-wingers opposed the fence for another reason, saying it could set a de facto border for a Palestinian state and weaken what they see as their biblical claim to land captured in the 1967 Middle East war.
The State Department criticism contrasted with a mild rebuke from White House spokesman Scott McClellan, who called on all parties in the Middle East to "keep in mind the consequences" of their actions but said Israel had a right of self-defence.
With U.S. Middle East policy appearing muddled at times, U.S. President George W. Bush has met regional leaders recently as he works on a vision of a two-state settlement that could set a course for renewed diplomacy after almost 21 months of violence.
But a newspaper interview with Ms. Rice underlined Mr. Arafat's poor relationship with Washington, which has demanded reforms in his Palestinian Authority and blasted him repeatedly over bombings in Israel.
Ms. Rice told the San Jose Mercury news that "the Palestinian Authority, which is corrupt and cavorts with terror ... is not the basis for a Palestinian state moving forward."
Mr. Arafat retorted in remarks to reporters: "We are implementing only what our people want us to do and we do not take orders from anyone."
He has responded to growing U.S. and Israeli pressure for far-reaching changes in his administration by announcing the Palestinians will hold legislative and presidential elections in December or January and by condemning suicide attacks in Israel.
But he says reforms, such as streamlining the security forces and cracking down on militants, are hampered by frequent Israeli military raids into Palestinian-ruled areas and by military blockades across the West Bank.
Palestinian negotiator Nabil Shaath said on Monday he hoped Mr. Bush's Middle East peace plan would be fair and balanced and would convince Arabs that Washington was committed to solving the problem.
"I hope it creates sufficient credibility in the Arab and Palestinian mind about the commitment of the United States to back that up and to make it real, to make it happen," Mr. Shaath told reporters after talks with UN Secretary-General Kofi Annan.
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