by Tanya Willmer

JERUSALEM (AFP) - Israel and the Palestinians face a crucial Wednesday deadline to respond to proposals by outgoing U.S. President Bill Clinton in his final bid to clinch a peace deal and end half a century of conflict.

Prime Minister Ehud Barak, facing a February election that could cost him his job, warned that without a deal Israel risked damaging relations with Arab peace partners Jordan and Egypt, and that the nation must be prepared for "painful" decisions.

"We should be aware that should an agreement not be achieved and we slide, heaven forbid, towards a deterioration, cracks will appear in the other peace agreements and Israel's isolation against this background of violence will increase," Barak told a cabinet meeting.

Barak described the negotiations as difficult, adding: "We will never concede on our vital interests. At the same time, we must examine every idea worthy of consideration, even if it is painful."

Clinton has given Israel and the Palestinians until Wednesday to respond to his bridging proposals on some of the key issues at the heart of the conflict, including the holy city of Jerusalem and the return of Palestinian refugees.

"If there is a positive response from the two sides, the aim is to hold separate meetings between President Clinton and Ehud Barak and [Palestinian leader] Yasser Arafat to decide if we can then organize a tripartite summit," Israeli Foreign Minister Shlomo Ben Ami said.

He told Israeli army radio separate talks could take place at the end of the week, with a possible summit the following week, saying the two sides had arrived at "the moment of truth."

Arafat was due to travel to Egypt on Monday for talks with President Hosni Mubarak, but Arafat's top adviser Nabil Abu Rudeina said it was "premature" to talk about a three-way summit with Barak and Clinton.

"It is also too early to give a final opinion regarding these [Clinton] ideas," he told Voice of Palestine radio.

Israeli press reports said the Clinton plan involved Israel turning over control of Arab neighborhoods of occupied east Jerusalem to the Palestinians along with the al-Aqsa mosque compound, known to Jews as Temple Mount.

In return, Palestinians would waive the right of return for refugees, with only a small number allowed back to Israel for family reunification.

In addition, Israel would withdraw from 95% of the West Bank and 100% of the Gaza Strip, territories the Jewish state has occupied along with east Jerusalem since the 1967 Arab-Israeli war.

Palestinian information minister Yasser Abed Rabbo also said the Clinton plan called for a mechanism to guarantee any accord, including the deployment of international forces.

But he said there was little sign of flexibility on the Israeli side.

Israel's chief rabbinate on Sunday denounced any moves to give up Jewish sovereignty over the Temple Mount, Judaism's holiest site, saying such steps would "renounce the right of a Greater Israel founded on the Bible."

More than 350 people, most of them Palestinians, have died in the bloodletting triggered by a visit to a hotly contested Jerusalem shrine in late September by Israel's hardline opposition leader and prime ministerial hopeful Ariel Sharon.

And on Christmas Eve, the devastating effects of the violence and the Israeli blockade were nowhere more in evidence than in Bethlehem, the traditional birthplace of Jesus.

The town has cancelled almost all celebrations to mark the 2,000th anniversary of Jesus's birth, although it will host a traditional midnight mass to be attended by Arafat on his first trip to the West Bank since the Palestinian revolt began.

During a trip to Amman, the 71-year-old leader had a routine check-up with his private doctor, leading Jordanian neurologist Ashraf Kurdi, who described his condition as satisfactory.

Clinton, who oversaw the signing of the 1993 Oslo peace accords, is keen to strike a deal before he leaves office on January 20th.

Time is also running out for Barak, who resigned two weeks ago, setting the stage for a February 6th election, with a peace deal seen as his only chance of winning against Sharon, the only other contender.

Sharon, reviled by the Palestinians, has said he would not abide by any accord reached by Barak if he becomes prime minister.

In a new sign of regional concern over the tension, Jordan's King Abdullah II gathered the country's military leaders and threatened to clamp down on those who would exploit anti-Israeli sentiment to destabilize Jordan.

"I will be ready for them with the help of the Jordanian Arab army," said Abdullah in remarks broadcast on state television.

At Least 10 Dead, 71 Injured In Christmas Eve Blasts Across Indonesia Israel Raids Palestinian Homes Making Arrests California Muslim And Arab Radio Station Indication Of Awareness Serbia's Reformers Celebrate As Milosevic Party Licks Wounds Israel, Palestinians Face Deadline On U.S. Peace Proposals Russian-Chechen Deal Could Mark Start Of Political Settlement U.N. Expatriate Workers Return To Afghanistan Suspected Islamists In Military Uniform Murder Algerian Singer Daring Red Fort Attack Sets Back Fragile Peace Process In Kashmir Malaysian Ruling Party May Hold Talks With Islamic Opposition Megawati “Most Popular” Politician In Indonesia Red Cross Repatriates More Than 700 POWS After Horn War Yesterday's News   Search Articles  [an error occurred while processing this directive]